There are deficits and debt you are right. Debt is incurred and carried over from the prior year. A deficit happens because of operating expenses liabilities vs assets. Part of those liabilities were reduced due to those reverse splits and taking those profits to offset the company deficits. Thats what dbmm did.
Now for the debt portion these are loans taken out to cover the opertating expenses for dbmm. If you own a company and you are profitable there is no reason to take out massive loans unless you are expanding. In this case with 13.4 million in debt, the loans are not used for expansion its used for covering their ass so they dont go out of business.
If the company was profitable then the CEOs wouldnt have their backpay owed incurring more of a deficit
If dbmm was profitable then they would have to adjust their liabilities to show a positive financial statement. It would show positive cash flow in the Cash Flow statement. The balance sheet looks like trash and the P&L.
Yea accounting 101 i know. My father and brothers are CPAs. They run audits on companys this is beautiful fluff.
Read the 8k again.
NOTE 4 – LOANS
370,000
$
370,000
$
400,000
The loans payables are due on demand, are unsecured, and are non-interest bearing.
During the years ended August 31, 2017, 2016 and 2015, the Company modified terms with existing or new lenders for loans payable aggregating $0, $100,500, and $85,000, respectively. Substantially all modifications consist in adding conversion terms to such notes.
During the years ended August 31, 2017, 2016 and 2015, the Company generated proceeds of $0, $70,500, and $109,500 from loans payable, respectively.
F-12
NOTE 5 – CONVERTIBLE DEBENTURES
At August 31, 2017, August 31, 2016, and August 31, 2015 convertible debentures consisted of the following:
Years Ended August 31,
2017
2016
2015
Convertible notes payable
$
840,791
$
840,791
$
764,196
Unamortized debt discount
-
32,083
16,668
Total
$
840,791
$
808,708
$
747,528
The convertible notes payable mature through January 2016, some of which are payable on demand and they bear interest at ranges between 6% and 15%. The convertible promissory notes are convertible at ratios varying between 45% and 50% of the closing price at the date of conversion through, at its most favorable terms for the holders, the average of the three lowest closing bids for a period of 5-30 days prior to conversion. As of August 31, 2017, an aggregate of $840,791 of convertible promissory notes have matured and remain unpaid.
During the years ended August 31, 2017, 2016 and 2015, the Company modified terms with existing or new lenders for convertible notes aggregating $0, $100,500, and $70,000, respectively. Substantially all modifications consist in adding conversion terms to such notes.
During the years ended August 31, 2017, 2016 and 2015, the Company issued 0, 739,976, and 801,104 shares of its common stock, respectively, to satisfy its obligations under conversion features of convertible debt aggregating $0, $249,727 and $31,443, respectively. During fiscal years 2016 and 2015, 260,456 and 100,979 shares of its common stock were issued pursuant to conversion notices and to satisfy interest expenses pursuant to certain convertible promissory notes amounting to $151,351 and $4,236, respectively which was recorded as interest expense.
During the years ended August 31, 2017, 2016 and 2015, the Company generated proceeds of $0, $50,000 and $160,000, respectively, from the issuance of convertible promissory notes payable.
NOTE 6 - DERIVATIVE LIABILITIES
The Company accounts for the embedded conversion features included in its convertible instruments as derivative liabilities. The aggregate fair value of derivative liabilities at August 31, 2017, 2016 and 2015 amounted to $740,953, $1,517,811 and $408,053 respectively. At each measurement date, the fair value of the embedded conversion features was based on the lattice binomial method using the following assumptions:
Years Ended August 31,
2017
2016
2015
Effective Exercise price
0.0095 – 0.00152
0.00005 – 0.0001
0.013 – 0.0208
Effective Market price
0.0019
0.0001
0.026
Volatility
85%
248%
208%
Risk-free interest
1.13%
0.45%
0.27%
Terms
365 days
365 days
365 days
Expected dividend rate
0%
0%
0%
F-13
Changes in the derivative liabilities during the years ended August 31, 2017, 2016 and 2015 are as follows:
Balance at September 1, 2014
$
305,207
Embedded conversion features at issuance
150,646
Changes in fair value of derivative liabilities
(47,800)
Balance, August 31, 2015
$
408,053
Balance at September 1, 2015
$
408,053
Embedded conversion features at issuance
102,751
Changes in fair value of derivative liabilities
1,007,007
Balance, August 31, 2016
$
1,517,811
Balance at September 1, 2016
$
1,517,811
Embedded conversion features at issuance
-
Changes in fair value of derivative liabilities
(776,858)
Balance, August 31, 2017
$
740,953
NOTE 7 – ACCRUED COMPENSATION
As of August 31, 2017, 2016 and 2015 the Company owes $882,643, $677,947, and $514,593 respectively, in accrued compensation and expenses to certain directors/consultants. The amounts are non-interest bearing.
NOTE 8 - COMMON STOCK AND PREFERRED STOCK
Preferred Stock- Series 1 and 2
The designation of the Preferred Stock- Series 1 is as follows: Authorized 2,000,000 shares, par value of $0.001. One share of the Company’ s Preferred Stock- Series is convertible into 53.04 shares of the Company ’ s common stock, at the holder ’ s option and with the Company ’s acquiescence, and has three votes per share.
The designation of the Preferred Stock- Series 2 is as follows: Authorized 2,000,000 shares, par value of $0.001. One share of the Company’ s Preferred Stock- Series is convertible into one share of the Company ’ s common stock, at the holder ’ s option and with the Company ’ s acquiescence, and has no voting rights.
In October 2014, 1,100,000 shares of Preferred Stock Series 1 Designation were issued to three officers of the Company. These shares are convertible at a ratio of 1 preferred share to 53.04 common shares. These shares are valued at $5,834 based on the trading price of the common shares of $0.0001 into which the preferred shares are convertible. This amount was recorded as compensation expense.
In October 2015, 325,000 shares of Preferred Stock Series 1 Designation were issued to three officers of the Company. These shares are convertible at a ratio of 1 preferred share to 53.04 common shares. These shares are valued at $5,470 based on the trading price of the common shares of $0.0001 into which the preferred shares are convertible. This amount was recorded as compensation expense.
In October 2015, the Company issued 15,912,000 shares of its common stock in connection with the conversion of 300,000 shares of Preferred Stock Series 1 Designation.
F-14
