ATTENTION; INVESTOR ALERT; WARNING
GUARANTEED DILUTION BY THE MILLIONS !!
THE 10Q PROVIDES DETAILS FOR ALL THE UPCOMING DILUTIONS
CONTRAST TO POPULAR BELIEFS, TOXIC NOTES ARE NOT PAID OFF!! ALSO THERE ARE OTHER AVENUES FOR DILUTION BESIDES CONVERTIBLE LOANS..
IT'S GOING TO BE A BLOODBATH
READ THE SECTION ABOUT PREFERRED SHARES CAREFULLY AND UNDERSTAND THAT PRIOR CONVERTIBLE NOTES WERE JUST TRANSFERRED INTO CONVERTIBLE PREFERRED SHARES. 1 OF THOSE SHARES CAN CONVERT INTO AS MANY 100,000 COMMON SHARES ANY TIME.
THEY ALL TRANSFORMED INTO PHYSICAL SHARES WHICH AS SOME POINT WILL DILUTE THE OS AS WE'VE BEEN SEEING.
READ THE 10Q DATA;
From our incorporation on April 17, 2008 through September 30, 2020, we have financed our operations, capital expenditures and working capital needs through the sale of common shares and the incurrence of indebtedness, including term loans, convertible loans, revolving lines of credit and purchase order financing. At September 30, 2020, we had $10,413,521 in total liabilities, the majority of which matures within the next twelve months.
During the year ended December 31, 2019:
The Company settled various accounts payable balances, debt and preferred shares in exchange for shares of common stock to be issued and warrants. Included in these settlements were 100,500 and 4,649,908 shares of Series D and Series E preferred shares, respectively, with an aggregate carrying value of $6,668,643.
On November 10, 2020, the Company paid $100,000 in cash pursuant to the Settlement Agreement for full and final satisfaction of the outstanding pending litigation and all related principal and accrued interest outstanding for $100,000. See Note 9(e) and Note 17.
On November 11, 2020, the Company received a conversion notice to issue 1,622,840 shares of common stock for the conversion of 180 Series C Preferred Shares with a carrying value of $180,000. The shares have yet to be issued as of the date of this report.
Outstanding Indebtedness
Our current indebtedness as of September 30, 2020 is comprised of the following:
Unsecured loan payable with an outstanding principal amount of $317,500, bearing interest at 18% per annum;
Unsecured loan payable with an outstanding principal amount of $250,000, bearing interest at 10% per annum, with a minimum interest amount of $25,000, mature and in default;
Unsecured loan payable with an outstanding principal amount of $250,000, bearing interest at 10% per annum, is due , and convertible into common shares at $1.75 per share;
Unsecured, convertible note payable to a former related party with an outstanding principal amount of $310,000, bearing interest at 5% per annum, mature and in default;
Senior secured, convertible note payable with an outstanding principal amount of $193,889, bearing interest at 8% per annum. Repayable in cash or common shares at the lower of (i) twelve cents ($0.12) and (ii) the closing sales price of the Common Stock on the date of conversion;
Unsecured, convertible note payable with an outstanding principal amount of $81,470, bearing interest at 10% per annum. Matures on July 17, 2018. Principal is repayable in cash or common shares at the lower of (i) six cents ($0.06) (ii) 55% of the lowest trading price during the 20 Trading Days immediately preceding the date of conversion;
Unsecured loan payable with an outstanding principal amount of CDN$40,000. The loan is non-interest bearing and eligible for CDN$10,000 forgiveness if repaid paid by December 31, 2022. If not repaid by December 31, 2022, the loan bears interest at 5% per annum and is due on December 31, 2025;
Unsecured loan payable with an outstanding principal amount of CDN$40,000. The loan is non-interest bearing and eligible for CDN$10,000 forgiveness if repaid paid by December 31, 2022. If not repaid by December 31, 2022, the loan bears interest at 5% per annum and is due on December 31, 2025;
Unsecured loan payable with an outstanding principal amount of $30,065. The loan bears interest at 1% per annum and is due on May 21, 2022 with payments deferred for the first six months of the term; and
Secured loan payable with an outstanding principal amount of $150,000. The loan bears interest at 3.75% per annum and is due on June 5, 2050. The loan is secured by all tangible and intangible assets of Company. Fixed payments of $731 are due monthly and begin 12 months from the date of the loan.
Unsecured loan payable with an outstanding principal amount of $78,643. The loan is non-interest bearing and due on March 2, 2021.
Unsecured loan payable with an outstanding principal amount of $32,541 (CDN$43,243). The loan is non-interest bearing and due and payable on demand;
From our incorporation on April 17, 2008 through September 30, 2020, we have financed our operations, capital expenditures and working capital needs through the sale of common shares and the incurrence of indebtedness, including term loans, convertible loans, revolving lines of credit and purchase order financing. At September 30, 2020, we had $10,413,521 in total liabilities, the majority of which matures within the next twelve months.
Compensation expense increased by $3,034, or 2.4%, for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019. Compensation expense increased by $1,389,650, or 343.4%, for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 primarily as a result of non-cash warrants and shares issued for consulting services during the period.
Authorized
5,000,000 shares of redeemable Series C preferred shares, authorized, each having a par value of $0.001 per share. Each share of Series C preferred shares is convertible into shares of common stock at a conversion rate equal to the lowest traded price for the fifteen trading days immediately preceding the date of conversion.
1,000,000 shares of redeemable Series D preferred shares, authorized, each having a par value of $0.001 per share. Each share of Series D preferred shares is convertible into 5 shares of common stock.
5,000,000 shares of redeemable Series E preferred shares, authorized, each having a par value of $0.001 per share. Each share of Series E preferred shares is convertible into 4 shares of common stock.
Mezzanine Preferred Equity Transactions
During the nine months ended September 30, 2020:
On September 30, 2020, the Company entered into an Exchange Agreement, as outlined in Note 9, to settle outstanding convertible debt and accrued interest in exchange for 2,347 shares of Series C preferred shares with an aggregate carrying amount of $2,348,208. The shares were all issued subsequently on October 14, 2020.
On September 30, 2020, the Company into a Securities Purchase Agreement (the “SPA”) whereby the Company agrees to sell and the Purchaser agrees to purchase, in a series of closings (the “Closings”), up to 200 shares of Series C preferred shares at a price of $1,000 per share. At the First Closing, the Company agrees to issue 250 shares of Series C preferred shares, representing 200 Purchased Shares and 50 Commitment Shares.
During the year ended December 31, 2019:
The Company settled various accounts payable balances, debt and preferred shares in exchange for shares of common stock to be issued and warrants. Included in these settlements were 100,500 and 4,649,908 shares of Series D and Series E preferred shares, respectively, with an aggregate carrying value of $6,668,643.
Note 13 – PREFERRED STOCK
Authorized
3,000,000 shares of Series A preferred shares authorized, each having a par value of $0.001 per share.
10,000 shares of Series B convertible preferred shares authorized, each having a par value of $0.001 per share. Each share of Series B convertible preferred shares is convertible into 100,000 shares of common stock.
Preferred Stock Transactions
During the nine months ended September 30, 2020:
On May 21, 2020, the Company issued an aggregate of 136 shares of Series B convertible preferred shares to various parties for past services to the Company, which included 122 issued to related parties and 2 issued to a former director of the Company. These preferred shares were valued at $767,040, based on the fair value of the underlying common stock, discounted for the six month hold period before the preferred shares can be converted. The issuance is recorded under compensation expense.
During the year ended December 31, 2019:
The Company settled various accounts payable balances, debt and preferred shares in exchange for shares of common stock to be issued and warrants. Included in these settlements were 132 shares of Series B Preferred Stock with a carrying value of $4,872,732.
On October 29, 2019, the Company issued an aggregate of 200,376 shares of Series A preferred shares at value of $200 to three directors of the Company.
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Note 14 – COMMON STOCK AND ADDITIONAL PAID IN CAPITAL
Authorized
On March 26, 2019, the Company effected a reverse stock split of its shares of common stock on a four thousand (4,000) old for one (1) new basis. Upon effect of the reverse split, authorized capital decreased from 3,000,000,000 shares of common stock to 750,000 shares of common stock. Subsequently, on May 23, 2019, an increase in common shares to 150,000,000 was authorized, with a par value of $0.001. These consolidated financial statements give retroactive effect to such reverse stock split named above and all share and per share amounts have been adjusted accordingly, unless otherwise noted. Each share of common stock is entitled to one vote.
Common Stock Transactions
During the nine months ended September 30, 2020:
The Company issued an aggregate of 191,865 shares of common stock for cash proceeds of $100,031.
The Company issued an aggregate of 2,003,000 shares of common stock with a fair value of $783,899 in exchange for services.
The Company issued an aggregate of 9,430,146 shares of common stock with a fair value of $7,402,254 to satisfy shares to be issued.
The Company issued 6,462,244 shares of common stock with a fair value of $136,457 for share-settled debt.
The Company issued an aggregate of 52,937,999 shares of common stock with a fair value of $3,577,005 upon the conversion of $777,872 of convertible debentures and accrued interest, as outlined in Note 9, per the table below:
