If anyone doubts the new toxic death spiral payment suddenly appeared after the fact, here is the disclosure from the prior 10-Q compared to the disclosure in the 10-K.
From the 10-Q:
11. CONVERTIBLE PROMISSORY NOTE
On November 14, 2017, the Company issued a Convertible Promissory Note (“Note”) to JMJ Financial (“Holder”), for a principal sum of $166,667 plus one-time 10% interest charge of $16,667 which matures on May 14, 2018 for $150,000 in cash. The Company may repay the Note and interest any time in cash before the maturity date without a prepayment penalty. If the Company defaults on repayment, this Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lesser of (a) $0.0375 or (b) 50% (40% if the conversion shares are not deliverable by DWAC) of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. On issuance of the Note, an embedded derivative with a fair value of $66,205 was identified and recorded as debt discount (See Note 12). In conjunction with the Note, the Company issued 3,591,940 shares of common stock (“Origination Shares”) of the Company which was recorded as debt discount. The Origination Shares and the Note were valued at $51,920 and $31,875 upon issuance, respectively, using the relative fair value method. Additional interest expense is accreted on the Note between issuance and maturity dates with the expectation that principal and interest is likely to be settled in shares of common stock of the Company at a variable conversion price calculated at 40% of trade price of common stock of the Company. At December 31, 2017, the principal and interest outstanding of $254,742 is recorded net of unamortized debt discount of $112,129. Interest and amortization of debt discount was $110,738 for the three and nine months ended December 31, 2017.
From the 10-K, with the added, after the fact disclosure, highlighted:
11. CONVERTIBLE PROMISSORY NOTE
On November 14, 2017, the Company issued a Convertible Promissory Note (“Note”) to JMJ Financial (“Holder”), for a principal sum of $166,667 plus one-time 10% interest charge of $16,667 which matures on May 14, 2018 for $150,000 in cash. The Company may repay the Note and interest any time in cash before the maturity date without a prepayment penalty. If the Company defaults on repayment, this Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lesser of (a) $0.0375 or (b) 50% (40% if the conversion shares are not deliverable by DWAC) of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. On issuance of the Note, an embedded derivative with a fair value of $66,205 was identified and recorded as debt discount (See Note 11). In conjunction with the Note, the Company issued 3,591,940 shares of common stock (“Origination Shares”) of the Company which was recorded as debt discount. The number of Origination Shares is subject to a reset on the six month anniversary of the Note equal to the $166,667 divided by the lowest daily price of shares of common stock (i) during the 10 days before the delivery of the Origination Shares (ii) during the ten days prior to the date of the Note or (iii) during the ten days prior to the date of the six month anniversary (“Top-off Liability”). The Origination Shares and the Note were valued at $51,920 and $31,875 upon issuance, respectively, using the relative fair value method. Additional interest expense is accreted on the Note between issuance and maturity dates with the expectation that principal and interest is likely to be settled in shares of common stock of the Company at a variable conversion price calculated at 40% of trade price of common stock of the Company. At March 31, 2018, the principal and interest outstanding of $391,482 is recorded net of unamortized debt discount of $36,818 and a Top-off Liability of $58,067 is included accounts payable and accrued liabilities. Interest and amortization of debt discount was $380,856 for the year ended March 31, 2018.
And the number of shares issued pursuant to the newly disclosed "top off" requirement is included in the Subsequent Events:
"On May 30, 2018, the Company issued 4,269,663 shares of common stock to satisfy obligations under share subscription agreements of $67,888 for settlement of the Top-off Liability included in accounts payable and accrued liabilities (see Note 10) included in share subscriptions payable."
Again, those "top off" shares valued at $67,888 were issued TWO WEEKS AFTER the full amount of the note was repaid.
Like so much related to Mexus, something stinks. It sure looks like the additional "top off" clause was invented after the fact to hide the penalty payment for Mexus paying off the note a week late. Which is why it was not disclosed, as required, in the prior SEC filings.
This is definitely one more issue the SEC should examine regarding Mexus' massive compliance failures.
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