UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-29621
NovAccess Global Inc.
(Exact name of registrant as specified in its charter)
Colorado
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84-1384159
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. employer
Identification no.)
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Address of principal executive offices, including zip code: 8834
Mayfield Road, Suite C, Chesterland, Ohio 44026
Registrant’s telephone number, including area code:
440-644-1027
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
Indicate by check mark if the registrant is a well-known seasoned
issuer as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
No ☒
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the Registrant has submitted
electronically, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T
(Section 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the Registrant was required to
submit and post such files). Yes ☐ No ☒
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will
not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ☒
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See
definition of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act. (check one):
Large accelerated Filer ☐ Accelerated Filer ☐
Non-Accelerated Filer ☐ Smaller Reporting Company ☒
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes ☐
No ☒
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid
and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second fiscal quarter.
The aggregate market value of the 1,601,887,744 shares of the
registrant’s common stock held by non-affiliates of the registrant
was $789,427 calculated based on the $0.0005 closing price on March
31, 2020 (does not reflect the August 25, 2020 1-for-1,000 reverse
stock split of the registrant’s outstanding shares of common
stock).
Indicate the number of shares outstanding of each of the
registrant’s classes of common stock, as of the latest practicable
date. There were 12,741,342 shares of common stock outstanding on
March 18, 2021.
Table of
Contents
Part I
Item 1.
Business.
In this Annual Report on Form 10-K, we use the terms “Company,”
“NovAccess,” “we,” “us,” and “our” to refer to NovAccess Global
Inc.
Overview
NovAccess Global Inc. is a biopharmaceutical company that is
developing novel immunotherapies to treat brain tumor patients in
the United States with plans to expand globally. We specialize in
cutting-edge research related to utilizing a patient’s own immune
system to attack the cancer. We are filing an Investigational New
Drug Application (IND) and working closely with Food and Drug
Administration (FDA) to obtain approval for human clinical trials
to determine safety and efficacy of our drug product for brain
cancer patients. Once we have successfully completed the clinical
trials and proven that the new therapy is safe and efficacious, we
plan to commercialize the product. We also have expertise in
successfully executing clinical trials, bringing products to market
and increasing market size of products through our advisory board.
Our scientists are well versed in immunology, stem cell biology,
neuroscience, molecular biology, imaging, small molecules
development, gene therapy and other technical assays needed for
protein and genetic analysis of cancer cells.
NovAccess operates as a research and development (R&D) company
out of Ohio and California, and our executive management and
scientific advisory board provides over 15 years of extensive
experience in all aspects of biopharmaceutical R&D and
commercialization of drug candidates. We guide our performance by
striving to deliver consistently on the following core objectives:
(1) Accountability —taking responsibility for providing safe and
effective options for patients; (2) Integrity — doing what is
ethically right for the patient; (3) Excellence — doing your best
and working hard; and (4) Teamwork — bringing together a strong
working team to deliver the best products for brain tumor
patients.
Our website is www.NovAccessGlobal.com.
Recent Events
In the 2018, Innovest Global Inc. acquired 20% of StemVax, LLC, a
biopharmaceutical company developing novel therapies for brain
tumor patients that holds an exclusive patent license from
Cedars-Sinai Medical Center in Los Angeles, California
(Cedars-Sinai) known as StemVax Glioblast (SVX-GB). The Innovest
investment provided StemVax with the resources to extend the
license for SVX-GB. Dr. Christopher Wheeler, president of StemVax,
has been involved in the pre-clinical research and development of
the drug candidate at Cedars-Sinai Department of Neurosurgery since
2005. As president, Dr. Wheeler began preparing the pre-IND
application in order to obtain FDA approval to start human clinical
trials. In February 2020, Innovest acquired 100% of StemVax and on
September 8, 2020, NovAccess acquired StemVax from Innovest for 7.5
million shares of NovAccess. In October 2020, Dr. Dwain
Morris-Irvin joined NovAccess as our chief executive officer. in
February 2021, we contracted Dr. Wheeler to continue serving as
president of StemVax.
Organization and History
NovAccess Global Inc. is a Colorado corporation incorporated on
February 25, 1997 as “Sun River Mining, Inc.” In 2003, the Company
was renamed “XsunX, Inc.” and entered the solar business,
specializing in the sale, design, and installation of solar
photovoltaic power generation and energy storage systems. Effective
August 25, 2020, we filed articles of amendment to our articles of
incorporation with the Colorado Secretary of State to: effectuate a
1-for-1,000 reverse stock split of the Company’s outstanding shares
of common stock; and change the name of the Company to “NovAccess
Global Inc.” After completing the acquisition of StemVax, we exited
the solar business and focused all of our efforts on our
biopharmaceutical business.
Business
and Operations
Market
Drivers for Immunotherapy against Cancer
The most common adult brain tumor has less than a 15-month median
survival period after diagnosis. Despite advances in chemotherapy
and radiation therapy there has been no change in survival for
glioblastoma multiforme (GBM) patients in over 50 years. As a
result, there is significant demand for novel therapies to treat
brain tumors. We identify two main drivers to bring immunotherapy
to market as quickly as possible: (1) the National Institutes of
Health has been promoting the development of novel immunotherapies
for cancer for over 10 years; and (2) the biopharmaceutical
industry has been promoting the development of novel
immunotherapies to treat cancer and bringing novel products to
market, including Dendreon’s Provenge drug to treat prostate
cancer.
What We
Do
NovAccess is biopharmaceutical company that specializes in the
research and development of a new drug to treat brain cancer and
other cancers. We perform pre-clinical and clinical trial
experiments to bring the drugs to market. We determine if the new
drug candidates are safe and effective for human use and to treat
brain and other cancers. We seek to develop a new treatment or a
cure for brain cancer patients and make these solutions for these
patients a sound investment for our shareholders.
We are developing novel therapies for brain cancer patients in the
US and ultimately globally. Our R&D process begins with testing
drug candidates through molecular and cellular based assays, animal
models for diseases, testing for safety and efficacy in animal
models, and human clinical trials to bring drug candidates to
market. Once our products have made it to market, we plan to
license their use to bigger pharmaceutical companies to better
access the patient populations and provide treatment.
We currently do not generate revenue. In order to finance our
operations, including clinical trials development and execution, we
intend to raise capital through financial institutions that invest
in cancer therapeutics. As we achieve milestones during the process
of R&D, we expect our overall value to increase. We intend to
commercialize our products immediately after successful completion
of clinical trials. We plan to license our products to larger
biopharmaceutical companies in order to deliver our product to as
many patients as possible once we have obtained the required FDA
approvals. We expect to have other treatment candidates outside of
our lead candidate moving forward as we build our patent portfolio
of other therapeutics to improve patient outcomes and overall
quality of health.
The key elements of our approach include:
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Lead Drug Candidate. We perform pre-clinical R&D to test
hypothesis in order to determine if a lead product is safe and
efficacious to treat cancer patients. These experiments include,
molecular testing, cell culture testing and animal testing.
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Publish Data. When appropriate we publish our findings, and
we pursue patents protection for all drug candidates to proceed
with human clinical trial testing
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Human Clinical Trial Testing. At the appropriate time we
will seek FDA approval to begin clinical trials on our drug
candidates. We submit IND applications to the FDA in order to
obtain this approval.
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Commercialization. After we successfully complete of human
clinical trials and we demonstrate safety and efficacy of a drug
candidate we will commercialize the product.
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Customers
At this stage, we do not generate revenue but once we commercialize
our products our customers are expected to be cancer patients
and/or larger biopharmaceutical companies that we license our
products through in order to complete human clinical trial testing
and/or to commercialize our products. As there is currently no
immunotherapy to treat brain tumors on the market and survival
rates for GBM patients has not improved through standard
operational procedures, including chemotherapy and immunotherapy,
we anticipate a significant market for our products.
Competition
We compete with other R&D biopharmaceutical companies
developing novel immunotherapies to treat brain cancer. Currently,
there are no FDA approved immunotherapies available to GBM patients
in the market. We have a platform technology as our lead candidate.
Once we have commercialized this lead product after proving it is
safe and efficacious from our human clinical trial testing, we will
seek approval to utilize our platform technology to treat other
brain cancers, including childhood brain cancer and other cancers
in general.
Intellectual Property
In September and June of 2017, Cedars-Sinai was issued patents,
“Use of toll-like receptor ligands as adjuvants to vaccination
therapy for brain tumors,” Patent numbers: 9764014 and 8728465. In
2018, StemVax obtained an exclusive license for these patents from
Cedars-Sinai. The license term is for the full life of the patents
on a country-by-country basis.
Regulation
Our business is subject to extensive regulation by the FDA
governing the development, testing, marketing and sale of our
biopharmaceuticals. However, compliance with environmental laws is
not a significant cost for the Company.
Employees and Consultants
As of December 31, 2020, Dr. Dwain Morris-Irvin served as our
full-time chief executive officer and L. Michael Yukich served as
our part-time chief financial officer. We also rely on qualified
consultants to perform specific functions that otherwise would
require an employee. As we expand our business developments
efforts, we plan to add staff and executive officers to respond to
and assist with operations. We consider relations with our full and
part-time employees and consultants to be good.
Seasonality
Research and development in medicine has no seasonality to its
operations.
Item 1A. Risk
Factors.
We have only recently refocused our business as a biopharmaceutical
company and currently have no revenues or products approved for
sale. In addition, we have limited staff and assets. Our stock
trades on the OTC Pink, but trading in is limited and sporadic. As
a result of these and other factors, an investment in NovAccess is
inherently speculative and risky.
COVID-19:
In December 2019, a novel strain of coronavirus (“COVID-19”) was
identified in Wuhan, China, and has subsequently spread to other
regions of the world, and has resulted in increased travel
restrictions, business disruptions and emergency quarantine
measures across the world including the United States.
The Company’s business, financial condition and results of
operations were impacted by the COVID-19 pandemic for the fiscal
year ended September 30, 2020 as follows:
Efforts to secure financing necessary for business activities were
delayed as the financial institutions’ operations were restricted
due to COVID related lockdowns and other priorities related to The
Paycheck Protection Program (PPP).
Investment funding activities were also disrupted as our business
development/Investment team was unable to travel to meet potential
investors due to travel restrictions.
The research and development team was unable to have in person
meetings with the FDA regarding the quality and status of our IND
application.
The accompanying financial statements have been prepared on a going
concern basis of accounting, which contemplates continuity of
operations, realization of assets and liabilities and commitments
in the normal course of business. The accompanying financial
statements do not reflect any adjustments that might result if the
Company is unable to continue as a going concern. The Company does
not generate significant revenue, and has negative cash flows from
operations, which raise substantial doubt about the Company’s
ability to continue as a going concern. The ability of the Company
to continue as a going concern and appropriateness of using the
going concern basis is dependent upon, among other things,
additional cash infusion. The Company has obtained funds from its
shareholders since its inception through the year ended September
30, 2020. Management believes the existing shareholders and the
prospective new investors will provide the additional cash needed
to meet the Company’s obligations as they become due and will allow
the development of its business.
This Annual Report on Form 10-K contains statements which, to the
extent they are not recitations of historical facts, constitute
“forward-looking statements” within the meaning of the Securities
Litigation Reform Act of 1995 (Reform Act). The words “estimate,”
“project,” “anticipate,” “expect,” “intend,” “believe,” “plan,”
“could” and similar expressions are intended to identify
forward-looking statements. All of these forward-looking statements
are intended to be subject to the safe harbor protection provided
by the Reform Act. Although we believe that the expectations
reflected in these forward-looking statements are based on
reasonable assumptions, we can provide no assurance that our
expectations will be achieved. As forward-looking statements, these
statements involve risks, uncertainties and other factors that
could cause actual results to differ materially from the expected
results. Accordingly, actual results may differ materially from
those expressed in any forward-looking statements. Forward-looking
statements speak only as of the date of this report, and we
undertake no obligation to update any forward-looking statement in
light of new information or future events.
Item 1B. Unresolved
Staff Comments.
We have no unresolved Securities and Exchange Commission (the
“SEC”) comments to report.
Item 2.
Properties.
Our corporate headquarters is located at 8834 Mayfield Road in
Chesterland, Ohio. The building is eight years old and is in
excellent condition. We have approximately 1,500 square feet of
fully furnished and equipped office space and have access to an
additional 2,500 square feet of common area including meeting and
kitchen facilities. We lease our headquarters pursuant to a
management services agreement with TN3, LLC. The initial term of
the agreement is three years, with subsequent one-year renewals.
TN3 holds all of our outstanding preferred stock and is owned by
Daniel G. Martin, the sole member of our board of directors.
Item 3. Legal
Proceedings.
We are not involved in any legal proceedings.
Item 4. Mine Safety
Disclosures.
We are not engaged in mining operations.
Part II
Item 5. Market for
Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
The common stock of NovAccess trades on the OTC Pink market under
the symbol “XSNX.” Trading in the common stock is limited and
sporadic. The following table lists the high and low closing sale
prices for our stock for each quarter for the last two fiscal years
as reported on the OTC Pink market (adjusted for the Company’s
1-for-1,000 reverse stock split effective August 25, 2020). Because
our stock is traded on the OTC, these quotations reflect
inter-dealer prices, without retail markup, markdown or commission
and may not represent actual transactions.
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Closing Price
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Quarter Ended
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High
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Low
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December 31, 2018
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$ |
1.10 |
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$ |
0.55 |
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March 31, 2019
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0.90 |
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0.50 |
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June 30, 2019
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1.20 |
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0.50 |
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September 30, 2019
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0.80 |
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0.50 |
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December 31, 2019
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0.70 |
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0.50 |
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March 31, 2020
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0.70 |
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0.40 |
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June 30, 2020
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0.50 |
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0.20 |
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September 30, 2020
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1.10 |
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0.20 |
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We had 317 shareholders of record of our common stock on December
31, 2020. We intend to reinvest in our business and do not
currently intend to pay cash dividends on our common stock in the
foreseeable future.
Item 6. Selected
Financial Data.
Because NovAccess is a “smaller reporting company” as defined by
the SEC we are not required to provide selected financial data.
Item 7.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Cautionary and Forward-Looking Statements
The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our
consolidated financial statements and the related notes included
elsewhere in this Annual Report on Form 10-K. In addition to
historical consolidated financial information, the following
discussion and analysis contains forward-looking statements that
involve risks, uncertainties and assumptions. Our actual results
could differ materially from those anticipated by these
forward-looking statements as a result of many factors, including
those discussed under “Item 1A: Risk Factors” and
elsewhere in this Annual Report on Form 10-K.
We undertake no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the
date of this report. Readers should carefully review the factors
described in other documents that the Company files from time to
time with the SEC.
Organization
NovAccess Global Inc. is a Colorado corporation that was formerly
known as XsunX, Inc. and Sun River Mining Inc.
Business Overview
New
Business Plan
On June 2, 2020, TN3, LLC, a limited liability company owned by
Daniel G. Martin, purchased all of our outstanding shares of
preferred stock from Tom Djokovich, our former president and
chief executive officer, for $50,000. In addition, TN3 agreed to
pay for certain expenses of the transaction incurred by Mr.
Djokovich and the Company totaling more than $50,000. Upon
acquiring the preferred shares, Mr. Martin became the sole director
and chief executive officer of the Company. For more information
about Mr. Martin’s acquisition of the preferred stock and his
appointment to our board, please see our Schedule 14F-1/A filed
with the SEC on May 13, 2020 and Form 8-K filed with the SEC on
June 8, 2020.
Following Mr. Martin’s acquisition of Mr. Djokovich’s preferred
stock, the Company changed the delivery method for its solar
contracting operations by outsourcing the completion of sold
projects under a transition services agreement with a licensed
California contractor owned by Mr. Djokovic (the “Service
Provider”). The Company’s intent was to transition from providing
contracting services directly to its customers to marketing solar
services to potential customers and referring those customers to
the Service Provider or engaging the Service Provider to provide
the services to customers on behalf of the Company. The Company’s
operations in future periods will be focused on generating a
referral fee of 1% of any gross sales generated through these
referrals. We anticipate that this change in operations, and
delivery method, will have a negative impact on our gross sales and
resulting revenues, if any. However, the Company began efforts to
expand its operations to include the commercialization of
developmental healthcare solutions in the biotechnology, medical,
and health and wellness markets which efforts are ongoing. There
can be no assurance that the Company’s change to its contracting
operations to focus on referral fee revenues, and its efforts to
expand operations into healthcare solutions in the biotechnology,
medical, and health and wellness markets will be successful, or
that the Company will continue to generate revenues of significance
similar to prior periods.
On June 2, 2020, we entered into a membership interest purchase
agreement with Innovest Global, Inc. to acquire StemVax for 7.5
million shares of our unregistered common stock (after giving
effect to the 1-for-1,000 reverse stock split described in this
information statement). The acquisition was completed on September
8, 2020.
We believe that investing in the biotechnology industry will
significantly increase value for our shareholders. However, we
cannot guaranty that we will be successful in this endeavor or that
we can locate, acquire and finance the acquisition of biotechnology
companies. Currently, we continue to engage in the marketing of
solar photovoltaic power generation and storage solutions.
Results of
Operations for the Fiscal Year Ended September 30, 2020 Compared to
Fiscal Year Ended September 30, 2019
Revenue and
Cost of Sales:
The Company generated revenues of $1,044,333 and $1,608,723 in the
fiscal years ended September 30, 2020 (“fiscal 2020”), and
September 30, 2019 (“fiscal 2019”). The decrease of $564,390,
during fiscal 2020 was primarily due to the Company’s change in
focus from commercial solar system sales and the sale of steel
canopy construction services to investing in the biotechnology
industry following Company’s acquisition. The costs of goods sold
was $822,603 in fiscal 2020 and $856,165 is fiscal 2019.
Pursuant to the reporting requirements of ASC 205-20,
Presentation of Financial Statements – Discontinued
Operations, the Company has determined that the business
qualifies for presentation as a discontinued operation. Therefore,
the Company has reclassified and presented the operating results as
discontinued operations in the accompanying statements of
operations.
Selling,
General and Administrative Expenses:
Selling, general and administrative (SG&A) expenses increased
by $284,194 during fiscal 2020 to $828,892 as compared to $544,698
for fiscal 2019. The increase in SG&A expenses was related
primarily due to the Company recognizing $399,260 in stock
compensation expense in connection with warrants granted to the
Company’s former board members.
Other Income/(Expenses):
Other income/(expenses) decreased by $8,299,277 from other income
of $2,136,702 for fiscal 2019 to other expenses of $6,162,575 for
fiscal 2020. The increase in net loss was primarily due to a
increase in net loss on net change of fair market value of the
derivative instruments of $3,252,198 and a loss on conversion of
preferred stock of $5,088,524.
Net
Loss:
For fiscal 2020, our net loss was $(6,770,215) as compared to a net
income of $2,343,982 for fiscal 2019. The majority of the increase
in net loss of $9,114,197 was due to an increase in other
(expenses) associated with a loss recognized on conversion of
preferred stock and the net change in derivative instruments
estimated each period. These estimates are based on multiple
inputs, including the market price of our stock, interest rates,
our stock price, volatility, variable conversion prices based on
market prices defined in the respective agreements and
probabilities of certain outcomes based on managements’ estimates.
These inputs are subject to significant changes from period to
period, therefore, the estimated fair value of the derivative
liabilities will fluctuate from period to period, and the
fluctuation may be material.
Liquidity and Capital Resources
We had a working capital deficit at September 30, 2020 of
$(3,454,730), as compared to a working capital deficit of
$(2,072,641) as of September 30, 2019. The increase of $1,382,089
in working capital deficit was the result of a decrease in cash,
contract assets, prepaid expenses, accounts payable, other payable,
contract liabilities and promissory note, related party, with an
increase in derivative liability, accrued expenses, loan payable
and other amount due to related party, as well as increase in
current portion of convertible promissory notes.
For the fiscal year 2020, our cash flow used by operating
activities was $93,190, as compared to cash flow used by operating
activities of $6,542 for fiscal year 2019. Out of these amounts,
$260,705 was used by and $192,685 was provided by continuing
operating activities in fiscal years 2020 and 2019, respectively.
The balance of $167,515 was provided by and $199,277 used by
discontinued operating activities. The net increase of $86,648 in
cash flow used by operating activities was primarily due to changes
in assets and liabilities.
Cash flow used in investing activities — discontinued operations
was $0 in fiscal 2020, compared to cash flow used by investing
activities of $2,284 for fiscal 2019. The increase of $2,284 in
investing activities was primarily due to fixed assets purchased in
the fiscal year 2019.
Cash flow provided by financing activities was $85,399 for fiscal
2020, as compared to cash used by financing activities of $24,300
during fiscal 2019. The increase in cash flow provided by financing
activities was the result of cash advances from related
parties.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or
financial partnerships such as entities often referred to as
structured finance or special purpose entities that would have been
established for the purpose of facilitating off-balance-sheet
arrangements or for other contractually narrow or limited purposes.
As a result, we are not exposed to any financing, liquidity, market
or credit risk that could arise if we had engaged in such
relationships.
Item 7A. Quantitative
and Qualitative Disclosures About Market Risk.
Because NovAccess is a “smaller reporting company” as defined by
the SEC we are not required to provide quantitative and qualitative
disclosures about market risk.
Item 8. Financial
Statements and Supplementary Data.
The following financial statements are filed with this Form 10-K
beginning at page F-1:
Report of M&K CPAS, PLLC, Independent Registered Public
Accounting Firm
Consolidated Financial Statements:
Consolidated Balance Sheets as of September
30, 2020 and 2019
Consolidated Statements of Operations for
the fiscal year ended September 30, 2020 and 2019
Consolidated Statements of Shareholders’
Deficit for the fiscal year ended September 30, 2020 and
2019
Consolidated Statements of Cash Flows for
the fiscal year ended September 30, 2020 and 2019
Notes to Consolidated Financial
Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of NovAccess Global, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
NovAccess Global, Inc. (the Company) as of September 30, 2020 and
2019, and the related consolidated statements of operations,
shareholders’ deficit, and cash flows for each of the years in the
two-year period ended September 30, 2020, and the related notes
(collectively referred to as the financial statements). In our
opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of September 30,
2020 and 2019, and the results of its operations and its cash flows
for each of the years in the two-year period ended September 30,
2020, in conformity with accounting principles generally accepted
in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continues as a going concern. As discussed in
Note 1 to the financial statements, in past years, the Company has
suffered net losses from operations and has a net capital
deficiency, which raises substantial doubt about its ability to
continue as a going concern. Management’s plans regarding those
matters are discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2019.
Houston, TX
March 29, 2021
NOVACCESS GLOBAL, INC.
CONSOLIDATED BALANCE
SHEETS
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
178 |
|
|
$ |
7,964 |
|
Contract receivables of discontinued operations
|
|
|
- |
|
|
|
198,083 |
|
Prepaid expenses
|
|
|
- |
|
|
|
6,575 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
178 |
|
|
|
212,622 |
|
|
|
|
|
|
|
|
|
|
NET PROPERTY & EQUIPMENT DISCONTINUED OPERATIONS
|
|
|
- |
|
|
|
2,570 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$ |
178 |
|
|
$ |
215,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
88,519 |
|
|
$ |
129,425 |
|
Other payable
|
|
|
65,304 |
|
|
|
67,155 |
|
Loan payable, related party
|
|
|
24,287 |
|
|
|
- |
|
Accrued expenses and interest on notes payable
|
|
|
65,215 |
|
|
|
54,478 |
|
Contract liabilities of discontinued operations
|
|
|
- |
|
|
|
33,138 |
|
License Fees Payable
|
|
|
50,402 |
|
|
|
- |
|
Derivative liability
|
|
|
2,989,165 |
|
|
|
1,945,650 |
|
Due to related party
|
|
|
68,312 |
|
|
|
- |
|
Promissory note, related party (Note 6)
|
|
|
- |
|
|
|
7,200 |
|
Convertible promissory note, related party (Note 5)
|
|
|
12,000 |
|
|
|
12,000 |
|
Convertible promissory notes, current portion net of debt discount
of $0 and $36,297, respectively (Note 4)
|
|
|
91,704 |
|
|
|
36,217 |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
3,454,908 |
|
|
|
2,285,263 |
|
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES
|
|
|
|
|
|
|
|
|
Convertible promissory notes, net of debt discount of $0 and $12,
respectively
|
|
|
115,000 |
|
|
|
165,880 |
|
|
|
|
|
|
|
|
|
|
Total Long Term Liabilities
|
|
|
115,000 |
|
|
|
165,880 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
3,569,908 |
|
|
|
2,451,143 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
Preferred stock 50,000,000 shares authorized, shares issued and
outstanding designated as follows:
|
|
|
|
|
|
|
|
|
Preferred Stock Series A, $0.01 par value, 10,000 authorized
0 and 5,000 shares issued and outstanding, respectively
|
|
|
- |
|
|
|
50 |
|
Preferred Stock Series B, $0.01 par value, 25,000 authorized
25,000 and 0 shares issued and outstanding, respectively
|
|
|
250 |
|
|
|
- |
|
Common stock, no par value;
2,000,000,000 authorized common shares
1,603,492 and 1,601,888 shares issued and outstanding,
respectively
|
|
|
33,369,424 |
|
|
|
33,369,424 |
|
Additional paid in capital
|
|
|
11,710,398 |
|
|
|
5,335,398 |
|
Paid in capital, common stock warrants
|
|
|
4,210,960 |
|
|
|
3,811,700 |
|
Paid in capital, preferred stock
|
|
|
5,088,324 |
|
|
|
- |
|
Accumulated deficit
|
|
|
(57,949,086 |
)
|
|
|
(44,752,523 |
)
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' DEFICIT
|
|
|
(3,569,730 |
)
|
|
|
(2,235,951 |
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
$ |
178 |
|
|
$ |
215,192 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
NOVACCESS GLOBAL, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 AND 2019
|
|
Year Ended
|
|
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
SALES
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
COST OF GOODS SOLD
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
828,892 |
|
|
|
544,698 |
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
828,892 |
|
|
|
544,698 |
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)
|
|
|
(828,892 |
)
|
|
|
(544,698 |
)
|
|
|
|
|
|
|
|
|
|
OTHER INCOME/(EXPENSES)
|
|
|
|
|
|
|
|
|
Loss on conversion of Preferred Stock
|
|
|
(5,088,524 |
)
|
|
|
- |
|
Gain (Loss) on change in derivative liability
|
|
|
(1,043,515 |
)
|
|
|
2,208,683 |
|
Interest expense
|
|
|
(30,536 |
)
|
|
|
(71,981 |
)
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER INCOME/(EXPENSES)
|
|
|
(6,162,575 |
)
|
|
|
2,136,702 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
|
|
$ |
(6,991,467 |
)
|
|
$ |
1,592,004 |
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM DISCONTINUED OPERATIONS
|
|
|
221,252 |
|
|
|
751,978 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
(6,770,215 |
)
|
|
|
2,343,982 |
|
|
|
|
|
|
|
|
|
|
BASIC INCOME (LOSS) PER SHARE
|
|
$ |
(4.22 |
)
|
|
$ |
1.50 |
|
|
|
|
|
|
|
|
|
|
DILUTED INCOME (LOSS) PER SHARE
|
|
$ |
(4.22 |
)
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
BASIC
|
|
|
1,603,492 |
|
|
|
1,559,483 |
|
DILUTED
|
|
|
1,603,492 |
|
|
|
5,000,474 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
NOVACCESS GLOBAL, INC.
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 AND 2019
|
|
Preferred Stock, Class A
|
|
|
Preferred Stock, Class B
|
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Stock Options/
Warrants
Paid in
|
|
|
Accumulated
|
|
|
Paid in Capital,
Preferred
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Capital
|
|
|
Deficit
|
|
|
Stock
|
|
|
Total
|
|
Balance at September 30, 2018
|
|
|
5,000 |
|
|
$ |
50 |
|
|
|
- |
|
|
|
- |
|
|
|
1,468,107 |
|
|
$ |
33,311,674 |
|
|
$ |
5,335,398 |
|
|
$ |
3,811,700 |
|
|
$ |
(47,096,505 |
)
|
|
|
- |
|
|
$ |
(4,637,683 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued upon conversion of debt and accrued
interest
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
133,781 |
|
|
|
57,750 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
57,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,343,982 |
|
|
|
- |
|
|
|
2,343,982 |
|
Balance at September 30, 2019
|
|
|
5,000 |
|
|
$ |
50 |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
1,601,888 |
|
|
$ |
33,369,424 |
|
|
$ |
5,335,398 |
|
|
$ |
3,811,700 |
|
|
$ |
(44,752,523 |
)
|
|
$ |
- |
|
|
$ |
(2,235,951 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation cost, purchase warrants
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
399,260 |
|
|
|
- |
|
|
|
- |
|
|
|
399,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in Capital for StemVax Acquisition
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,375,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,375,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed Dividend
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,426,348 |
)
|
|
|
- |
|
|
|
(6,426,348 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Conversion
|
|
|
(5,000 |
)
|
|
|
(50 |
)
|
|
|
25,000 |
|
|
|
250 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,088,324 |
|
|
|
5,088,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rounding Shares issued due to stock split
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,604 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,770,215 |
)
|
|
|
- |
|
|
|
(6,770,215 |
)
|
Balance at September 30, 2020
|
|
|
- |
|
|
$ |
- |
|
|
|
25,000 |
|
|
$ |
250 |
|
|
|
1,603,492 |
|
|
$ |
33,369,424 |
|
|
$ |
11,710,398 |
|
|
$ |
4,210,960 |
|
|
$ |
(57,949,086 |
)
|
|
$ |
5,088,324 |
|
|
$ |
(3,569,730 |
)
|
The accompanying notes are an integral part of these consolidated
financial statements.
NOVACCESS GLOBAL, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 AND 2019
|
|
Year Ended
|
|
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$ |
(6,770,215 |
)
|
|
$ |
2,343,982 |
|
Adjustment to reconcile net income (loss) to net cash
provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gain) Loss on change in derivative liability
|
|
|
1,043,515 |
|
|
|
(2,208,683 |
)
|
Loss on conversion of Preferred Stock
|
|
|
5,088,524 |
|
|
|
- |
|
Amortization of debt discount recorded as interest expense
|
|
|
- |
|
|
|
36,309 |
|
Purchase warrant stock compensation expense
|
|
|
399,260 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Changes in Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
6,575 |
|
|
|
(1,176 |
)
|
Accounts payable
|
|
|
(40,784 |
)
|
|
|
(2,395 |
)
|
Other payable
|
|
|
(1,851 |
)
|
|
|
24,648 |
|
Accrued expenses and interest on notes payable
|
|
|
14,271 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES -
CONTINUING OPERATIONS
|
|
|
(260,705 |
)
|
|
|
192,685 |
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES -
DISCONTINUED OPERATIONS
|
|
|
167,515 |
|
|
|
(199,227 |
)
|
|
|
|
|
|
|
|
|
|
NET CASH (USED IN) PROVIDED BY OPERATIONS
|
|
|
(93,190 |
)
|
|
|
(6,542 |
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES - CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
Investment in StemVax, LLC
|
|
|
5 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of fixed asset - discontinued operations
|
|
|
- |
|
|
|
(2,284 |
)
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES - DISCONTINUED OPERATIONS
|
|
|
- |
|
|
|
(2,284 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Due to related party
|
|
|
68,312 |
|
|
|
- |
|
Payments on related party promissory notes
|
|
|
(7,200 |
)
|
|
|
(24,300 |
)
|
Proceeds from related party loan payable
|
|
|
24,287 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
85,399 |
|
|
|
(24,300 |
)
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
(7,786 |
)
|
|
|
(33,126 |
)
|
|
|
|
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD
|
|
|
7,964 |
|
|
|
41,090 |
|
|
|
|
|
|
|
|
|
|
CASH, END OF PERIOD
|
|
$ |
178 |
|
|
$ |
7,964 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
6,955 |
|
|
$ |
10,099 |
|
Taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
|
|
|
|
|
|
|
|
|
Issuance of common stock upon conversion of debt and accrued
interest
|
|
$ |
- |
|
|
$ |
57,750 |
|
Accrued interest capitalized into convertible note
|
|
$ |
4,607 |
|
|
$ |
23,184 |
|
Preferred stock exchange
|
|
$ |
50 |
|
|
$ |
- |
|
The accompanying notes are an integral part of these consolidated
financial statements.
NOVACCESS GLOBAL, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
1. ORGANIZATION AND LINE OF BUSINESS
Organization
NovAccess, Inc. (“NovAccess,” the “Company” or the “issuer”) is a
Colorado corporation formerly known as Sun River Mining Inc., “Sun
River” and XsunX, Inc., “XsunX”). The Company was originally
incorporated in Colorado on February 25, 1997. Effective September
24, 2003, the Company completed a plan of reorganization and name
change to XsunX, Inc. In June, 2020 the company was acquired and
changed its name to NovAccess, Inc.
Line of Business
During the year ended September 30, 2020, the Company discontinued
its direct delivery method for its solar contracting operations by
outsourcing the completion of sold projects under a Transition
Services Agreement with a licensed California contractor “the
Service Provider”. The Company’s intent is to transition from
providing contracting services directly to its customers to
marketing solar services to potential customers and referring those
customers to the Service Provider or engaging the Service Provider
to deliver the services to customers on behalf of the Company. The
Company’s operations in future periods will be focused on
generating a referral fee of 1% of any gross sales generated
through these referrals. We anticipate that this change in
operations, and delivery method, will have a negative impact on our
gross sales and resulting revenues, if any. However, during the
year ended September 30, 2020 the Company began efforts to expand
its operations to include the commercialization of developmental
healthcare solutions in the biotechnology, medical, and health and
wellness markets. These efforts are ongoing. There can be no
assurance that the Company’s change to its contracting operations
to focus on referral fee revenues, and its efforts to expand
operations into healthcare solutions in the biotechnology, medical,
and health and wellness markets will be successful, or that the
Company will continue to generate revenues of significance similar
to prior periods.
Going Concern
The accompanying financial statements have been prepared on a going
concern basis of accounting, which contemplates continuity of
operations, realization of assets and liabilities and commitments
in the normal course of business. The accompanying
financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going
concern. The Company does not generate significant
revenue, and has negative cash flows from operations, which raise
substantial doubt about the Company’s ability to continue as a
going concern. The ability of the Company to continue as
a going concern and appropriateness of using the going concern
basis is dependent upon, among other things, additional cash
infusion. The Company has obtained funds from its
shareholders since its inception through the year ended September
30, 2020. Management believes the existing shareholders and the
prospective new investors will provide the additional cash needed
to meet the Company’s obligations as they become due and will allow
the development of its business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of NovAccess
Global, Inc. is presented to assist in understanding the Company’s
financial statements. The financial statements and notes are
representations of the Company’s management, which is responsible
for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the
preparation of the financial statements.
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary StemVax, LLC. All
significant inter-company accounts and transactions between these
entities have been eliminated in these consolidated financial
statements.
Business Combinations
The Company utilized ASC 805, Business Combinations (“ASC 805”) and
ASC 850, Related Parties Disclosures to account for the September
8, 2020 acquisition of StemVax, LLC (see note 14 for more
details).
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Preferred Stock
On September 4, 2020, the Company issued 25,0000 shares of
unregistered Series B Convertible Preferred Stock, $0.01 par value
per share (the “Series B Preferred”), to TN3, LLC in exchange for
the redemption of 5,000 shares of Series A Preferred Stock, $0.01
par value per share (the “Series A Preferred”), held by TN3. TN3 is
owned by Daniel G. Martin, the chief executive officer, at the time
of the transaction, and the sole member of the board of directors.
The shares of Series A and Series B Preferred Stock were classified
as permanent equity in the Statement of Shareholder’ Deficit for
the Fiscal Year Ended September 30, 2020 (see note 3 for more
details).
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the accompanying consolidated financial statements. Significant
estimates made in preparing these consolidated financial statements
include the estimate of useful lives of property and equipment,
revenue recognition, the deferred tax valuation allowance, the fair
value of stock options, and derivative liabilities. Actual results
could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash
equivalents include cash in banks and money markets with an
original maturity of three months or less.
Property and Equipment
Property and equipment are stated at cost, and are depreciated
using straight line over its estimated useful lives:
Leasehold improvements
|
Length of the lease
|
Computer software and equipment
|
3 Years
|
Furniture & fixtures
|
5 Years
|
Machinery & equipment
|
5 Years
|
The Company capitalizes property and equipment over $500. Property
and equipment under $500 are expensed in the year purchased. During
the year ended September 30, 2020, the Company sold certain assets
at net book value for $2,092. The depreciation expense for the
years ended September 30, 2020, and 2019, were $478 and $580,
respectively, which are now included in the discontinued
operations.
Revenue Recognition
We recognize revenue when services are performed, and at the time
of shipment of products, provided that evidence of an arrangement
exists, title and risk of loss have passed to the customer, fees
are fixed or determinable, and collection of the related receivable
is reasonably assured.
Revenues and related costs on construction contracts were
recognized as the performance obligations for work were satisfied
over time in accordance with Accounting Standards Codification
(“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606,
revenue and associated profit, was recognized as the customer
obtained control of the goods and services promised in the contract
(i.e., performance obligations). All un-allocable indirect costs
and corporate general and administrative costs were charged to the
periods as incurred. However, in the event a loss on a contract was
foreseen, the Company would recognize the loss as it is
determined.
Revisions in cost and profit estimates during the course of the
contract were reflected in the accounting period in which the facts
for the revisions became known. Provisions for estimated losses on
uncompleted contracts were made in the period in which such losses
were determined. Changes in job performance, job conditions, and
estimated profitability, including those arising from contract
penalty provisions, and final contract settlements, may have
resulted in revisions to costs and income, which were recognized in
the period the revisions were determined.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Revenue Recognition (continued)
Contract receivables of discontinued operations were recorded on
contracts for amounts currently due based upon progress billings,
as well as any retentions, which were collectible upon completion
of the contracts. Accounts payable to material suppliers and
subcontractors were recorded for amounts currently due based upon
work completed or materials received, as were retention due
subcontractors, which were payable upon completion of the contract.
General and administrative expenses were charged to operations as
incurred and were not allocated to contract costs.
Contract Receivable
The Company previously billed its customers in accordance with
contractual agreements. The agreements generally required billings
to be on a progressive basis as work was completed. Credit was
extended based on evaluation of clients’ financial condition and
collateral was not required. The Company maintained an allowance
for doubtful accounts for estimated losses that may have arose, if
any customer was unable to make required payments. As of September
30, 2020 and 2019, there was no allowance for doubtful
accounts.
Management previously performed a quantitative and qualitative
review of the receivables past due from customers on a monthly
basis. The Company recorded an allowance against uncollectible
items for each customer after all reasonable means of collection
had been exhausted, and the potential for recovery was considered
remote. The contract receivables of discontinued operations balance
were $0 and $198,083 at September 30, 2020 and 2019,
respectively.
Project Warranties
Customers in our target market of California who purchased solar
energy systems are covered by a warranty of up to 10 years in
duration for material defects and workmanship. In addition, we
provide a pass-through warranty of the major components such as
module mounting, inverter and solar panel manufacturers’ warranties
to our customers, which generally range from 10 to 25 years. The
manufacturers of these major components provide the warranty
directly to our customers. In the event of a component
failure the manufacturers provide replacement of the major
components such as inverters and solar modules at no charge to our
customer, which is an industry standard. In the event of a
component failure such as an inverter the standard warranty from
the supplier we use, SolarEdge, provides a twelve (12) year
no-charge replacement warranty to the customer, and would also
provide NovAccess, Inc. or our subcontractor, with $125
compensation for labor replacement costs, should we be requested to
replace an inverter or other SolarEdge components. Additionally, we
employed the use of licensed subcontractors for the bulk of our
installation processes, who as licensed contractors are required to
warrant their work for material defects and workmanship for ten
(10) years. The Company has a limited history of project
installations, and in accessing the potential for warranty related
costs and other allowances, we believe that our reliance on the
manufacturers and subcontractor warranties would leave a limited
and inconsequential cost associated with warranty claims. During
the years ended September 30, 2020 and 2019, the Company did not
experience costs related to warranty claims.
Stock-Based Compensation
Share-based Payment applies to transactions in which an entity
exchanges its equity instruments for goods or services and also
applies to liabilities an entity may incur for goods or services
that are to follow a fair value of those equity instruments. We are
required to follow a fair value approach using an option-pricing
model, such as the Binomial lattice valuation model, at the date of
a stock option grant. The deferred compensation calculated under
the fair value method would then be amortized over the respective
vesting period of the stock option. This has not had a material
impact on our results of operations.
Advertising
Advertising expenses are expensed as incurred. Total advertising
expenses were $7,349 and $12,592 for the years ended September 30,
2020, and 2019, respectively.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Net Earnings (Loss) per Share Calculations
Net earnings (Loss) per share dictates the calculation of basic
earnings (loss) per share and diluted earnings per share. Basic
earnings (loss) per share are computed by dividing by the weighted
average number of common shares outstanding during the year.
Diluted net earnings (loss) per share is computed similar to basic
earnings (loss) per share except that the denominator is increased
to include the effect of stock options and stock-based awards plus
the assumed conversion of convertible debt (Notes 4 and 5).
|
|
For the Years Ended
|
|
|
|
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) to common shareholders (Numerator)
|
|
$ |
(6,770,215 |
)
|
|
$ |
2,343,982 |
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
(Denominator)
|
|
|
1,603,492 |
|
|
|
1,559,483 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding
(Denominator)
|
|
|
1,603,492 |
|
|
|
5,000,474 |
|
The Company has included shares issuable from convertible debt of
$214,097 for the year ended September 30, 2019, because their
impact on the income per share is dilutive. Diluted weighted
average number of shares for the fiscal year ended September 30,
2020 is the same as basic weighted average number of shares because
the Company had a net loss for fiscal year 2020.
Fair Value of Financial Instruments
Fair Value of Financial Instruments, requires disclosure of the
fair value information, whether or not recognized in the balance
sheet, where it is practicable to estimate that value. As of
September 30, 2020, the balances reported for cash, prepaid
expenses, accounts payable, accrued expenses approximate the fair
value because of their short maturities.
We adopted ASC Topic 820 for financial instruments measured as fair
value on a recurring basis. ASC Topic 820 defines fair value,
established a framework for measuring fair value in accordance with
accounting principles generally accepted in the United States and
expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC Topic 820
established a three-tier fair value hierarchy which prioritizes the
inputs used in measuring fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (level 1 measurements) and the
lowest priority to unobservable inputs (level 3 measurements).
These tiers include:
|
●
|
Level 1, defined as observable inputs such as quoted prices for
identical instruments in active markets;
|
|
●
|
Level 2, defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable such as
quoted prices for similar instruments in active markets or quoted
prices for identical or similar instruments in markets that are not
active; and
|
|
●
|
Level 3, defined as unobservable inputs in which little or no
market data exists, therefore requiring an entity to develop its
own assumptions, such as valuations derived from valuation
techniques in which one or more significant inputs or significant
value drivers are unobservable.
|
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Fair Value of Financial Instruments (continued)
We measure certain financial instruments at fair value on a
recurring basis. The Company had no assets that are required to be
valued on a recurring basis as of September 30, 2020 and 2019. The
Company had liabilities that are required to be measured at fair
value on a recurring basis as follows at September 30, 2020 and
2019:
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liability at fair value as of September 30, 2020
|
|
$ |
2,989,165 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2,989,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liability at fair value as of September 30, 2019
|
|
$ |
1,945,650 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,945,650 |
|
The following is a reconciliation of the derivative liability for
which Level 3 inputs were used in determining the
approximate fair value:
Balance as of September 30, 2018
|
|
|
4,154,333 |
|
Net (Gain) on change in fair value of derivative liability
|
|
|
(2,173,215 |
)
|
Net (Gain) on extinguishment of derivative liability upon
conversion of debt
|
|
|
(35,468 |
)
|
Balance as of September 30, 2019
|
|
|
1,945,650 |
|
Net Loss on change in fair value of derivative liability
|
|
|
1,043,515 |
|
Ending balance as of September 30, 2020
|
|
$ |
2,989,165 |
|
Recent Accounting Pronouncements
In August 2016, FASB issued accounting standards update
ASU-2016-15, “Statement of Cash Flows” (Topic 230) – Classification
of Certain Cash Receipts and Cash Payments, to address diversity in
how certain cash receipts and cash payments are presented and
classified in the statement of cash flows. The amendments in this
ASU are effective for public and nonpublic entities for fiscal
years beginning after December 15, 2018, and interim periods with
fiscal years beginning after December 15, 2019. Early adoption is
permitted, including adoption in an interim period. The Company has
evaluated the impact of the adoption of ASU 2016-15, which had no
effect on the Company’s financial statements.
In August 2017, FASB issued accounting standards update
ASU-2017-12, “D” (Topic 815) – “Targeted Improvements to Accounting
for Hedging Activities”, to require an entity to present the
earnings effect of the hedging instrument in the same statement
line item in which the earnings effect of the hedged item is
reported. The amendments in this update are effective for fiscal
years beginning after December 15, 2018, and interim periods within
those fiscal years. For all other entities, the amendments are
effective for fiscal years beginning after December 15, 2019, and
interim periods with the fiscal years beginning after December 15,
2020. Early adoption is permitted in any interim period after
issuance of the update. The Company has evaluated the impact of the
adoption of ASU 2017-12, which had no effect on the Company’s
financial statements.
In June 2018, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2018-07,
Compensation-Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting, which expands the
scope of Topic 718 to include share-based payment transactions for
acquiring goods and services from nonemployees. An entity should
apply the requirements of Topic 718 to nonemployee awards except
for specific guidance on inputs to an option pricing model and the
attribution of cost (that is, the period of time over which
share-based payment awards vest and the pattern of cost recognition
over that period). The new guidance is effective for all entities
for annual periods, and interim periods within those annual
periods, beginning after December 15, 2017, with early adoption
permitted. The Company has evaluated the impact of the adoption of
ASU 2018-07, which had no effect on the Company’s financial
statements.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting Pronouncements (continued)
In August 2018, the FASB issued ASU 2018-13, Fair Value
Measurement (Topic 820), Disclosure Framework – Changes to
the Disclosure Requirements for Fair Value Measurement. The
amendments in this Update modify certain disclosure requirements of
fair value measurements and are effective for all entities for
fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2019. Early adoption is permitted. The
Company has evaluated the impact of the adoption of ASU 2018-13,
which had no effect on the Company’s financial
statements.
Management does not believe that any other recently issued, but not
yet effective, accounting standards if currently adopted would have
a material effect on the accompanying financial statements.
3. CAPITAL STOCK
At September 30, 2020, the Company’s authorized stock consisted of
2,000,000,000 shares of common stock, with no par value. Effective
August 25, 2020, we filed articles of amendment to our articles of
incorporation with the Colorado Secretary of State to effectuate a
1-for-1,000 reverse stock split of the company’s outstanding shares
of common stock.
The Company is also authorized to issue 50,000,000 shares of
preferred stock with a par value of $0.01 per share. The rights,
preferences and privileges of the holders of the preferred stock
are determined by the Board of Directors prior to issuance of such
shares.
Preferred Stock
As of September 30, 2020 the Company had 25,000 shares of issued
and outstanding Series B Preferred Stock following the conversion
of 5,000 shares of issued and outstanding on September 30, 2019
Series A Preferred Stock. The Series A shares were originally
issued in consideration for the contribution of services by Tom
Djokovich, the President and Chief Executive Officer, to the
Company valued at fifty dollars, which the Board deemed full and
fair consideration. Because of such issuance, Mr. Djokovich had the
ability to influence and determine stockholder votes. On March 18,
2020, the “Company, Mr. Djokovich, and TN3, LLC, a Wyoming limited
liability company owned by Daniel G. Martin (“TN3”), entered into a
Stock Purchase Agreement (the “Agreement”). Pursuant to the
Agreement, Mr. Djokovich agreed to sell his 5,000 shares of Series
A Preferred Stock to TN3 in a private sale for cash. The holder of
the Series A Preferred Stock may cast votes equal to not less than
60% of the total outstanding voting power of the Company on all
matters voted on by the shareholders of the Company. On
September 4, 2020, the Company issued 25,000 shares of unregistered
Series B Convertible Preferred stock, $0.01 par value per share to
TN3 in exchange for the redemption of 5,000 shares of Series A
preferred stock. As a result of this exchange a loss on conversion
of Preferred Stock in the amount of $5,088,524 was recognized in
the fiscal year ended September 30, 2020. The shares of outstanding
Series B Preferred Stock have the right to vote on an as converted
basis. Each share of Series B Preferred Stock converts at 10,000
common shares. In the event of any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation, the
holders of shares of Series B Preferred Stock shall be paid out
based on an as converted basis. Dividend for Series B Preferred
Stock shall be declared on an as converted basis.
Common Stock
Effective August 25, 2020, we filed articles of amendment to our
articles of incorporation with the Colorado Secretary of State to
effectuate a 1-for-1,000 reverse stock split of the Company’s
outstanding shares of common stock.
During the year ended September 30, 2020, the Company issued 1,604
shares of common stock due to rounding of fractional shares upon
1-for-1,000 reverse stock split.
During the year ended September 30, 2019, the Company issued
133,780,925 shares of common stock upon conversion of principal in
the amount of $55,000, plus accrued interest of $2,750.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
4. CONVERTIBLE PROMISSORY NOTES
As of September 30, 2020, the outstanding convertible promissory
notes are summarized as follows:
Convertible Promissory Notes
|
|
$ |
206,704 |
|
Less current portion
|
|
|
91,704 |
|
Total long-term liabilities
|
|
$ |
115,000 |
|
Maturities of long-term debt for the next four years are as
follows:
Year Ending
|
|
|
|
|
September 30,
|
|
|
|
|
2021
|
|
$ |
91,704 |
|
2022
|
|
|
75,000 |
|
2023
|
|
|
40,000 |
|
|
|
$ |
206,704 |
|
On October 20, 2015, the Company entered into a third extension of
the Note originally issued September 30, 2013. The extension terms
included mandatory payments of $10,000 per month beginning November
1, 2015 until the note in the amount of $143,033 is paid in full.
The Note bears interest at 12% annum, and has a conversion price of
60% of the lowest volume weighted average price (“VWAP”) occurring
during the twenty trading days preceding any conversion date by
Holder. The balance of the provisions of the Note remained
substantially the same. As of September 30, 2020 the balance of the
Note was $40,824, which includes capitalized interest for the
period of $4,607. As of September 30, 2020, the Note has matured
and is in default, The Company and the Holder have entered into
discussions for the repayment of the Note.
On November 20, 2014, the Company issued a 10% unsecured
convertible promissory note (the “November Note”) for the principal
sum of up to $400,000 plus accrued interest on any advanced
principal funds. The November Note matures eighteen months from
each advance. The November Note may be converted by the lender into
shares of common stock of the Company at the lesser of $12.5 per
share or (b) fifty percent (50%) of the lowest trade prices
following issuance of the November Note or (c) the lowest effective
price per share granted to any person or entity. On November 20,
2014, the lender advanced $50,000 to the Company under the November
Note at inception. On various dates from February 18, 2015 through
September 30, 2016, the lender advanced an additional $350,000
under the November Note. The tranches advanced on the November Note
mature on June 30, 2021 and August 18, 2021. As of September 30,
2020, there remains an aggregate outstanding principal balance of
$50,880.
On May 10, 2017, the Company issued a 10% unsecured convertible
promissory note (the “May Note”) for the principal sum of up to
$150,000 plus accrued interest on any advanced principal funds. The
Lender may pay additional consideration at the Lenders discretion.
The Company received a tranche in the amount of $25,000 upon
execution of the May Note. On various dates, the Company received
additional tranches in the aggregate sum of $90,000. The May Note
matured twelve months from each tranche. Within thirty (30) days
prior to the maturity date, the Lender may extend the maturity date
to sixty (60) months. The May Note tranches mature from May 12,
2022 through December 14, 2022. The May Note may be converted by
the lender into shares of common stock of the Company at the lesser
of $10 per share or (b) fifty percent (50%) of the lowest trade
price of common stock recorded on any trade day after the effective
date, or (c) the lowest effective price per share granted to any
person or entity. As of September 30, 2020, the balance
remaining on the May Note was $115,000.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
4. CONVERTIBLE PROMISSORY NOTES
(Continued)
We evaluated the financing transactions in accordance with ASC
Topic 815, Derivatives and Hedging, and determined that the
conversion feature of the convertible promissory notes was not
afforded the exemption for conventional convertible instruments due
to its variable conversion rate. The note has no explicit limit on
the number of shares issuable so they did not meet the conditions
set forth in current accounting standards for equity
classification. The Company elected to recognize the notes under
paragraph 815-15-25-4, whereby, there would be a separation into a
host contract and derivative instrument. The Company elected to
initially and subsequently measure the notes in their entirety at
fair value, with changes in fair value recognized in earnings. The
Company recorded a derivative liability representing the imputed
interest associated with the embedded derivative. The derivative
liability is adjusted periodically according to the stock price
fluctuations based upon the Binomial lattice model calculation.
The convertible notes issued and described in Note 4 above, do not
have fixed settlement provisions because their conversion prices
are not fixed. The conversion feature has been characterized as a
derivative liability to be re-measured at the end of every
reporting period with the change in value reported in the statement
of operations.
We record the full value of the derivative as a liability at
issuance with an offset to valuation discount, which will be
amortized over the life of the Notes.
At September 30, 2020, the fair value of the derivative liability
was $2,989,165.
For purpose of determining the fair market value of the derivative
liability for the embedded conversion, the Company used
Binomial lattice valuation model. The significant assumptions used
in the Binomial lattice valuation of the derivatives are as
follows:
Risk free interest rate
|
|
Between 0.12%and 0.16%
|
Stock volatility factor
|
|
Between 142.0% and 260.0%
|
Months to Maturity
|
|
0 - 5 years
|
Expected dividend yield
|
|
None
|
5. CONVERTIBLE PROMISSORY NOTES – RELATED PARTY
Issuance of Convertible Promissory Notes for Services to Related
Party
As of March 31, 2016, Company issued the remaining unsecured
Convertible Promissory Notes (the “Notes”) in the amount of $12,000
to a Board member (the “Holder”) in exchange for retention as a
director during the fiscal year ending September 30, 2014. The
Note can be converted into shares of common stock by the Holder for
$4.5 per share. The Note matured on October 1, 2015, and bore a
one-time interest charge of $1,200 which was applied to the
principal on October 1, 2014. So long as any shares issuable under
a conversion are subject to transfer and sale restrictions imposed
pursuant to SEC Rule 144 of the Rules promulgated under the
Securities Act of 1933, the Company shall, upon written request by
Holder, file Form S-8, if applicable, with the U.S. Securities and
Exchange commission to register the issued. The convertible note
has a fixed settlement provision and does not qualify as a
derivative.
6. NOTE PAYABLE - RELATED PARTY
On August 5, 2014 the Company issued a 10% unsecured promissory
note (the “Note”) to a related party in the aggregate principal
amount of up to $80,000, plus accrued interest on any advanced
principal funds. The principal use of the proceeds from any advance
under the Note are intended to assist in the purchase of materials,
and services for the solar PV systems that we sell and install.
Consideration advanced under the Note matures twenty-four (24)
months from each advance. The balance of the Note as of September
30, 2019 was $7,200, plus accrued interest of $12,722. During the
year ended September 30, 2020, the Company paid off the principal
in the amount of $7,200 and accrued interest of $12,903. The
balance as of September 30, 2020 was $0.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
7. REVENUE FROM CONTRACTS WITH CUSTOMERS –
DISCONTINUED OPERATIONS
Revenues and related costs on construction contracts were
recognized as the performance obligations for work were satisfied
over time in accordance with ASC 606, Revenue from Contracts with
Customers. Under ASC 606, revenue and associated profit, are
recognized as the customer obtains control of the goods and
services promised in the contract (i.e., performance obligations).
The cost of uninstalled materials or equipment would generally be
excluded from our recognition of profit, unless specifically
produced or manufactured for a project, because such costs are not
considered to be a measure of progress.
The following table represents a disaggregation of revenue by type
of good or service from contracts with customers for the years
ended September 30, 2020 and 2019.
|
|
Years Ended
|
|
|
|
September
|
|
|
|
2020
|
|
|
2019
|
|
Commercial
|
|
$ |
998,373 |
|
|
$ |
1,518,368 |
|
Residential
|
|
|
45,960 |
|
|
|
73,105 |
|
Management fees
|
|
|
- |
|
|
|
17,250 |
|
|
|
$ |
1,044,333 |
|
|
$ |
1,608,723 |
|
Contract assets represents revenues recognized in excess of amounts
billed on contracts in progress. Contract liabilities represents
billings in excess of revenues recognized on contracts in progress.
Assets and liabilities related to long-term contracts are included
in current assets and current liabilities in the accompanying
balance sheets, as they will be liquidated in the normal course of
the contract completion. The contract asset for the years ending
September 30, 2020 and 2019 was $0 and $0, respectively. The
contract liability for the years ending September 30, 2020 and
2019, was $0 and $33,138, respectively.
8. INCOME TAXES
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act
(the “Act”), which significantly changed U.S. tax law. The Act
lowered the Company’s U.S. statutory federal income tax rate from
35% to 21% effective January 1, 2018.
The Company files income tax returns in the U.S. Federal
jurisdiction, and the state of California. With few exceptions, the
Company is no longer subject to U.S. federal, state and local, or
non-U.S. income tax examinations by tax authorities for years
before 2015.
Included in the balance at September 30, 2020, are no tax positions
for which the ultimate deductibility is highly certain, but for
which there is uncertainty about the timing of such
deductibility. Because of the impact of deferred tax
accounting, other than interest and penalties, the disallowance of
the shorter deductibility period would not affect the annual
effective tax rate but would accelerate the payment of cash to the
taxing authority to an earlier period.
The Company's policy is to recognize interest accrued related to
unrecognized tax benefits in interest expense and penalties in
operating expenses. During the period ended September 30, 2020, the
Company did not recognize interest and penalties.
At September 30, 2020, the Company had net operating loss
carry-forwards of approximately $26,921,000 that may be offset
against future taxable income from the year 2020 through 2039. No
tax benefit has been reported in the September 30, 2020
consolidated financial statements since the potential tax benefit
is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax
reporting purposes are subject to annual limitations. Net operating
loss carryforwards may be limited as to use in future years.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
8. INCOME TAXES (Continued)
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal and state income tax rate
of 30% to pretax income from continuing operations for the years
ended September 30, 2020 and 2019 due to the following:
|
|
9/30/2020
|
|
|
9/30/2019
|
|
Book Income
|
|
$ |
(1,421,730 |
)
|
|
$ |
703,120 |
|
Nondeductible Other Expenses
|
|
|
307,780 |
|
|
|
(642,915 |
)
|
Depreciation
|
|
|
- |
|
|
|
90 |
|
Related party accrual
|
|
|
(1,510 |
)
|
|
|
- |
|
Valuation Allowance
|
|
|
1,115,460 |
|
|
|
(60,295 |
)
|
Income Tax Expense
|
|
$ |
- |
|
|
$ |
- |
|
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
Net deferred tax assets consist of the following components as of
September 30, 2020 and 2019:
|
|
9/30/2020
|
|
|
9/30/2019
|
|
Deferred Tax Assets:
|
|
|
|
|
|
|
|
|
NOL Carryforward
|
|
$ |
5,653,390 |
|
|
$ |
6,452,745 |
|
Capital Loss Carryforward
|
|
|
5,323 |
|
|
|
- |
|
R&D Carryforward
|
|
|
46,147 |
|
|
|
46,150 |
|
Related Party Accruals
|
|
|
- |
|
|
|
2,160 |
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
- |
|
|
|
(10 |
)
|
|
|
|
|
|
|
|
|
|
Valuation Allowance
|
|
|
(5,704,860 |
)
|
|
|
(6,501,045 |
)
|
Net Deferred Tax Asset
|
|
$ |
- |
|
|
$ |
- |
|
9. OPTIONS
On June 2, 2020, the Company issued 2,000,000,000 options to
purchase common stock. These options will be exercisable on a
cashless basis for a period of ten years from the effective date of
the Stock Split at an exercise price of $0.00001 per share on a
pre-Stock Split basis. The number of options on the post Stock
Split basis is 2,000,000, and the exercise price of $0.01 per
share. The purpose of the options is to compensate our directors
for serving on the board without compensation in fiscal 2019. It is
difficult to assess the value of the options given the highly
limited trading in our Common Stock, the fact that the options
shares have not been and are not expected to be registered for
resale and will be restricted, and the speculative nature of the
Company’s future business plans. However, we estimated the value of
the services provided by each of our directors during 2019 and
believe that the value of the options to be issued to each of our
resigning directors approximates that amount.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
9. OPTIONS (Continued)
A summary of the Company’s options activity and related information
follows for fiscal year ended September 30,
2020:
|
|
September 30, 2020
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Number
|
|
|
average
|
|
|
|
of
|
|
|
exercise
|
|
|
|
Options
|
|
|
price
|
|
Outstanding - beginning of period
|
|
|
- |
|
|
$ |
- |
|
Granted
|
|
|
2,000,000 |
|
|
$ |
.01 |
|
Exercised
|
|
|
- |
|
|
$ |
- |
|
Forfeited
|
|
|
- |
|
|
$ |
- |
|
Outstanding - end of period
|
|
|
2,000,000 |
|
|
$ |
.01 |
|
At September 30, 2020, the weighted average remaining contractual
life of options outstanding:
|
|
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
Exercisable
|
|
|
Options
|
|
|
Options
|
|
|
Contractual
|
|
Prices
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
Life (years)
|
|
$ |
.01 |
|
|
|
2,000,000 |
|
|
|
2,000,000 |
|
|
|
9.67 |
|
For purpose of determining the fair market value of the
options, the Company used the Black Scholes valuation model.
The significant assumptions used in the Black Scholes valuation
model for the warrants are as follows:
Risk Free Interest Rate
|
|
0.32 |
% |
Stock Volatility Factor
|
|
146.0 |
% |
Weighted Average Expected Option Life
|
|
5 Years
|
|
Expected Dividend Yield
|
|
None
|
|
The stock-based compensation expense recognized in the statement of
operations during fiscal year ended September 30, 2020 related to
the granting of these warrants was $399,260.
10. ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts payable and accrued liabilities consisted of the following
at September 30, 2020 and 2019:
|
|
9/30/2020
|
|
|
9/30/2019
|
|
Trade accounts payable
|
|
$ |
88,519 |
|
|
$ |
129,425 |
|
Credit cards payable
|
|
|
65,304 |
|
|
|
67,155 |
|
Accrued liabilities
|
|
|
65,215 |
|
|
|
54,478 |
|
License Fees Payable
|
|
|
50,402 |
|
|
|
- |
|
|
|
|
269,440 |
|
|
|
251,058 |
|
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
11. LOAN PAYABLE, RELATED PARTY
During the period ended September 30, 2020, NovAccess, Inc.
Chairman and StemVax, LLC founder advanced funds to the Company for
operating expenses in the amount of $24,287. As of September 30,
2020, the amount has not been reimbursed to these persons.
12. DUE TO RELATED PARTY
During the period ended September 30, 2020, Innovest Global, Inc.
advanced funds to the Company for operating expenses in the amount
of $68,312. As of September 30, 2020, the amount has not been
reimbursed to Innovest Global, Inc.
13. BUSINESS TRANSITION
On June 2, 2020, the Seller (Mr. Tom Djokovich) entered into a
transition service agreement, with the Buyer (Mr. Daniel G.
Martin), sole owner, president and chairman of the board of TN3.
Mr. Martin is also the chief executive officer of Innovest Global,
Inc., a diversified industrials company. The Buyer is in the
process of ceasing the XsunX business to transition to the
biotechnology business (see note 14 – StemVax, LLC acquisition).
XsunX discontinued its direct delivery method for its solar
contracting operations by outsourcing the completion of sold
projects under a Transition Services Agreement with a licensed
California contractor “the Service Provider”. The Company’s intent
is to transition from providing contracting services directly to
its customers to marketing solar services to potential customers
and referring those customers to the Service Provider or engaging
the Service Provider to provide the services to customers on behalf
of the Company. The Company’s operations in future periods will be
focused on generating a referral fee of 1% of any gross sales
generated through these referrals. We anticipate that this change
in operations, and delivery method, will have a negative impact on
our gross sales and resulting revenues, if any. However, during the
period ended September 30, 2020 the Company began efforts to expand
its operations to include the commercialization of developmental
healthcare solutions in the biotechnology, medical, and health and
wellness markets which efforts are ongoing. There can be no
assurance that the Company’s change to its contracting operations
to focus on referral fee revenues, and its efforts to expand
operations into healthcare solutions in the biotechnology, medical,
and health and wellness markets will be successful, or that the
Company will continue to generate revenues of significance similar
to prior periods.
The Seller will withdraw his position as the qualifying individual
for the XsunX contractor license for the XsunX Business, and upon
completion of the withdrawal, XsunX and the Seller will terminate
the Transition Services Agreement. Thereafter, the Seller may
accept contracts initially marketed by XsunX with the Seller as the
qualifying individual for the XsunX license, without obligation to
XsunX for any cash flows therefrom. The timing and procedures for
the transition of the XsunX Business is governed by the Transition
Services Agreement. In the event of any contradiction or
discrepancy between this Agreement and the Transition Services
Agreement, the terms and provisions of the Transition Services
Agreement will govern.
In connection with preparing for the transition, the Company paid
Solar Energy Builders, Inc, a related party, $185,300 to serve as
the outside contractor for the assumption of the jobs that were
started, and completed. The Company recognized the expense
for the period and deducted the net book value of
certain assets (computer and small equipment) in the amount of
$2,092 against the income from discontinued operations, leaving a
net amount paid of $183,208.
Also, purchase options were issued to the board of directors as
discussed in Note 9 for payment of services.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
14. STEMVAX, LLC ACQUISITION
On September 8, 2020, NovAccess Global, Inc. acquired 100% of the
membership interest in StemVax, LLC (“StemVax”) from Innovest
Global, Inc. StemVax is a biotechnology company developing
therapies for brain tumor patients and holds a related exclusive
patent license from Cedars–Sinai Medical Center (“CSMC”) for
StemVax Glioblast (SVX–GB) a cancer vaccine therapy that enhances
patient’s immune response against brain tumors.
NovAccess issued 7,500,000 common shares based on Sept 8, 2020
market price of $0.85 to acquire StemVax. Total consideration paid
for 100% Interest is $6,375,000. The acquisition includes license
fees; milestone payments; and royalty payments during clinical
trials through revenue generation.
The intangible asset "the license agreement with CSMC" acquired as
part of the transaction was fair valued at zero as any potential
revenues from the commercialization of the license were subject to
successful clinical trials and market penetration. In
addition, StemVax is in the development stage and has no projected
revenue for 10 years into the future.
The transaction between NovAccess and Innovest was determined to be
a related party transaction as Dan Martin, the CEO of Innovest has
a controlling interest in both entities. Therefore, the assets and
liabilities are carried over at book value per ASC 805-50 and the
excess consideration is recorded as a deemed dividend.
Below table demonstrates allocation of purchase consideration on
September 8, 2020:
|
|
Debit
|
|
|
Credit
|
|
Tangible Assets Acquired
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Wells Fargo StemVax
|
|
$ |
5 |
|
|
|
|
|
Other Receivable
|
|
|
122 |
|
|
|
|
|
Total Tangible Assets
|
|
|
127 |
|
|
|
|
|
Assumed Liabilities
|
|
|
|
|
|
|
|
|
License Fees Payable
|
|
|
|
|
|
$ |
50,402 |
|
Accrued Interest
|
|
|
|
|
|
|
1,073 |
|
Total Liabilities
|
|
|
|
|
|
|
51,475 |
|
Net Tangible Assets/Liabilities
|
|
|
(51,348 |
)
|
|
|
|
|
Intangible Assets Acquired
|
|
|
|
|
|
|
|
|
Net Assets/Liabilities
|
|
|
(51,348 |
)
|
|
|
|
|
Deemed Dividend
|
|
|
6,426,348 |
|
|
|
|
|
Total Net Assets Acquired
|
|
$ |
6,375,000 |
|
|
|
|
|
15. DISCONTINUED OPERATIONS
On June 2, 2020, the Company entered into a transition agreement,
and changed their focus to a new line of business. As a result, the
Company discontinued the solar business and all related operations.
Pursuant to the reporting requirements of ASC 205-20,
Presentation of Financial Statements – Discontinued
Operations, the Company has determined that the business
qualifies for presentation as a discontinued operation. Therefore,
the Company has reclassified the business assets and liabilities as
discontinued operations in the accompanying Balance Sheet and
presented the operating results as discontinued operations in the
accompanying statements of Operations and Statements of Cash
Flows.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
15. DISCONTINUED OPERATIONS (Continued)
Financial information for the Company for years ended September 30,
2019 and 2020, respectively, are presented in the following
table:
|
|
Years Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
SALES
|
|
$ |
1,044,333 |
|
|
$ |
1,608,723 |
|
COST OF GOODS SOLD
|
|
|
822,603 |
|
|
|
856,165 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
221,730 |
|
|
|
752,558 |
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
478 |
|
|
|
580 |
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES OF DISCONTINUED OPERATIONS |
|
|
478 |
|
|
|
580 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS |
|
$ |
221,252 |
|
|
$ |
751,978 |
|
|
|
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Contract receivables of discontinued operations
|
|
|
- |
|
|
|
198,083 |
|
Total Current Assets of discontinued operations
|
|
|
- |
|
|
|
198,083 |
|
Net Property and Equipment of discontinued operations
|
|
|
- |
|
|
|
2,570 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS OF DISCONTINUED OPERATIONS
|
|
$ |
- |
|
|
$ |
200,653 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Contract liabilities of discontinued operations
|
|
|
- |
|
|
|
33,138 |
|
Total Current Liabilities of discontinued operations
|
|
|
- |
|
|
|
33,138 |
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
|
|
|
- |
|
|
|
33,138 |
|
16. RELATED PARTY TRANSACTIONS
On September 4, 2020, the Company entered into a management
services agreement (the “Agreement”) with TN3, LLC. Pursuant to the
Agreement, TN3 will provide NovAccess with office space in
Chesterland, Ohio and management, administrative, marketing,
bookkeeping and IT services for a fee of $30,000 a month. The
initial term of the Agreement is three years, with subsequent
one-year renewals.
TN3 holds all of our outstanding preferred stock and is owned by
Daniel G. Martin, our chief executive officer at the time of this
transaction, and the sole member of our board of directors.
NOVACCESS GLOBAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
17. SUBSEQUENT EVENTS
Management has evaluated subsequent events as of March 18, the date
the consolidated financial statements were available to be issued
according to the requirements of ASC topic 855.
On October 15, 2020, Dwain Irvin, PhD, MPH joined NovAccess Global
Inc. as our chief executive officer, replacing Daniel G. Martin,
who had been serving as interim CEO. Mr. Martin remains chairman of
the board of directors. Dr. Irvin, age 53, is a published
researcher and patent author. Dr. Irvin steps into the CEO role
after heading the biotechnology division of Innovest Global, Inc.
NovAccess acquired StemVax, LLC from Innovest on September 8,
2020.
On October 21, 2020, L. Michael Yukich joined NovAccess Global Inc.
as our fractional chief financial officer, replacing Daniel G.
Martin, who had been serving as interim CFO. Mr. Martin remains
chairman of the board of directors.
Subsequent to the fiscal year ended September 30, 2020 11,137,850
shares of common stock were issued by the company; including
7,500,000 shares issued to Innovest Global, Inc. related to the
acquisition of StemVax, LLC; 1,800,000 shares to our CEO Dwain
Morris-Irvin and 200,000 shares to our CFO L. Michael Yukich for
services provided; as well as additional 1,340,905 shares for
investment in the Company by various private investors, and 296,945
to outside service providers.
Item 9. Changes in and
Disagreements With Accountants on Accounting and Financial
Disclosure.
We did not change our accountants or have any reportable
disagreements with our accountants in fiscal 2020.
Item 9A. Controls and
Procedures.
Evaluation of Disclosure Controls and
Procedures
Our management team, with the participation of our chief executive
officer, Dwain K. Morris-Irvin, and chief financial officer, L.
Michael Yukich, evaluated the effectiveness of the design and
operation of NovAccess’ disclosure controls and procedures (as
defined under the Securities Exchange Act) as of September 30,
2020. Based upon this evaluation, Messrs. Morris-Irvin and Yukich
concluded that as of the period ended September 30, 2020, due to
the existence of the material weakness in the Company’s internal
control over financial reporting, the Company’s disclosure controls
and procedures were not effective.
Management’s Annual Report on Internal
Control Over Financial Reporting
Our senior management is responsible for establishing and
maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rules
13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, our principal
executive and principal financial officers, or persons performing
similar functions, and effected by our board, senior management and
other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. We continue to review our
internal control over financial reporting and may from time to time
make changes aimed at enhancing their effectiveness and to ensure
that our systems evolve with our business.
Our management team, with the participation of Messrs. Morris-Irvin
and Yukich, assessed the effectiveness of our internal control over
financial reporting as of September 30, 2020. In making this
assessment, management used the criteria designated by the
Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control — Integrated Framework (2013). Based
upon that evaluation, management concluded that we did not maintain
effective internal control over financial reporting as of September
30, 2020 due to the existence of a material weakness in internal
control over financial reporting primarily as a result of audit
adjustments relating to accounting for the acquisition of StemVax.
To remediate the issue, we retained an external accounting
consulting firm to assist us with the review and reporting of
complex and unusual transactions.
Changes in
Internal Control Over Financial Reporting
Other than as reported above, there were no changes in our internal
control over financial reporting identified in connection with the
evaluation required by the Securities Exchange Act that occurred
during our fourth fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. Other
Information.
We have disclosed on Form 8-K all reportable events that occurred
in the quarter ended September 30, 2020.
Part III
Item 10. Directors,
Executive Officers and Corporate Governance.
Board of Directors and Executive
Officers
On June 2, 2020, Daniel G. Martin became the sole director,
chairman of the board and interim chief executive and financial
officer of NovAccess after acquiring all of the outstanding shares
of our preferred stock from Tom Djokovich, our former president and
chief executive officer. On October 15, 2020, Dwain K.
Morris-Irvin, PhD, MPH joined NovAccess as our chief executive
officer, replacing Mr. Martin in that role. On October 21, 2020, L.
Michael Yukich joined NovAccess as our fractional chief financial
officer, replacing Mr. Martin in that role. Mr. Martin remains
chairman of the board of directors.
Daniel G. Martin, age 47, is a life-long entrepreneur and
currently serves as the chairman of the board and chief executive
officer of Innovest Global, Inc., a publicly-traded diversified
industrials company and significant shareholder of NovAccess. Since
launching Innovest in August 2016, he has led the company through
eight acquisitions, transforming Innovest into a diversified
industrial company. Mr. Martin credits his business tenacity to
growing up in his father’s drugstore which required managing very
low margins and critically important services. From December 2014
to January 2016, Mr. Martin served as the chief financial officer
of global operations of Momentis International, where he was
instrumental in stabilizing the company post-acquisition. In
November 2015, he established TN3, LLC to pursue diverse investment
opportunities, including the acquisition of preferred stock of
Innovest. Mr. Martin has a Bachelor of Science in Business
Administration from John Carrol University. Mr. Martin previously
filed for bankruptcy as a result of his personal guarantee of the
obligations of an unrelated company, and the bankruptcy was
discharged in May 2015.
Dwain K. Morris-Irvin, PhD, MPH, age 53, is a published
researcher and patent author. Dr. Irvin stepped into the CEO role
at NovAccess after heading the biotechnology division of Innovest
Global, Inc. NovAccess acquired StemVax, LLC from Innovest on
September 8, 2020. Dr. Irvin received his PhD from the University
of California, Los Angeles School of Medicine, his MPH from UCLA
School of Public Health, and trained at The Wallenberg Neuroscience
Center at Lund University in Lund, Sweden. He was also a professor,
faculty member at Cedars-Sinai Medical Center, Department of
Neurosurgery. Dr. Irvin received his PhD in Molecular & Medical
Pharmacology and Developmental Neuroscience with an emphasis on
neural stem cell fate and differentiation. His research focused on
neural development and notch signaling in mammalian neural stem
cells. He also worked as an NIH/NINDS post-doctoral fellow in Dr.
Anders Bjorklund’s laboratory in Lund, Sweden. There, his focus was
on research projects that investigated the potential role of cell
replacement therapy for patients with Parkinson’s disease. They
developed several protocols for the efficient generation of
dopaminergic neurons from forebrain and ventral midbrain stem and
progenitor cells. Dr. Irvin also worked as a research scientist,
assistant professor, and faculty member at Cedars-Sinai Medical
Center, Department of Neurosurgery. He led research investigations
in the role of adaptive immunity in Parkinson’s disease. He also
developed two patents in the area of immunotherapy for brain tumor
patients, specifically glioblastoma multiforme (GBM). His research
team focused on molecular mechanisms that impart therapeutic
resistance in cancer cells, including cancer stem cells. They
utilized these data to develop novel immunotherapies for brain
tumor patients.
L. Michael Yukich, age 74, has extensive financial and
accounting experience and for the past twenty years he has held the
position of chief financial officer for both public and private
companies. Mr. Yukich currently serves as interim chief financial
officer for Innovest Global, Inc., a publicly-traded diversified
industrials company and significant shareholder of NovAccess. Mr.
Yukich served as Innovest’s CFO from August 2017 to October 2019
and rejoined the company in September 2020. Before joining
Innovest, Mr. Yukich was CFO of Capital Finance Group LLC, a
financial services company with an emphasis in bond financing for
companies and municipalities. In addition, over his career Mr.
Yukich has served in senior financial positions for Fortune 500
companies including TRW, Inc. and Eaton Corporation. Mr. Yukich is
also a United States Navy veteran with tours on two naval warships.
He holds a BA in business administration from the University of
Mount Union and an MBA from Central Michigan University. He has
been an active member and past officer and director of the
Financial Executives Institute for the past twenty-two years. His
community involvement includes serving as president of the Beta
Iota House Corporation of Sigma Nu National fraternity, an
affiliate of the University of Mount Union since 2002.
Board Committees
Because our board of directors has only one member, we do not
currently have audit, compensation or other board committees,
although we believe that based on his experience Mr. Martin
qualifies as an “audit committee financial expert” as defined by
the SEC. As our new healthcare-oriented business expands we intend
to add members to our board and form appropriate committees.
Advisory Board
We have assembled a board of advisors with extensive experience in
all aspects of the biopharmaceuticals industry. The advisory board
provides our management team with guidance when requested providing
us with the benefit of the advisors’ expertise and experience.
Renard Currie, MBA, has over 20 years’ experience as a
product executive in healthcare information technology. He is
currently the senior global director for Infor Inc. Since 2001, he
has served as chief operating officer and vice president of product
management for leading healthcare IT companies, including KnowMed,
Healthvision and Quovadx. Mr. Currie’s leadership turns new ideas
into profitable products through building successful
cross-functional product development and management teams,
fostering a culture of design-driven product development,
microservices architecture and beautiful user experience. He has
led the effort to develop a multi-tenant interoperability solution
with infused artificial intelligence powered by InforOS. He has
also led sales, marketing, product management, product development
and service organizations of a cloud-based healthcare data platform
start-up company. More recently, Mr. Currie’s expertise has focused
on software development for successful transition of on-premise
products to the cloud. His product development experience includes
health interoperability, digital health, health analytics and
artificial intelligence.
Laina King, Ph.D., is a management consultant,
administrator, researcher, external grant reviewer and tenured
professor with more than 15 years of administrative experience in
the for-profit, not‐for‐profit, federal agency and academic
environments. She obtained her doctoral and postdoctoral training
at the University of Michigan, Harvard and the Coverdale Institute.
Her past five years have been with the United States Department of
Health and Human Services Food & Drug Administration (FDA/CDER
& FDA/OEA) and National Institutes of Health Office of the NIH
Director. Prior to these engagements, she was a senior
administrator and principal investigator at Keystone Symposia on
Molecular & Cellular Biology, associate academic dean and
professor of pharmaceutical sciences in a college of pharmacy and a
tenured professor of management at an AACSB school of business.
Significant academic appointments include being a voting Member of
the AMA/AAMC Liaison Committee on Medical Education (LCME),
commissioner at the North Central Association of Colleges &
Schools, and steering committee member of the CDC Health
Disparities Institute Development Group. Her research, national
presentations and publications are in the areas of organizational
behavior, advanced academic mentoring and positioning, graduate
education training program implementation and operational
management. Dr. King has authored numerous peer reviewed articles
and book chapters and has edited a three volume book series on
managed care. Her consulting experience includes work with the
Military District of Washington, Japan Consultant for the
Department of Defense, American Council on Education and multiple
health care professional credentialing agencies.
Andrew Norris, Ph.D., has a varied background in both
business and the technology sectors. He is co‐founder of The
Midvale Group LLC in 2002, consulting in both the technology and
biotechnology sectors. Dr. Norris has also co‐founded BCN
Biosciences in Pasadena California (2005), which is a privately
held biotechnology company whose principal focus is in the area of
oncology drug development. Dr. Norris has raised or co‐raised over
$20 million in funding in the technology and biotechnology sectors.
He currently serves as an officer and director at BCN Biosciences
and also holds a research faculty position at the University of
California Los Angeles Department of Neuropsychiatry. Dr. Norris
received his PhD from UCLA School of Medicine, Department of
Molecular & Medical Pharmacology and Chemistry. His research
focused on synthesizing molecular inhibitors against cancer cells.
He also trained in the Surgical Oncology Department at UCLA
focusing his research on novel drug discovery for breast cancer
patients.
Lachlan Thompson, Ph.D., is a principal research fellow at
the Florey Institute for Neuroscience and Mental Health. He heads a
research program dedicated to regenerative approaches to repair of
the central nervous system, with a special focus on the use of
pluripotent stem cells for functional reconstruction of circuitry
affected in Parkinson’s disease, stroke and motor neuron disease.
He has contributed more than 50 research papers on this topic in
leading journals including the Journal of Neuroscience,
Neurobiology of Disease, Proceedings of the National
Academy of Science, Brain and Cell Reports. Dr. Thompson
is a partner investigator in the Australian government’s major stem
cells initiative where he sits on the committee for clinical
translation and commercialization and plays an active role in
contributing to policy making on the regulation of experimental
stem cell therapies. He also sits on the board of the Network for
European CNS Transplantation and Repair and is president of the
Asia‐Pacific Association for Neural Transplantation and Repair. Dr.
Thompson brings a wealth of experience in cutting‐edge technology
driving pre‐clinical research in regenerative approaches to brain
repair and also in understanding of the regulatory frameworks
governing clinical translation and commercialization of stem cell
therapies.
Code of Ethics
We have adopted a code of ethics and business conduct that applies
to our directors, advisory board members and officers (including
our chief executive and financial officers). Our code of ethics is
reasonably designed to deter wrongdoing and to promote: (1) honest
and ethical conduct; (2) full and accurate disclosure in reports
that we file with the SEC; (3) compliance with applicable
governmental laws, rules and regulations; (4) the prompt internal
reporting of violations of the code to our chief compliance
officer; and (5) accountability for adherence to the code. Our code
of ethics is available on our website at
www.NovAccessGlobal.com.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons who own more than 10% of
our common stock to file with the SEC initial reports of ownership
and reports of changes in ownership of our common stock. Based
solely on review of Forms 3 and 4 filed with the SEC we believe
that all Section 16(a) filing requirements were met in fiscal
2020.
Item 11. Executive
Compensation.
Executive Compensation
On June 2, 2020, Daniel G. Martin became the sole director,
chairman of the board and interim chief executive and financial
officer of NovAccess after acquiring all of the outstanding shares
of our preferred stock from Tom Djokovich, who served as our
president and chief executive officer prior to Mr. Martin joining
the Company. Mr. Martin does not receive any compensation for
serving as an officer or director. We did not have any executive
officers other than Mr. Martin and Mr. Djokovich during fiscal 2020
or 2019. The following table summarizes information with respect to
compensation earned by Mr. Djokovich for the fiscal years ended
September 30, 2020 and 2019.
Name
|
|
Year
|
|
Salary
|
|
|
Options (1)
|
|
|
Other (2)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tom Djokovich
|
|
2020
|
|
$ |
124,469 |
|
|
$ |
2,500 |
|
|
$ |
18,652 |
|
|
$ |
145,622 |
|
|
|
2019
|
|
$ |
169,000 |
|
|
|
— |
|
|
$ |
18,024 |
|
|
$ |
187,024 |
|
1. On June 2, 2020, NovAccess issued to each of its
former directors, including Tom Djokovich, a warrant to purchase up
to 500,000 shares of the Company’s common stock for $0.01 per share
(adjusted for the Company’s 1-for-1,000 reverse stock split
effective August 25, 2020). The warrants were issued to compensate
our former directors for serving on the Company’s board of
directors without compensation in fiscal 2019. It is difficult to
assess the value of the warrants given the highly limited trading
in our common stock, the fact that the warrant shares have not been
and are not expected to be registered for resale and will be
restricted, and the speculative nature of the Company’s future
business plans. However, we estimated the value of the services
provided by each of our directors during 2019 to be $2,500 and
believe that the value of each of the warrants approximates that
amount. Note, however, that for the purpose of determining the fair
market value of the warrants for our fiscal 2020 financial
statements, we used the Black Scholes valuation model and
recognized stock-based compensation expense of $399,260 related to
the granting of the warrants.
2. In addition to salary, we provided Mr. Djokovich
with co-payments in the listed amounts for health insurance
premiums.
We do not have an employment agreement with Mr. Martin and he does
not receive any compensation for serving as an officer of the
Company. Mr. Djokovich previously served as our president, chief
executive officer and acting principal accounting officer, and the
qualifying person for the Company’s California state contractor’s
license. We did not have an employment agreement with Mr. Djokovich
and he worked at the discretion of the board of directors. We
relied on our former board of directors to evaluate Mr. Djokovich’s
compensation.
Outstanding Equity Awards at Fiscal
Year-End
On June 2, 2020, NovAccess issued to each of its former directors,
including Tom Djokovich, a warrant to purchase up to 500,000 shares
of the Company’s common stock for $0.01 per share (adjusted for the
Company’s 1-for-1,000 reverse stock split effective August 25,
2020). All of the warrants are immediately exercisable for a period
of ten years from the issuance date and expire on June 2, 2030. Mr.
Djokovich has not exercised any of the warrants. The warrants were
issued to compensate our former directors for serving on the
Company’s board of directors without compensation in fiscal
2019.
Director Compensation
On June 2, 2020, NovAccess issued to each of its former directors
(Tom Djokovich, Thomas Anderson, Oz Fundingsland and Mike Russak) a
warrant to purchase up to 500,000 shares of the Company’s common
stock for $0.01 per share (adjusted for the Company’s 1-for-1,000
reverse stock split effective August 25, 2020). The warrants are
exercisable for a period of ten years from the issuance date. The
warrants were issued to compensate our former directors for serving
on the Company’s board of directors without compensation in fiscal
2019. It is difficult to assess the value of the warrants given the
highly limited trading in our common stock, the fact that the
warrant shares have not been and are not expected to be registered
for resale and will be restricted, and the speculative nature of
the Company’s future business plans. However, we estimated the
value of the services provided by each of our directors during 2019
to be $2,500 and believe that the value of each of the warrants
approximates that amount. Note, however, that for the purpose of
determining the fair market value of the warrants for our fiscal
2020 financial statements, we used the Black Scholes valuation
model and recognized stock-based compensation expense of $399,260
related to the granting of the warrants.
Our directors did not receive any other compensation for serving on
the board during fiscal 2020 or 2019. All directors were reimbursed
for any expenses actually incurred in connection with attending
board meetings.
Item 12. Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
The following table summarizes information about ownership of our
stock by each of our directors and senior executive officers, all
of our directors and executive officers as a group, and each other
person we know beneficially owns more than 5% of our stock. The
information is as of December 31, 2020.
Unless otherwise noted, the address of each beneficial owner listed
in the table is c/o NovAccess Global Inc., 8834 Mayfield Road,
Suite C, Chesterland, Ohio 44026.
We have determined beneficial ownership in accordance with the
rules of the SEC. Except as indicated by the footnotes, we believe,
based on the information furnished to us, that the persons and
entities named in the table below have sole voting and investment
power with respect to all shares of stock that they beneficially
own, subject to applicable community property laws. Except as
indicated by the footnotes, applicable percentage ownership is
based on 11,846,143 shares of common stock outstanding.
Shareholder
|
|
Shares Held
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
Daniel G. Martin, Chairman of the Board (1)
|
|
|
250,000,000 |
|
|
|
95.5 |
% |
Dwain K. Morris-Irvin, Chief Executive Officer
|
|
|
1,800,000 |
|
|
|
15.2 |
% |
L. Michael Yukich, Chief Financial Officer
|
|
|
— |
|
|
|
— |
|
All Directors and Executive Officers as a Group (2)
|
|
|
251,800,000 |
|
|
|
96.2 |
% |
|
|
|
|
|
|
|
|
|
Innovest Global, Inc.
8834 Mayfield Road
Chesterland, Ohio 44026
|
|
|
7,500,000 |
|
|
|
63.3 |
% |
Tom Djokovich, Former Chief Executive Officer (3)
65 Enterprise
Aliso Viejo, California 92656
|
|
|
513,000 |
|
|
|
4.2 |
% |
1. Represents shares of our common stock issuable upon
the conversion of 25,000 shares of our Series B Convertible
Preferred Stock, $0.01 par value per share, owned by TN3, LLC. Mr.
Martin owns TN3 and is considered to be the beneficial owner of the
preferred stock owned by TN3. Each share of preferred stock is
convertible at the option of the holder into 10,000 shares of our
common stock and entitles the holder to cast 40,000 votes on any
action presented to our shareholders. The 250.0 million common
shares issuable upon conversion of the preferred were added to our
outstanding shares to determine Mr. Martin’s percentage. Does not
include 7.5 million common shares owned by Innovest Global, Inc.
Mr. Martin is a major shareholder and the chief executive officer
of Innovest. Mr. Martin disclaims beneficial ownership of the
shares owned by Innovest.
2. Includes Messrs. Martin, Irvin and Yukich. Includes
shares of our common stock issuable upon the conversion of
preferred stock owned by TN3, LLC, a company owned by Mr.
Martin.
3. Includes 500,000 shares of our common stock
issuable upon exercise of a warrant held by Mr. Djokovich, which
were also included in the shares outstanding to determine Mr.
Djokovich’s percentage ownership. Mr. Djokovich shares voting and
dispositive power with respect to his shares with his wife.
Equity Compensation Plan Information
On June 2, 2020, we issued to each of our former directors (Tom
Djokovich, Thomas Anderson, Oz Fundingsland and Mike Russak) a
warrant to purchase up to 500,000 shares of our common stock for
$0.01 per share (adjusted for the 1-for-1,000 reverse stock split
effective August 25, 2020). We did not have any other equity
compensation plans on September 30, 2020. The following table
summarizes information about our equity compensation plans at
fiscal year-end.
Equity Compensation Plan Category
|
|
Shares to be Issued Upon Exercise of Outstanding
Warrants
|
|
|
Weighted-Average Exercise Price of Outstanding Warrants
|
|
|
Shares Remaining Available for Future Issuance Under Equity
Compensation Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plans approved by security holders
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Plans not approved by security holders
|
|
|
2,000,000 |
|
|
$ |
0.01 |
|
|
|
— |
|
Total
|
|
|
2,000,000 |
|
|
$ |
0.01 |
|
|
|
— |
|
Item 13. Certain
Relationships and Related Transactions, and Director
Independence.
On June 2, 2020, TN3, LLC, a limited liability company owned by
Daniel G. Martin, purchased all of the outstanding shares of
preferred stock of the Company from Tom Djokovich, our former
president and chief executive officer. Upon acquiring the preferred
shares, Mr. Martin became the sole director and chief executive
officer of the Company. At that time our then board members, Tom
Djokovich, Thomas Anderson, Oz Fundingsland and Mike Russak,
resigned as directors of the Company. After Mr. Martin joined the
Company, we continued to market our current solar energy services
while preparing to transition into a new business plan focused on
commercializing developmental healthcare solutions in the
biotechnology, medical, and health and wellness markets.
The sole member of our board directors, Daniel Martin, previously
served as our interim chief executive and financial officer and is
a significant shareholder. As a result, he is not considered an
independent director. Because our board has only one member, we do
not currently have a formal policy concerning the review and
approval or ratification of transactions with directors, officers
and other parties related to NovAccess. As our new
healthcare-oriented business expands we intend to add members to
our board and adopt a formal policy addressing transactions with
related parties.
On June 2, 2020, we entered into a transition services agreement
with Solar Energy Builders, Inc. (“Solar Energy”), a company
controlled by Tom Djokovich. Pursuant to the agreement, we have
engaged Solar Energy to service our solar business customers or
refer those customers to Solar Energy on an exclusive basis. For
referrals, Solar Energy will pay us a referral fee of 1% of the
gross amount paid by the referred customer to Solar Energy. The
agreement has a term of one year, but can be terminated before that
in some instances. No referral fees were paid or accrued under this
agreement in fiscal 2020.
In connection with the transition services agreement, we paid Solar
Energy $185,300 to serve as the outside contractor for the
assumption of the jobs that were started by the Company and
completed by Solar Energy. The Company recognized the expense in
cost of sales for the third quarter, and also deducted the net book
value of certain assets (a computer and miscellaneous equipment) in
the amount of $2,092, leaving a net amount paid of $183,208.
On June 2, 2020, we entered into a membership interest purchase
agreement with Innovest Global, Inc. (“Innovest”) to acquire
StemVax, LLC for 7.5 million shares of unregistered common stock.
StemVax is a biotechnology company developing novel therapies for
brain tumor patients and holds a related exclusive patent license
from Cedars-Sinai Medical Center in Los Angeles, California known
as StemVax Glioblast (SVX-GB). On September 8, 2020, we completed
the transaction, issuing the shares to Innovest and acquired
StemVax, which is now our wholly-owned subsidiary. The acquisition
of StemVax is the first step in our transition into our new
business plan focused on developmental healthcare solutions. Daniel
Martin is the chief executive officer, chairman of the board and a
significant shareholder of Innovest.
On September 4, 2020, we entered into a management services
agreement with TN3, LLC. Pursuant to the agreement, TN3 provides us
with office space in Chesterland, Ohio and management,
administrative, marketing, bookkeeping and IT services for a fee of
$30,000 a month. The initial term of the agreement is three years,
with subsequent one-year renewals. TN3 holds all of our outstanding
preferred stock and is owned by Daniel Martin. No payments were due
under the agreement in fiscal 2020.
On September 4, 2020, we issued 25,0000 shares of newly-authorized
Series B Convertible Preferred Stock to TN3, LLC in exchange for
the redemption of 5,000 shares of Series A Preferred Stock held by
TN3 and acquired from Tom Djokovich. The holder of our Series A
preferred stock is entitled to cast a number of votes equal to that
number of common shares which is not less than 60% of the vote
required to approve any action presented to the shareholders. Each
share of Series B preferred entitles the holder to cast 40,000
votes on any action presented to the shareholders. As the sole
holder previously of the Series A and currently the Series B
preferred stock, TN3 has the ability to cast the votes necessary to
approve any matter presented to the Company’s shareholders.
However, the Series B preferred shares are convertible into common
stock and participate in dividends and distributions on an
as-converted basis, unlike the Series A preferred shares. TN3 is
owned by Daniel Martin.
On September 4, 2020, TN3, LLC issued promissory notes to two
private investors each for $25,000 and provided the $50,000 in note
proceeds to NovAccess to fund working capital. On November 23,
2020, we issued 64,103 shares of our common stock to each of the
two investors in cancellation of the TN3 promissory notes. TN3 is
owned by Daniel Martin.
During fiscal 2020, we received advances of: $68,312 from Innovest;
$23,802 from our chairman Daniel Martin; and $485 from our chief
executive officer Dwain Morris-Irvin. The advances were used to
fund operating expenses and remained outstanding in full as of
September 30, 2020. Mr. Martin is the chief executive officer,
chairman of the board and a significant shareholder of
Innovest.
Item 14. Principal
Accountant Fees and Services.
On November 18, 2019, we engaged M&K CPAS, PLLC (“M&K”) to
serve as our principal independent registered public accounting
firm. Prior to that, Liggett & Webb, P.A. (“L&W”) served as
our principal independent registered public accounting firm.
For the fiscal year ended September 30, 2020, we paid audit fees to
M&K of $28,325 for professional services for the audit of our
annual financial statements included in our Form 10-K and the
review of financial statements included in our quarterly reports on
Form 10-Q.
For the fiscal years ended September 30, 2019, we paid audit fees
to M&K of $15,000 for professional services for the audit of
our annual financial statements included in our Form 10-K and to
L&W of $12,000 for the review of financial statements included
in our quarterly reports on Form 10-Q.
We did not pay either M&K or L&W audit-related fees, tax
fees, or other fees in fiscal 2020 or 2019. Our board of directors
does not currently have an audit committee, but all of the services
provided by M&K and L&W were pre-approved by our board.
Part IV
Item 15. Exhibit and
Financial Statement Schedules.
(a) Financial
Statement Schedules (see Item 8 Financial Statements and
Supplementary Data)
(b) Exhibits
Exhibit
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Description
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3.1
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Articles of Incorporation
(incorporated by reference to Registration Statement Form 10SB12G
#000-29621 dated February 18, 2000 and by reference to exhibits
included with the Company’s prior Report on Form 8-K/A dated
October 29, 2003)
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3.2
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Amendment to Articles of
Incorporation for the increase to authorized shares (incorporated
by reference to exhibits included with the Company’s Report on Form
8-K dated August 19, 2013)
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3.3
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Certificate of Designation for
Preferred Shares (incorporated by reference to exhibits included
with the Company’s Report on Form 8-K dated July 2, 2013)
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3.4
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Articles of Amendment to Articles of
Incorporation dated August 25, 2020 to change the name of the
Company to “NovAccess Global Inc.” and effectuate a
1-for-1,000 reverse stock split (incorporated by reference to
Exhibit 3.1 to the Company’s August 25, 2020 Form 8-K)
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3.5
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Certificate of Designation of Series
B Convertible Preferred Stock dated September 4, 2020 (incorporated
by reference to Exhibit 3.1 to the Company’s September 4, 2020 Form
8-K)
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3.6
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Bylaws (incorporated by reference to
Registration Statement Form 10SB12G #000-29621 dated February 18,
2000)
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10.1
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2014 XsunX, Inc. Stock Option and
Award Plan, dated May 20, 2014 (incorporated by reference to
exhibits included with the Company’s Report on Form 8-K dated May
21, 2014)
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10.2
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Management Services Agreement between
NovAccess Global Inc. and TN3, LLC dated September 4, 2020
(incorporated by reference to Exhibit 10.1 to the Company’s
September 4, 2020 Form 8-K)
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10.3
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Membership
Interest Purchase Agreement dated June 2, 2020 between the Company
and Innovest Global, Inc.
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10.4
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Form of
Company Warrant for the Purchase of 500,000,000 Shares of Common
Stock dated June 2, 2020 issued to Tom Djokovich, Thomas Anderson,
Oz Fundingsland and Mike Russak
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10.5
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Transition
Services Agreement dated June 2, 2020 between the Company and Solar
Energy Builders, Inc.
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10.6
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Stock Purchase Agreement among XsunX,
Inc., Tom Djokovich and TN3, LLC, dated March 18, 2020
(incorporated by reference to Exhibit 10.1 to the Company’s March
31, 20202 Report on Form 10-Q)
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10.7
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Form of Third Extension Agreement to
12% Note used in connection with the exchange and 18-month
extension to a promissory note that had become due September 30,
2015 (incorporated by reference to exhibits included with the
Company’s Report on Form 10-K dated January 8, 2016)
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10.8
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Form of Convertible 10% Promissory
Note issued on November 20, 2014, used in connection with the sale
of a convertible promissory note in an amount up to $400,000
(incorporated by reference to exhibits included with the Company’s
Report on Form 8-K dated November 26, 2014)
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10.9
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Form of Addendum extending the
maturity date to April 13, 2018 for a Convertible 10% Promissory
Note issued on November 20, 2014, used in connection with the sale
of a convertible promissory note in an amount up to $400,000
(incorporated by reference to exhibits included with the Company’s
Report on Form 10-K dated December 14, 2016)
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10.10
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Form of Convertible Promissory Notes
issued to four members of the Board of Directors dated October 1,
2013 (incorporated by reference to exhibits included with the
Company’s Report on Form 8-K dated November 12, 2013)
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10.11
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Form of 10% Promissory Note issued on
August 5, 2014, used in connection with establishing access to
interim financing requirements for solar system installations
(incorporated by reference to exhibits included with the Company’s
Report on Form 10-Q dated August 18, 2014)
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10.12
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Form of Convertible 10% Promissory
Note issued on May 12, 2017, used in connection with the sale of a
convertible promissory note in an amount up to $150,000
(incorporated by reference to exhibits included with the Company’s
Report on Form 10-Q dated May 15, 2017)
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10.13
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Form of Addendum extending the
maturity date to May 12, 2022 for a Convertible 10% Promissory Note
issued on May 12, 2017, used in connection with the sale of a
convertible promissory note in an amount up to $150,000
(incorporated by reference to exhibits included with the Company’s
Report on Form 10-K dated January 7, 2019)
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10.14
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Form of Convertible 10% Promissory
Note issued on May 8, 2018, used in connection with the sale of a
convertible promissory note in the amount of $25,000 (incorporated
by reference to exhibits included with the Company’s Report on Form
8-K dated May 14, 2018)
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10.15
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Form of Convertible 10% Promissory
Note issued on August 6, 2018, used in connection with the sale of
a convertible promissory note in the amount of $30,000
(incorporated by reference to exhibits included with the Company’s
Report on Form 10-Q filed dated August 14, 2018)
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31.1
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Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act — Dwain Morris-Irvin
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31.2
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Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act — L. Michael Yukich
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32.1
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Certification Pursuant to Section 906 of
the Sarbanes-Oxley Act
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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|
XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
|
|
XBRL Taxonomy Extension Label Linkbase Document
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101.LAB
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Definition Linkbase Document
|
Item 16. Form 10-K
Summary.
Not required.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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NovAccess Global Inc.
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Date: March 29, 2021
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/s/ Dwain Morris-Irvin
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By Dwain Morris-Irvin, Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Date: March 29, 2021
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/s/ Daniel G. Martin
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Daniel G. Martin, Chairman of the Board
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Date: March 29, 2021
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/s/ Dwain Morris-Irvin
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Dwain Morris-Irvin, Chief Executive Officer
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(Principal Executive Officer)
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Date: March 29, 2021
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/s/ L. Michael Yukich
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L. Michael Yukich, Chief Financial Officer
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(Principal Financial and Accounting Officer)
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NovAccess Global (PK) (USOTC:XSNX)
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