NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR
THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2018 AND 2017
NOTE
1 – ORGANIZATION AND SUMMARY of
significant accounting policies
Organization
Force
Protection Video Equipment Corp., together with its wholly owned subsidiary, Cobraxtreme HD Corp. (collectively, the Company),
is in the business of selling video and audio capture devices and accessories to consumers and law enforcement. Force Protection
Video Equipment Corp. was incorporated on March 11, 2011, under the laws of the State of Florida. On February 2, 2015 the Company
changed its name to Force Protection Video Equipment Corp.
Going
Concern
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern.
The
Company incurred net losses of $363,209 for the six months ended October 31, 2018 and had net cash used in operating activities
of $36,781 for the same period. Additionally, the Company has an accumulated deficit of $4,392,671 and a working
capital deficit of $597,958 at October 31, 2018. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern for a period of at least twelve months after the date of issuance on these financial statements.
In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability
to achieve a level of profitability and/or to obtain adequate financing through the issuance of debt or equity in order to finance
its operations.
While
the Company is attempting to produce revenues, the Company’s cash position is not significant enough to support the Company’s
operations. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional
funds, there can be no assurances to that effect. The key factors that are not within the Company’s control and that may
have a direct bearing on operating results include, but are not limited to, acceptance of the Company’s business plan, the
ability to raise capital in the future, and the ability to expand its customer base. There may be other risks and circumstances
that management may be unable to predict.
The
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue
as a going concern.
Earnings
Per Share
Basic
income per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC No. 260,
Earnings Per Share.
The
computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding
during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted
EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued
assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of
diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive
effect on earnings per share. Therefore, when calculating EPS, if the Company experienced a loss, there is no inclusion of dilutive
securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect
under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise
price of the options or warrants (they are in the money).
Following
is the computation of basic and diluted net loss per share for the six months ended October 31, 2018 and 2017:
|
|
For
6 Months Ended
|
|
|
|
October
31,
|
|
|
October
31,
|
|
|
|
2018
|
|
|
2017
|
|
Basic and Diluted
EPS Computation
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Loss
available to common stockholders’
|
|
$
|
(363,209
|
)
|
|
$
|
(651,455
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding
|
|
|
563,638,135
|
|
|
|
7,842,065
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
EPS
|
|
$
|
(0.00
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
Potentially dilutive
securities are not included in the calculation of diluted net loss per share attributable to common stockholders, because
to do so would be anti-dilutive. Common stock equivalents pertaining to the Company’s Convertible Notes are as follows:
|
|
|
|
Convertible notes,
principal and accrued interest
|
|
|
7,264,071,140
|
|
|
|
144,039,431
|
|
Convertible notes,
penalties potentially settled in common stock
|
|
|
1,670,438,195
|
|
|
|
-
|
|
Total convertible
note common stock equivalents
|
|
|
8,934,509,335
|
|
|
|
-
|
|
Concentrations
of risk
During
the six months ended October 31, 2018, three customers accounted for 15.8% (4.4%, 5.0%, and 6.4%) of sales. During the six months
ended October 31, 2017, one customer accounted for 51.5% of sales.
The
Company relies on third parties for the supply and manufacture of its capture devices, some of which are sole-source suppliers.
The Company believes that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change,
the Company periodically evaluates the need and advisability of adding manufacturers to support its operations. In instances where
a supply and manufacture agreement does not exist or suppliers fail to perform their obligations, the Company may be unable to
find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all. During the six months ended
October 31, 2018, two suppliers accounted for 46.1% (31.4% and 14.7%) of our inventory purchases. During the six months ended
October 31, 2017, three suppliers accounted for 51.6% (19.0%, 17.1% and 15.5%) of our inventory.
Summary
of Significant Accounting Policies
Principles
of Consolidation
These
condensed consolidated financial statements have been prepared in accordance with US GAAP and include the accounts of the Company
and its wholly owned subsidiary, Cobraxtreme HD Corp. All significant intercompany transactions and balances have been eliminated.
Cobraxtreme HD Corp. was incorporated under the laws of the State of North Carolina on September 19, 2017 and currently is non-operating.
Use
of Estimates
In
preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from
those estimates. Our most significant estimates are for stock based compensation; assumptions used in calculating derivative liabilities,
and deferred tax valuation allowances. We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates
under different assumptions or conditions.
Cash
and Cash Equivalents
Cash
is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance
provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company
considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The
Company had no cash equivalents at either October 31, 2018 or 2017.
Cash
Flow Reporting
The
Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to
whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect
or reconciliation method (“indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow
from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects
of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts
and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.
Inventory
The
Company’s inventory is comprised of finished goods and primarily includes cameras and recording equipment. The Company’s
inventory is stated at the lower of cost or market and expensed to cost of goods sold upon sale using the average-cost method.
The Company also makes prepayments against the future delivery of inventory classified as prepaid inventory. During the period
ended October 31, 2018, the Company recorded an impaired loss of $112,736 for certain inventory that was considered obsolete in
the marketplace. As of October 31, 2018 and April 30, 2018, the balance of inventory was $0 and $126,687, respectively.
Accounts
Receivable
Accounts
receivable are reported at the customers’ outstanding balances. The Company does not have a history of significant bad debt
and has not recorded any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The Company
evaluates receivables on a regular basis for potential reserve with none this period.
Leases
In
February 2016, the FASB issued ASU No. 2016-02 (“ASC 842”), Leases, to require lessees to recognize all leases, with
certain exceptions, on the balance sheet, while recognition on the statement of operations will remain similar to current lease
accounting. Subsequently, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Targeted
Improvements, ASU No. 2018-20, Narrow-Scope Improvements for Lessors, and ASU 2019-01, Codification Improvements, to clarify and
amend the guidance in ASU No. 2016-02. ASC 842 eliminates real estate-specific provisions and modifies certain aspects of lessor
accounting. This standard is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted.
The
Company elected to early adopt ASC 842 using the cumulative effect adjustment approach. In addition, the Company elected the package
of practical expedients permitted under the transition guidance within the new standard, which allows us to carry forward the
historical determination of contracts as leases, lease classification and not reassess initial direct costs for historical lease
arrangements. Accordingly, previously reported financial statements, including footnote disclosures, will not been recast to reflect
the application of the new standard to all comparative periods presented. The adoption of this Standard did not have a material
effect on its financial statements.
The
Company recognizes lease assets and liabilities with terms in excess of twelve months on its balance sheet. The Company capitalizes
operating lease obligations as a right-of-use asset with a corresponding liability based on the present value of future operating
leases.
Property
and Equipment
Fixed
assets are carried at cost, less accumulated depreciation and amortization. Major improvements are capitalized, while repair and
maintenance are expensed when incurred. Renewals and betterments that materially extend the life of the assets are capitalized.
When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts,
and any resulting gain or loss is reflected in income for the period.
For
federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. Depreciation for financial
statement purposes is computed on a straight-line basis over estimated useful lives of the related assets. The estimated useful
lives of depreciable assets are:
|
|
Estimated
|
|
|
Useful
Lives
|
Vehicles
|
|
5 years
|
Office Equipment
|
|
3 - 5 years
|
Furniture & equipment
|
|
5 - 7 years
|
Long-Lived
Assets
In
accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence
of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of
recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair
value.
Income
Taxes
The
Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets
and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred
tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets
will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.
Revenue
Recognition
Our
revenue is generated from the sale of products consisting primarily of video and audio capture devices and accessories. We recognize
revenue when control of our products is transferred to our customers in an amount that reflects the consideration we expect to
receive from our customers in exchange for those products. This process involves identifying the contract with a customer, determining
the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance
obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. We consider a performance
obligation satisfied once we have transferred control of a product to the customer, meaning the customer has the ability to use
and obtain the benefit of the product. We recognize revenue for satisfied performance obligations only when we determine there
are no uncertainties regarding payment terms or transfer of control. Revenue from product sales is generally recognized upon shipment
to the end customer, which is when control of the product is deemed to be transferred. Payment or invoicing typically occurs upon
shipment and the term between invoicing and when payment is due is not significant. Revenue is recorded net of discounts and promotions.
Marketing
and Advertising Costs
Marketing
and advertising costs are expensed as incurred. The Company recognized $1,703 and $53,149 in marketing and advertising
costs during the three months ended October 31, 2018 and 2017, respectively, and $7,184 and $69,934 during the six months ended
October 31, 2018 and 2017, respectively.
Stock
Based Compensation
Under
ASC 718, Compensation – Stock Compensation, companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period
during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted
share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost
is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting
periods of the option grant.
In
July 2019, the FASB released Accounting Standards Update (ASU) No. 2018-09, Codification Improvements. ASU 2018-09 that
affect a wide variety of Topics in the FASB Accounting Standards Codification including the guidance in paragraph 718-740-35-2,
Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting is unclear on whether
an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s
tax return. The amendment to paragraph 718-740-35-2 in this update clarifies that an entity should recognize excess tax benefits
(that is, the difference in tax benefits between the deduction for tax purposes and the compensation cost recognized for financial
statement reporting) in the period in which the amount of the deduction is determined. This includes deductions that are taken
on the entity’s return in a different period from when the event that gives rise to the tax deduction occurs and the uncertainty
about whether (1) the entity will receive a tax deduction and (2) the amount of the tax deduction is resolved.
Critical
Accounting Estimates
The
preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the
United States requires us to make judgments, assumptions and estimates that have a significant impact on the results that we report
in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a
result of the need to make estimates regarding matters that are inherently uncertain. Certain of these significant accounting
policies require us to make critical accounting estimates, as defined below.
A
critical accounting estimate is defined as one that is both material to the presentation of our financial statements and requires
management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and
results of operations. Specifically, critical accounting estimates have the following attributes:
●
|
we
are required to make assumptions about matters that are highly uncertain at the time of the estimate; and
|
|
|
●
|
different
estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material
effect on our financial condition or results of operations.
|
Many
of our financial instruments are issued in conjunction with the issuance of debt. At the time of issuance we allocate the proceeds
received to the various financial instruments and this involves the determination of fair value. From time to time, the fair value
of these financial instruments exceeds the proceeds received. When this occurs, we critically evaluate the validity of the fair
value computation.
Financial
Instruments
The
Company’s balance sheets include the following financial instruments: cash, accrued expenses, notes payable and payables
to a stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively
short period of time between the origination of these instruments and their expected realization. The carrying values of the notes
payable and amounts due to stockholder approximates fair value based on borrowing rates currently available to the Company for
instruments with similar terms and remaining maturities.
FASB
Accounting Standards Codification (ASC) topic, “Fair Value Measurements and Disclosures”, defines fair value as the
exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also
establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data
obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions
developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists
of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are
described below:
|
●
|
Level
1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets
or liabilities
|
|
●
|
Level
2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or
similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the
asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
|
|
●
|
Level
3 - Inputs that are both significant to the fair value measurement and 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.
|
Beneficial
Conversion Features
ASC
470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give
the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature
should be valued at the commitment date as the difference between the conversion price and the fair market value of the common
stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. This
amount is recorded as a debt discount and amortized over the life of the debt. ASC 470-20 further limits this amount to the proceeds
allocated to the convertible instrument.
Recent
Accounting Pronouncements
We
have reviewed all FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof
that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new
pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles
will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability
of any standard is subject to the formal review of our financial management and certain standards are under consideration.
In
July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic
815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments
(or embedded features) with down round features. When determining whether certain financial instruments should be classified as
liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument
is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified
instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be
accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity
classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic
260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction
of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down
round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20,
Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of
this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content
in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the
amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts
the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes
that interim period. The Company does not expect adoption of ASU 2017-11 to have a material impact on its condensed consolidated
financial statements.
In
May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments
in this Update provide guidance about which changes to the terms or conditions of a share-based payment awards require an entity
to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods,
and interim periods within those annual periods, beginning after December 15, 2017. The Company implemented ASU 2017-09 for the
interim and annual reporting periods of 2019, which resulted in no impact on its condensed consolidated financial statements.
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and Accounting Standards
Codification (“ASC”) Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”),
(collectively, “Topic 606”). On May 1, 2018, the Company adopted Topic 606 by applying the modified retrospective
method of adoption for all contracts that were not substantially completed as of the adoption date. ASU 2014-09 requires entities
to recognize revenue through the application of a five-step model, which includes identification of the contract, identification
of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance
obligations and recognition of revenue as the entity satisfies the performance obligations. The Company implemented ASU 2014-09
for the interim and annual reporting periods of 2019, which resulted in no changes to how we recognize revenue.
The
Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the
end of the Company’s previous fiscal year may be applicable to the Company, the Company has not identified any standards
that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact
on its condensed consolidated financial statements.
NOTE
2 – PROPERTY AND EQUIPMENT
Property
and Equipment consisted of the following:
|
|
October
31,
|
|
|
April
30,
|
|
|
|
2018
|
|
|
2018
|
|
Vehicles
|
|
|
7,654
|
|
|
|
7,654
|
|
Furniture and fixtures
|
|
|
10,936
|
|
|
|
10,936
|
|
Computers and office equipment
|
|
|
4,226
|
|
|
|
4,226
|
|
Leasehold improvements
|
|
|
1,775
|
|
|
|
1,775
|
|
Total
|
|
|
24,591
|
|
|
|
24,591
|
|
Accumulated depreciation
|
|
|
(11,049
|
)
|
|
|
(7,922
|
)
|
Total
|
|
$
|
13,542
|
|
|
$
|
16,669
|
|
During
the six months ended October 31, 2018 and 2017, the Company recognized $3,127 and $2,717, respectively in depreciation expense.
NOTE
3 – CONVERTIBLE PROMISSORY NOTES
The
company determined that each convertible promissory note conversion feature is indexed to the Company’s stock, which is
an input to a fair value measurement of a fixed-for-fixed option on equity shares. Thus, the conversion feature of the notes meets
the scope exception under FASB Accounting Standards Codification (“ASC”) 815-40-15-7 and treatment under ASC 470-20
– Debt with Conversion and Other Options is appropriate.
As
of October 31, 2018, ten of the Company’s convertible promissory notes remain outstanding beyond their respective maturity
dates; triggering an event of technical default under the respective agreements. Consequently, the Company is accruing interest
on these notes at their respective default rates. As a result of being in default on these notes, the Holders could, at their
sole discretion, call these Notes in their entirety, including all associated penalties provided for under the respective agreements.
In this event, the Company may not have sufficient authorized shares to absolve itself of the defaulted Notes through the issuance
of common shares of the Company. The Company is working with the current noteholders in order that it may resolve these outstanding
issues as soon as practicable.
As
of October 31, 2018, the Company owed $380,256 in principal (before a debt discount of $4,078) and $83,001 in accrued interest
on its remaining outstanding convertible promissory notes. As of April 30, 2018, the Company owed $480,623 in principal (before
a debt discount of $21,225) and $62,281 in accrued interest on its remaining outstanding convertible promissory notes.
|
|
October
31, 2018
|
|
|
April
30, 2018
|
|
Convertible promissory notes, various
lending institutions, maturing at variable dates ranging from 180 days to one year from origination date, 8-12% interest and
default interest of 12-24%, convertible at discount to trading price (60-61%) based on various measurements of prior trading,
at face value of remaining original note principal balance, net of unamortized debt discounts and attributable deferred financing
costs in the amount of $4,078 and $21,225, respectively.
|
|
|
|
|
|
|
|
|
Principal
|
|
$
|
380,256
|
|
|
$
|
480,623
|
|
Debt discount
|
|
|
(4,078
|
)
|
|
|
(21,225
|
)
|
Total Principal
|
|
$
|
376,178
|
|
|
$
|
459,398
|
|
Summary of Convertible
Note Transactions:
|
|
October
31, 2018
|
|
|
April
30, 2018
|
|
|
|
|
|
|
|
|
Convertible notes, May 1
|
|
$
|
480,623
|
|
|
$
|
427,128
|
|
Additional notes, face value
|
|
|
5,789
|
|
|
|
363,375
|
|
Conversions of debt
|
|
|
(106,156
|
)
|
|
|
(309,880
|
)
|
Unamortized debt
discounts
|
|
|
(4,078
|
)
|
|
|
(21,225
|
)
|
Convertible notes,
balance
|
|
$
|
376,178
|
|
|
$
|
459,398
|
|
RDW
Capital, LLC
The
RDW Notes have identical terms and conditions, including convertibility into common stock at the holder’s option, at a price
for each share of common stock equal to 60% of the lowest traded price during the twenty (20) trading days immediately preceding
the applicable conversion, and subject to anti-dilution and market adjustments set forth in the Agreement. The Notes mature in
six months and bear an interest rate of 8%. In no event shall RDW effect a conversion if such conversion results in RDW beneficially
owning in excess of 4.99% of the outstanding common stock of the Company. The Notes and accrued interest may be prepaid in whole
or in part at any time with ten (10) days written notice to the holder for the sum of the outstanding principal and interest multiplied
by one hundred and thirty percent (130%). Any principal and interest unpaid when due shall bear interest at 24% and RDW may accelerate
the outstanding principal, plus accrued and unpaid interest, and other amounts owing through the date of acceleration and the
amount due will be one hundred thirty percent (130%) of the outstanding principal amount of the Note and accrued and unpaid interest.
In the event the Company defaults on the accelerated balance, and at the request of the Holder, the Company must pay one hundred
fifty percent (150%) of the outstanding balance plus accrued interest and default interest. The Company is required to reserve
three (3) times the amount of shares necessary for the issuance of common stock upon conversion.
As
of October 31, 2018, the Company is in default of all RDW Notes; however, the penalty provision election has not been made by
the Holder of the Note. In the event and at any time this election is made, additional default penalties would need to be accrued
and due immediately for all notes in the amount of approximately $144,182.
Note
3 - On March 10, 2016, the Company entered into a Securities Purchase Agreement and amendments thereto, with RDW Capital,
LLC, pursuant to which the Company received $210,000 in financing through the execution of a Convertible Promissory Note. The
Company received proceeds of $180,000 after payment of $30,000 in legal fees.
The
principal was discounted for the OID, due diligence fees, stock issued to an advisor in connection with the note totaling $18,000,
and the intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $227,391. As this amount resulted
in a total debt discount that exceeded the note principal, the discount recorded for the beneficial conversion feature was limited
to the principal amount of the note.
The
Note became due and payable on September 10, 2016 and the Company is in default of its obligations under the Note and the default
interest rate of 24% per annum is being accrued beginning on September 11, 2016.
During
the six months ended October 31, 2018 and 2017, respectively, the Company issued no common shares for payment on the note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $792 and $792 in principle and $0 and $0 in interest, respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 13,196,334.
The number of common shares the Company is required to have in reserve on the note is 39,589,002.
Note
4 - On May 13, 2016, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC pursuant to which
the Company received $105,000 in financing through the execution of a Convertible Promissory Note (RDW Note 4). The Company received
proceeds of $82,500 after payment of a $5,000 OID and $17,500 of legal and due diligence fees.
The
principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. The calculated
intrinsic value was $70,000. As this amount resulted in a total BCF debt discount that was less than note principal, the full
$70,000 discount was recognized. The resulting $92,500 discount was accreted over the 6 month term of the Note.
The
Note became due and payable on November 13, 2016 and the Company is in default of its obligations under the Note. The default
interest rate of 24% per annum is being accrued beginning on November 14, 2016.
During
the six months ended October 31 2018, the Company issued no common shares for payment on the Note. During the six months ended
October 31, 2017, the Company issued 71,341,227 common shares for a value of $105,000, satisfying the note principal, and leaving
a balance due of $4,540 in accrued interest.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $0 in principle and $4,540 and $4,540 in interest,
respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 75,664,694.
The number of common shares the Company is required to have in reserve on the note is 226,994,082.
Note
5 - On May 20, 2016, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC pursuant to which
the Company received $52,500 in financing through the execution of a Convertible Promissory Note. The Company received proceeds
of $45,000 after payment of a $2,500 OID and $5,000 of due diligence fees.
The
principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. The calculated
intrinsic value was $35,000. As this amount resulted in a total BCF debt discount that was less than note principal, the full
$35,000 discount was recognized. The resulting $42,500 discount was accreted over the 6 month term of the Note.
The
Note became due and payable on November 20, 2016 and the Company is in default of its obligations under the Note. The default
interest rate of 24% per annum is being accrued beginning on November 21, 2018.
During
the six months ended October 31 2018, the Company issued no common shares for payment on the Note. During the six months ended
October 31, 2017, the Company issued 80,769 common shares for a value of $52,500, satisfying the note principal, and leaving a
balance due of $2,743 in accrued interest.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $0 in principle and $2,742 and $2,742 in interest,
respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 45,706,301.
The number of common shares the Company is required to have in reserve on the note is 137,118,903.
Note
6 - On August 22, 2016, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC pursuant to which
the Company received $157,500 in financing through the execution of a Convertible Promissory Note. The Company received proceeds
of $130,000 after payment of a $7,500 OID and $20,000 of legal and due diligence fees.
The
principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. The calculated
intrinsic value was $105,000. As this amount resulted in a total BCF debt discount that was less than note principal, the full
$105,000 discount was recognized. The resulting $132,500 discount was accreted over the 6 month term of the Note.
The
Note became due and payable on February 22, 2017 and the Company is in default of its obligations under the Note. The default
interest rate of 24% per annum is being accrued beginning on February 23, 2017.
During
the six months ended October 31 2018, the Company issued no common shares for payment on the Note. During the six months ended
October 31, 2017, the Company issued 579,733 common shares for a value of $31,674, satisfying the note principal, and leaving
a balance due of $8,398 in accrued interest.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $0 in principle and $889 and $889 in interest, respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 14,817,664.
The number of common shares the Company is required to have in reserve on the note is 44,452,992.
Note
7 – In connection with RDW SPA 4 under which RDW agreed to purchase an aggregate of up to $367,500 in principal
amount of notes, on September 1, 2016, the Company issued to RDW a convertible note due on March 1, 2017 in the principal amount
of $157,500 of which the Company received proceeds of $130,000 after payment of a $7,500 OID and legal and due diligence fees
totaling $20,000. The second tranche for $210,000 will occur on the date that is two trading days from the date a registration
statement is declared effective by the SEC. On March 16, 2018, the Company and RDW agreed to amend the Note to extend the Maturity
Date to October 31, 2018.
The
principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. The calculated
intrinsic value was $105,000. As this amount resulted in a total BCF debt discount that was less than note principal, the full
$105,000 discount was recognized. The resulting $132,500 discount was accreted over the 6 month term of the Note.
The
Note became due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default
interest rate of 24% per annum will be accrued beginning on November 1, 2018.
During
the six months ended October 31 2018, the Company issued no common shares for payment on the Note. During the six months ended
October 31, 2017, the Company issued 16,753,900 common shares for a value of $115,148, and was applied to the Note principal.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $25,700 and $25,700 in principle and $16,776 and $13,397
in interest, respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 707,937,309.
The number of common shares the Company is required to have in reserve on the note is 2,123,811,927.
Note
8 – On February 6, 2017, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant
to which the Company received $210,000 in financing through the execution of a Convertible Promissory Note. The Company received
proceeds of $180,000 after payment of $10,000 OID and legal and due diligence fees totaling $20,000. On March 16, 2018, the Company
and RDW agreed to amend the Note to extend the Maturity Date to October 31, 2018.
The
principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the BCF. The calculated
intrinsic value was $217,000. As this amount resulted in a total debt discount that exceeded the principal, the discount recorded
for the BCF was limited to the principal amount of the Note. The resulting $210,000 discount was accreted over the 6 month term
of the Note.
The
Note became due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default
interest rate of 24% per annum will begin accruing on November 1, 2018.
During
the six months ended October 31, 2018, the Company issued 57,100,000 common shares for a value of $14,754, and was applied to
the Note principal. During the six months ended October 31 2017, the Company issued no common shares for payment on the Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $1,221 and $15,975 in principle and $5,964 and $5,512 in
interest, respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 119,756,048.
The number of common shares the Company is required to have in reserve on the note is 359,268,144.
Note
9 – On March 30, 2017, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant
to which the Company received $78,750 in financing through the execution of a Convertible Promissory Note. The Company received
proceeds of $62,500 after payment of $3,750 OID and legal and due diligence fees totaling $12,500. On March 16, 2018, the Company
and RDW agreed to amend the Note to extend the Maturity Date to October 31, 2018.
The
principle was discounted for the value of the OID, fees and intrinsic value of the BCF. The calculated intrinsic value was $72,000.
As this amount resulted in a total debt discount that exceeded the principal, the discount recorded for the BCF was limited to
the principal amount of the Note. The resulting $78,750 discount was accreted over the 6 month term of the Note.
The
Note became due and payable on October 31, 2018 and the Company is in default of its obligations under the Note. The default interest
rate of 24% per annum will be accrued beginning on November 1, 2018.
During
the six months ended October 31 2018, the Company issued 130,800,000 common shares for a value of $16,322, and was applied to
the principal on the Note. During the six months ended October 31, 2017, the Company issued no common shares for payment on the
Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $62,428 and $78,750 in principle and $10,459 and $7,243
in interest, respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 1,214,790,559.
The number of common shares the Company is required to have in reserve on the note is 3,644,371,677.
Note
10 – On April 26, 2017, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant
to which the Company received $110,000 in financing through the execution of a Convertible Promissory Note. The Company received
proceeds of $90,000 after payment of $10,000 OID and legal fees totaling $10,000. On March 16, 2018, the Company and RDW agreed
to amend the Note to extend the Maturity Date to October 31, 2018.
The
principle was discounted for the value of the OID, fees and intrinsic value of the BCF. The calculated intrinsic value was $134,000.
As this amount resulted in a total debt discount that exceeded the principal, the discount recorded for the BCF was limited to
the principal amount of the Note. The resulting $110,000 discount was accreted over the 6 month term of the Note.
The
Note became due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default
interest rate of 24% per annum will be accrued beginning on November 1, 2018.
During
the six months ended October 31 2018 and 2017, the Company issued no shares on the Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $7,510 in accrued interest.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 125,169,335.
The number of common shares the Company is required to have in reserve on the note is 375,508,005.
Note
11 – On May 30, 2017, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant to
which the Company received $81,375 in financing through the execution of a Convertible Promissory Note. The Company received proceeds
of $65,000 after payment of $3,875 OID and legal and due diligence fees totaling $9,875. On March 16, 2018, the Company and RDW
agreed to amend the Note to extend the Maturity Date to October 31, 2018.
The
principle was discounted for the value of the OID and issuance fees. The BCF intrinsic value was $102,000. As this amount resulted
in a BCF that exceeded the Note proceeds, accretion of the BCF was limited to $65,000 which was accreted over the 6 month term
of the Note.
The
Note became due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default
interest rate of 24% per annum is being accrued beginning on November 1, 2018.
During
the six months ended October 31 2018, the Company issued 138,791,667 common shares for a value of $9,050 and was applied against
the principal on the Note. During the six months ended October 31, 2017, the Company issued no shares on the Note.
As
of October 31, 2018 and April 30, 2018, the Company owed $81,375 and $81,375 in principal and $9,947 and $6,288 in accrued interest,
respectively.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 1,522,028,613.
The number of common shares the Company is required to have in reserve on the note is 4,566,085,839.
Note
12 – On August 7, 2017, the Company entered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant
to which the Company received $52,500 in financing through the execution of a Convertible Promissory Note. The Company received
proceeds of $46,000 after payment of $2,500 OID and legal and due diligence fees totaling $4,000. On March 16, 2018, the Company
and RDW agreed to amend the Note to extend the Maturity Date to October 31, 2018.
The
principle was discounted for the value of the OID and issuance fees. The BCF intrinsic value was $107,283. As this amount resulted
in a BCF that exceeded the Note proceeds, accretion of the BCF was limited to $52,500 which was accreted over the 6 month term
of the Note.
The
Note became due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default
interest rate of 24% per annum is being accrued beginning on November 1, 2018.
During
the six months ended October 31 2018 and 2017, respectively, the Company issued no shares against the Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $52,500 and $52,500 in principal and $5,521 and $3,197
in accrued interest.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 967,013,810.
The number of common shares the Company is required to have in reserve on the note is 2,901,041,430.
Power
Up Lending Group Ltd.
The
Power Up Notes have identical terms and conditions, including convertibility into common stock, at the holder’s option any
time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note, at a price
for each share of common stock equal to 61% of the average of the lowest two (2) trading prices during the twenty (20) trading
days immediately preceding the applicable conversion. In no event shall Power Up effect a conversion if such conversion results
in Power Up beneficially owning in excess of 4.99% of the outstanding common stock of the Company. The Notes and accrued interest
may be prepaid within the 180 day period following the issuance date at an amount equal to 115% - 140% of the outstanding principle
and unpaid interest. After expiration of the 180 days, the Note may not be prepaid. Any principal and interest unpaid when due
shall bear interest at 22%. Upon the occurrence of an event of default the balance of principle and interest shall become immediately
due at the default amount which is equal to the sum of the unpaid principal and unpaid interest multiplied by 150%.
Power
Up Note 1 – On October 20, 2017 the Company sold a 12% convertible note in the principal amount of $70,000 of which
the Company received $60,300 after payment of legal fees of $9,700. The Note matured on July 30, 2018 and bears a default interest
rate of 22% as of July 31, 2018.
The
intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion
of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic
value was $44,754 and is being accreted over the 10 month term of the Note.
During
the six months ended October 31 2018, the Company issued 243,760,201 common shares for a value of $70,230; whereby $66,030 was
applied against the principal and $4,200 was applied against the accrued interest. During the six months ended October 31 2017,
the Company issued 9,232,558 common shares for a value of $3,970, which was applied against the principal on the Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $66,030 in principal and $0 and $4,554 in accrued
interest.
Power
Up Note 2 – On November 16, 2017 the Company sold a 12% convertible note in the principal amount of $36,000 of which
the Company received $30,000 after payment of legal fees of $6,000.
The
intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion
of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic
value was $23,016 and is being accreted over the 9.5 month term of the Note.
The
Note became due and payable on August 30, 2018 and the Company is in default of its obligations under the Note. The default interest
rate of 22% per annum is being accrued beginning on August 31, 2018.
During
the six months ended October 31, 2018, the Company issued 138,791,667 common shares for a value of $9,050, which was applied against
the principal on the Note. During the six months ended October 31, 2017, the Company issued no shares against the balance on the
Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $26,950 and $5,113 in principal and $36,000 and $2,006
in accrued interest.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to hold in its reserves is equal to
the amount required to satisfy the Note, which is 525,615,677.
Power
Up Note 3 – On January 5, 2018 the Company sold a 12% convertible note in the principal amount of $38,000 of which
the Company received $32,000 after payment of legal fees.
The
intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion
of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic
value was $24,295 and is being accreted over the 10 month term of the Note.
The
Note became due and payable on October 10, 2018 and the Company is in default of its obligations under the Note. The default interest
rate of 22% per annum is being accrued beginning on October 11, 2018.
During
the six months ended October 31, 2018 and 2017, the Company issued no shares against the balance on the Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $38,000 and $38,000 in principal and $4,109 and $1,464
in accrued interest.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to hold in its reserves is equal to
the amount required to satisfy the Note, which is 690,305,539.
Power
Up Note 4 – On January 5, 2018 the Company sold a 12% convertible note in the principal amount of $33,000 of which
the Company received $27,500 after payment of legal fees. The Note matures on December 15, 2018 and bears interest at 12%.
The
intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion
of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic
value was $21,098 and is being accreted over the 9 month term of the Note.
During
the six months ended October 31, 2018 and 2017, the Company issued no shares against the balance on the Note.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $33,000 and $33,000 in principal and $2,709 and $613 in
accrued interest.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to hold in its reserves is equal to
the amount required to satisfy the Note, which is 585,391,069.
Power
Up Settlement
On
October 8, 2019, the Company and the assignee of Power Up, “Recovery”, agreed to settle the amount of all outstanding
Notes, in final settlement of all related claims for the aggregate sum of $146,925. At closing, the Company was obligated to pay
the first installment of $30,000; the second installment of $15,000 due on October 22, 2019, and the third and final amount of
$15,000 by November 5, 2019. Should the Company fail to pay the settlement amount by the deadline, Recovery shall have all rights
under the Notes and SPA’s to convert the debt amount into common stock of the Company pursuant to the terms and provisions
of the Notes. Recovery, in addition, is entitled to obtain an affirmative injunction from the Court which injunction shall remain
in full force and effect until Recovery has converted the debt obligation. Recovery will also have the right to enter a money
judgement and have immediate execution thereon for the default amount together with accrued and unpaid interest and full default
interest against the Company, giving the Company credit for all sums received by Recovery prior to enforcement.
Adar
Bays, LLC
The
Adar Notes bear interest at the rate of 8% per annum. All interest and principal must be repaid on or before March 5, 2019. After
six months, the Adar Notes are convertible into common stock, at Adar’s option, at a conversion price equal to 60% of the
lowest trading price of our common stock during the 20 prior trading days prior to conversion. The Company is required to reserve
three (3) times the amount of shares necessary for the issuance of common stock upon conversion. The two Adar Collateralized Notes
may only be converted by Adar in the event they are paid in full. In addition, the Note contains pre-payment penalties. The Company
is only required to make payments on the Back End Notes if Adar funds the Collateralized Notes.
Adar
has agreed to restrict its ability to convert the Adar Notes and receive shares of common stock such that the number of shares
of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of
the then issued and outstanding shares of common stock. The Adar Notes are a debt obligation arising other than in the ordinary
course of business, which constitutes a direct financial obligation of the Company. The Adar Notes also provides for penalties
and rescission rights if the Company does not deliver shares of its common stock upon conversion within the required timeframes.
In the event of default, the note interest rate increases to 24%.
Adar
Note 1 - On March 5, 2018 the Company entered into a Securities Purchase Agreement with Adar Bays, LLC providing for the
purchase of a Convertible Promissory Note in the principal amount of $52,500; and two Collateralized Secured Promissory Notes
also in the amount of $52,500 each (the “Adar Collateralized Notes”) and the delivery by the Company of two Back End
Notes payable to Adar each in the principal amount of $52,500. The first $52,500 financing closed on March 5, 2018 with the Company
receiving net proceeds of $43,500 after payment of legal fees of $6,500 and a 5%, or $2,500 original issue discount. On May 24,
2018 Adar funded $5,789 under one of the Adar Collateralized Notes with the Company receiving net proceeds of $5,500 after payment
of a 5% original issue discount.
The
intrinsic value of the Adar Notes beneficial conversion feature exceeded their proceeds thereby limiting the accretion of the
BCF to $43,500 and $5,500 for Adar Note 1 and the Adar Collateralized Note, respectively. Accretion is over the 12 month term
of the Adar Notes.
As
of October 31, 2018 and April 30, 2018, respectively, the Company owed $58,289 and $52,500 in principal and $6,722 and $648 in
accrued interest.
As
of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 656,678,188.
The number of common shares the Company is required to have in reserve is 1,970,034,564, which is equal to three times the amount
sufficient to satisfy the note at each measurement date.
Adar
Settlement
On
October 3, 2019, the Company and Adar Bays, LLC agreed to enter into a Payment Agreement to settle the amounts outstanding on
two previously outstanding Notes, whereby the Company would repay the debt in three installments; $37,000 by October 4, 2019,
$18,750 by October 23, 2019, and $18,750 by November 23, 2019. The Company subsequently met all the terms of the final settlement.
NOTE
4 - Short Term Loans
On
September 25, 2018, the Company repaid the then outstanding balance of the ACH Loan totaling $13,372 with funds received from
Strategic Funding Source, Inc.
On
September 25, 2018, the Company borrowed $38,340 from Strategic Funding Source, Inc. under the Loan Agreement. Pursuant to the
terms of the Loan Agreement, the Company received $13,233 of proceeds after deductions for $395 of service fees and $11,340 related
to interest. Repayment is achieved through 246 daily bank account withdrawals of $156. The Loan Agreement is secured by all current
and future assets of the Company.
NOTE
5 – COMMITMENTS AND CONTINGENCIES
Product
Warranties
The
Company’s manufacturer(s) provide the Company with a 2 year warranty. The Company products are sold with a 1 year manufacturer’s
warranty. The Company offers a 1 year extended warranty for a fee. The extended warranty expires at the end of the second year
from the date of purchase with warranty costs during the two year period being born by the manufacturer. As a result, the Company
has no, or limited warranty liability exposure.
Operating
Leases
On
November 15, 2017, the Company entered into a lease of office space at 1600 Olive Chapel Road, Apex, North Carolina 27502. The
lease expires on November 30, 2020 and includes an option to extend the lease an additional term or three years. Rent is $1,650
per month and is increased each anniversary by 3%. The Company paid a $1,650 security deposit. As of April 30, 2018, the Company
had adopted ASC 2016-2; Leases (Topic 842). As a result, the Company was required to estimate and record the right of use asset
(“ROU Asset”) and lease liability on the face of the Company’s balance sheet. The Company determined the ROU
Asset and lease liability to be $51,063 which compares to the total payments of the initial three year term of $61,200. The company
determined that there was no discount rate implicit in the lease. Thus, the Company used its incremental borrowing rate of 12%
to discount the lease payments in the determination of the ROU asset and lease liability.
On
March 21, 2015, the Company entered into a lease of office space at 130 Iowa Lane, Suite 102, Carry, North Carolina 27511. During
January, 2018, the Company moved and this lease was terminated with no further obligations.
The
Company has no other non-cancelable operating leases. The following is a maturity analysis of the annual undiscounted cash flows
of the operating lease liabilities as of October 31, 2018:
Fiscal
Year
|
|
|
|
|
2019
|
|
|
$
|
10,148
|
|
2020
|
|
|
$
|
20,649
|
|
2021
|
|
|
$
|
12,253
|
|
|
|
|
$
|
43,050
|
|
As
of October 31, 2018, total operating lease liability was as follows:
Total undiscounted cash
flows
|
|
$
|
43,050
|
|
Less unamortized
interest
|
|
|
(5,129
|
)
|
Total operating
lease liability
|
|
$
|
37,921
|
|
During
the six months ended October 31, 2018 and 2017, operating lease expense for rent for office space totaled $10,200 and $7,388,
respectively.
NOTE
6 –REDEEMABLE PREFERRED STOCK AND Stockholder’s Equity
Redeemable
Preferred Stock
As
of October 31, 2018 and April
30, 2018, there were 5,000,000 shares of par value $0.0001, Series A Preferred Stock outstanding. The Preferred Stock pays no
dividends and has no conversion rights into common stock. Each share of Preferred Stock is entitled to 200 votes per share and
is redeemable in whole, but not in part, at the option of the holder for $0.0001 per share. Accordingly, this preferred stock
is reflected as temporary equity.
During
the year ended April 30, 2018, the Company issued 4,000,000 shares of Series A Preferred
Stock to Paul Feldman, CEO in exchange for $4,000. Each Series A preferred share is entitled to 200,000 (i.e., 200:1) votes per
share and carries no right of conversion into shares of common stock.
Common
Stock
As
of October 31, 2018 and April
30, 2018, there were 764,867,622 and 194,415,754 shares of common stock outstanding, respectively.
On
September 20, 2018, the Company amended its Articles of Incorporation to affect a 1:1,000 reverse stock split. As of the date
of this filing, the Company is waiting for FINRA to approve this corporate action. All share amounts included in this quarterly
report have not been updated to reflect the reverse split.
On
May 17, 2018, the Company filed its Amended Articles of Incorporation which increased its authorized common stock to 20,000,000,000
shares and it Series A Preferred to 20,000,000 shares, with no changes in par value. The increase in the common stock was made
necessary because of the reserves required by the Company’s holders of convertible notes.
During
the six months ended October 31, 2018, the Company issued an aggregate of 570,451,868
shares of common stock in exchange for convertible notes totaling $110,710.
During
the year ended April 30, 2018, the Company issued 192,516,391 shares of common stock
in exchange for convertible notes totaling $317,096. In addition, a total of 100,000 common shares were issued for cash in the
amount of $600, and 100,000 common shares were issued for services and valued at $600.
NOTE
7 – SUBSEQUENT EVENTS
On
November 28, 2018, the Company has issued 76,316,667 common shares for a value of $4,578, as payment on its convertible notes
payable.
On
March 15, 2019 the Company received a Notice of Default from 111 Recovery Corp, as Assignee from Power Up Lending Group, Ltd.
The Notice stated that the Company was in default of one or more Convertible Promisory Notes which, prior to the default, had
aggregate and outstanding principal balances of $97,950. The Notice stated that as a result of the default, 111 Recovery Corp
is demanding immediate payment of $146,925.
On
October 3, 2019, the Company and Adar Bays, LLC agreed to enter into a Payment Agreement to settle the amounts outstanding on
two previously outstanding Notes, whereby the Company would repay the debt in three installments; $37,000 by October 4, 2019,
$18,750 by October 23, 2019, and $18,750 by November 23, 2019. The Company subsequently met all the terms of the final settlement.
On
October 8, 2019, the Company and the assignee of Power Up, “Recovery”, agreed to settle the amount of all outstanding
Notes, in final settlement of all related claims for the aggregate sum of $146,925. At closing, the Company was obligated to pay
the first installment of $30,000; the second installment of $15,000 due on October 22, 2019, and the third and final amount of
$15,000 by November 5, 2019. Should the Company fail to pay the settlement amount by the deadline, Recovery shall have all rights
under the Notes and SPA’s to convert the debt amount into common stock of the Company pursuant to the terms and provisions
of the Notes. Recovery, in addition, is entitled to obtain an affirmative injunction from the Court which injunction shall remain
in full force and effect until Recovery has converted the debt obligation. Recovery will also have the right to enter a money
judgement and have immediate execution thereon for the default amount together with accrued and unpaid interest and full default
interest against the Company, giving the Company credit for all sums received by Recovery prior to enforcement. The Company subsequently
met all the terms of the final settlement.