0001477932-18-000346.txt : 20180119 0001477932-18-000346.hdr.sgml : 20180119 20180119144628 ACCESSION NUMBER: 0001477932-18-000346 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20171130 FILED AS OF DATE: 20180119 DATE AS OF CHANGE: 20180119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Poverty Dignified, Inc. CENTRAL INDEX KEY: 0001591615 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 463754609 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-55558 FILM NUMBER: 18537037 BUSINESS ADDRESS: STREET 1: 330 GRAPEVINE HIGHWAY CITY: HURST STATE: TX ZIP: 76054 BUSINESS PHONE: 719-761-1869 MAIL ADDRESS: STREET 1: 330 GRAPEVINE HIGHWAY CITY: HURST STATE: TX ZIP: 76054 10-Q/A 1 povd_10qa.htm FORM 10-Q/A povd_10qa.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q/A

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: November 30, 2017

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from: _____________ to _______________

  

Comission file number: ____________

  

Poverty Dignified, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

46-3754609

(State or Other Jurisdiction of Incorporation or Organization)

 

(IRS Employer Identification Number)

  

330 Grapevine Highway

Hurst, Texas 76054

Telephone No.: (719) 761-1869

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

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 x No o

 

Check whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 x No ¨ (Not required by smaller reporting companies)

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company.

 

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting Company

x

(Do not check if a smaller reporting Company)

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes o No x

 

As of January 19, 2018, there were 8,746,394 shares of the registrant's common stock issued and outstanding.

 

 
 
 
 

 

EXPLANATORY NOTE

 

Our printer inadvertently uploaded our Form 10-Q filing without including the XBRL Interactive Data Files. There are no other changes from the Original Form 10-Q filing than to include these files. 

 

 
 
 
 

 

 

Poverty Dignified, Inc.

 

Quarterly Report on Form 10-Q

Table of Contents

 

Page Number

 

 

 

 

 

PART I FINANCIAL INFORMATION

 

 

Item 1

Financial Statements

3

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

22

 

 

Item 4

Controls and Procedures

22

 

 

PART II OTHER INFORMATION

 

 

Item 1

Legal Proceedings

23

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

23

 

 

Item 3

Defaults Upon Senior Securities

23

 

 

Item 4

Mine Safety Disclosures

23

 

 

Item 5

Other Information

23

 

 

Item 6

Exhibits

24

 

 

 
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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Poverty Dignified, Inc.

Consolidated Balance Sheets 

 

 

 

November 30,

2017

 

 

August 31,

2017

 

 

 

(Unaudited)

 

 

 

 

ASSETS

Current assets

 

 

 

 

 

 

Cash

 

$ 27,342

 

 

$ 7,146

 

Prepaid inventory

 

 

-

 

 

 

-

 

Prepaid expenses and other current assets

 

 

14,617

 

 

 

27,219

 

Total current assets

 

 

41,959

 

 

 

34,365

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

50,735

 

 

 

53,505

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 92,694

 

 

$ 87,870

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$ 66,793

 

 

$ 58,845

 

Notes payable - related party

 

 

568,173

 

 

 

486,373

 

Accrued payroll expenses

 

 

837,950

 

 

 

769,497

 

Accrued expenses

 

 

24,864

 

 

 

26,622

 

Other liabilities

 

 

206,999

 

 

 

206,999

 

Franchise liability

 

 

-

 

 

 

-

 

Due to officer

 

 

6,725

 

 

 

6,944

 

Convertible notes payable, net of discount of $72,381 and $32,500, respectively

 

 

87,449

 

 

 

32,500

 

Derivative liabilities

 

 

181,305

 

 

 

-

 

Total current liabilities

 

 

1,980,258

 

 

 

1,587,780

 

 

 

 

 

 

 

 

 

 

Long term convertible debenture, net of discount of $53,166 and $46,559, respectively

 

 

1,834

 

 

 

53,441

 

Total liabilities

 

 

1,982,092

 

 

 

1,641,221

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit)\

 

 

 

 

 

 

 

 

Preferred stock par value $.0001:10,000,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock par value $.0001: 100,000,000 shares authorized; 8,659,802 and 8,511,850 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively

 

 

866

 

 

 

851

 

Additional paid in capital

 

 

8,364,396

 

 

 

8,272,310

 

Accumulated deficit

 

 

(10,211,966 )

 

 

(9,784,847 )

Accumulated other comprehensive loss

 

 

(42,694 )

 

 

(41,665 )

Total stockholders' equity (deficit)

 

 

(1,889,398 )

 

 

(1,553,351 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity (deficit)

 

$ 92,694

 

 

$ 87,870

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
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Poverty Dignified, Inc.

Consolidated Statements of Operations and Comprehensive Loss

Unaudited

 

 

 

Three Months Ended

 

 

 

November 30,

2017

 

 

November 30,

2016

 

 

 

 

 

 

 

 

Franchise revenue

 

$ -

 

 

$ 3,613

 

 

 

 

 

 

 

 

 

 

Franchise and operating expenses

 

 

 

 

 

 

 

 

Franchise expenses

 

 

15

 

 

 

17,081

 

Research and development

 

 

-

 

 

 

306

 

Professional fees

 

 

52,065

 

 

 

57,907

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

 

Payroll

 

 

164,696

 

 

 

155,623

 

Advertising

 

 

-

 

 

 

49,003

 

Travel

 

 

15,969

 

 

 

69,953

 

Other

 

 

16,320

 

 

 

35,320

 

Total general and administrative

 

 

196,985

 

 

 

309,899

 

 

 

 

 

 

 

 

 

 

Total franchise and operating expenses

 

 

249,065

 

 

 

385,193

 

 

 

 

 

 

 

 

 

 

Net operating loss

 

 

(249,065 )

 

 

(381,580 )

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(50,027 )

 

 

(4,494 )

Loss on valuation of derivative liabilities

 

 

(76,977 )

 

 

-

 

Loss on extinguishment of debt

 

 

(51,050 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(427,119 )

 

 

(386,074 )

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(1,029 )

 

 

(5,376 )

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$ (428,148 )

 

$ (391,450 )

 

 

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 

 

-Basic and diluted

 

$ (0.05 )

 

$ (0.05 )

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

-Basic and diluted

 

 

8,585,826

 

 

 

7,628,182

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
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Poverty Dignified, Inc.

Consolidated Statement of Changes in Stockholders' Equity (Deficit)

Unaudited 

 

 

 

Common Stock

 

 

 

Additional

 

 

 

 

Accumulated

Other

 

 

Total

Stockholders'

 

 

 

Number of

Shares

 

 

Amount

 

 

Paid In

Capital

 

 

Accumulated

Deficit

 

 

Comprehensive

Loss

 

 

Equity

(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at August 31, 2017

 

 

8,511,850

 

 

$ 851

 

 

$ 8,272,310

 

 

$ (9,784,847 )

 

$ (41,665 )

 

$ (1,553,351 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

16,800

 

 

 

2

 

 

 

17,098

 

 

 

-

 

 

 

-

 

 

 

17,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock through conversion of convertible notes payable

 

 

131,152

 

 

 

13

 

 

 

126,063

 

 

 

-

 

 

 

-

 

 

 

126,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of beneficial conversion feature to derivative liabilities

 

 

-

 

 

 

-

 

 

 

(51,075 )

 

 

-

 

 

 

-

 

 

 

(51,075 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(427,119 )

 

 

-

 

 

 

(427,119 )

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,029 )

 

 

(1,029 )

Balance at November 30, 2017

 

 

8,659,802

 

 

$ 866

 

 

$ 8,364,396

 

 

$ (10,211,966 )

 

$ (42,694 )

 

$ (1,889,398 )
 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
5
 
Table of Contents

 

Poverty Dignified, Inc.

Consolidated Statements of Cash Flows

Unaudited

 

 

 

Three Months Ended

 

 

 

November 30,

2017

 

 

November 30,

2016

 

 

 

 

 

 

 

 

Cash Flows From Operating Activities

 

 

 

 

 

 

Net loss

 

$ (427,119 )

 

$ (386,074 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock compensation

 

 

-

 

 

 

-

 

Depreciation

 

 

2,770

 

 

 

134

 

Amortization of debt discounts

 

 

40,293

 

 

 

-

 

Loss on valuation of derivative liabilities

 

 

76,977

 

 

 

-

 

Loss on extinguishment of debt

 

 

51,050

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

12,602

 

 

 

(7,641 )

Accounts payable

 

 

7,948

 

 

 

2,535

 

Accrued payroll expenses

 

 

68,453

 

 

 

70,168

 

Accrued expenses

 

 

1,570

 

 

 

(1,132 )

Deferred revenue and other liabilities

 

 

-

 

 

 

9,235

 

Net cash used in operating activities

 

 

(165,456 )

 

 

(312,775 )

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 

 

 

Proceeds from notes payable - related party

 

 

81,800

 

 

 

-

 

Payments on notes payable - related party

 

 

-

 

 

 

(99,048 )

Advances from (payments to) officer, net

 

 

(219 )

 

 

(133 )

Issuance of common stock

 

 

17,100

 

 

 

449,000

 

Proceeds from convertible notes payable

 

 

98,000

 

 

 

-

 

Debt issuance costs

 

 

(10,000 )

 

 

-

 

Net cash provided by financing activities

 

 

186,681

 

 

 

349,819

 

 

 

 

 

 

 

 

 

 

Effect of foreign currency translation

 

 

(1,029 )

 

 

(5,376 )

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

20,196

 

 

 

31,668

 

Cash - beginning of period

 

 

7,146

 

 

 

20,557

 

Cash - end of period

 

$ 27,342

 

 

$ 52,225

 

 

 

 

 

 

 

 

 

 

Non-Cash Financing Activities:

 

 

 

 

 

 

 

 

Original issue discount in connection with convertible note payable

 

$ 5,000

 

 

$ -

 

Issuance of common stock through conversion of convertible notes payable

 

$ 126,076

 

 

$ -

 

Reclassification of beneficial conversion feature to derivative liabilities

 

$ 51,075

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Supplementary Disclosure Of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$ 4,802

 

 

$ 5,851

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
6
 
Table of Contents

 

Poverty Dignified, Inc.

Notes to Unaudited Consolidated Financial Statements

November 30, 2017

 

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Poverty Dignified, Inc. was incorporated in the State of Nevada on September 27, 2013, and is headquartered in Hurst, Texas. The Company has established itself as a renewable energy company, incubating franchise business concepts designed to affect the individual, community and local economy in rural and peri-urban areas across the globe. My Power Solutions, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc., was incorporated in the State of Nevada on March 13, 2014 as a franchise business opportunity with Franchise Disclosure Documents for franchise sales in both the United States and South African markets. Africhise, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc. is a Delaware Corporation, and was formed on August 28, 2015 to be the franchise management arm of My Power Solutions, Inc's franchise operations in Africa. These entities are collectively referred herein to as Poverty Dignified, or the Company.

 

Going Concern and Management’s Plans

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of November 30, 2017, the Company had cash of $27,342, a working capital deficit of $1,938,299 and a stockholders’ deficit of $1,889,398. The Company has incurred net losses from start-up costs and minimal operations since inception to November 30, 2017 and continues to expend cash in order to accomplish its business objectives. Based on the Company’s current progress in its business plan, it has not successfully implemented its plan to mitigate the going concern issue. Specifically, the Company has only one operational unit and has not been effective in reducing operating expenses. As a result, as of November 30, 2017, these issues raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company needs additional revenues or must raise additional capital, reduce expenses and curtail cash outflows in order to be able to accomplish its business plan. In the interim, the Company will accrue for management salaries and defer certain payments and will continue to borrow funds from affiliates as needed. From the Company’s inception through November 30, 2017, the Company has one operational franchise unit. As such, the Company has recognized franchise revenue of $146,180 and associated franchise expenses and cost of product revenue of $143,844 from inception through November 30, 2017.

 

The Company's primary source of operating funds since inception has been equity financings through a private placement. In its private placement memorandum dated January 2014 and closed November 2014, the Company raised $1,182,180 for its operations, research and development, and marketing of its franchise opportunities.

 

Since our original Private Placement Offering was not sufficient to capitalize the Company, Poverty Dignified, Inc. conducted a Private Investment in Public Equity transaction, in which the Company offered 1,000,000 unregistered shares to accredited investors at a discounted price of $0.75 per share to raise an additional $750,000 of growth capital. Under this offering, the Company sold 999,970 shares of common stock for proceeds of $749,977, including 784,302 shares of common stock for proceeds of $588,226 during the year ended August 31, 2017. Poverty Dignified, Inc. is currently doing a Private Placement Memorandum, in which the Company is offering 2,000,000 shares at a price of $1.50 per share to raise an additional $3,000,000 in growth capital. In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share. Through August 31, 2017, under this Private Placement Memorandum, the Company issued 144,000 shares of common stock at a discounted price of $0.75 per share for proceeds of $108,000 and issued 49,700 shares of common stock at the offering price of $1.50 per share for proceeds of $74,550. During the three months ended November 30, 2017, the Company issued 10,800 shares at a discounted price of $.075 per share and 6,000 shares at a discounted price of $1.50 for total proceeds of $17,100.

 
 
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During the second or third quarter of fiscal year 2018, Poverty Dignified, Inc. plans to ask for approval for a secondary offering. Upon approval, the Company plans to register 1,000,000 shares in an S-1 registration. Once "effective" by the SEC, these shares will be made available to the public market.

 

The Company has borrowed funds from a related party for working capital purposes and $568,173 remains outstanding under notes payable to this related party at November 30, 2017.

 

During the year ended August 31, 2017, the Company entered into two separate convertible note payable agreements, which provided net proceeds of $125,075, after payment of debt issuance costs totaling $24,925.

 

During the three months ended November 30, 2017, the Company entered into two separate convertible note payable agreements for $55,000 and $48,000, respectively. After an original issue discount of $5,000 and the payment of debt issuance costs totaling $10,000, net proceeds to the Company were $88,000.

 

Subsequent to November 30, 2017, the Company has entered into a convertible note payable agreement for $56,000. After an original issue discount totaling $3,000, net proceeds to the Company were $53,000.

 

Under the second phase of its expanded franchise capacity, Poverty Dignified, Inc’s wholly-owned subsidiary, My Power Solutions, Inc., is currently in the final stages of completing its involvement in a Public Private Partnership with the Development Bank of South Africa. Should this Public Private Partnership be fully executed, My Power Solutions, Inc. will have the responsibility of placing 240 franchise units in rural communities over the next thirty-six months, beginning in early 2018. It will be working within a consortium, headed by InovaSure, a South African organization created to provide energy security to the people of South Africa, to bring electricity, connectivity and digital education to 240,000 homes. This Public Private Partnership would impact our near-term operational cash flow significantly though upfront development funds, projected to be $150,000 per location, or $36,000,000, over the next thirty-six months. Additionally, MPS would receive ongoing revenues to manage and maintain each of the 240 franchise units over a twenty-five year period.

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Form 10-K, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the year ended August 31, 2017. The interim results for the three months ended November 30, 2017 are not necessarily indicative of results for the full fiscal year.

 

The unaudited consolidated financial statements include the accounts of Poverty Dignified, Inc., My Power Solutions, Inc. and Africhise, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Risks and Uncertainties

 

Poverty Dignified’s activities are subject to significant risks and uncertainties, including failing to secure funding to operationalize the franchise business concept.

 

 
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Cash

 

The Company maintains funds in various financial institutions that are members of the Federal Deposit Insurance Corporation (“FDIC”). As such, funds are insured based on Federal Reserve limits. The Company has not experienced any losses in the past, and management believes it is not exposed to any significant credit risk on the current account balances. At times, cash balances may exceed insured limits.

 

The Company has determined that the functional currency of its foreign subsidiaries is the local currency. At November 30, 2017 and August 31, 2017, the Company had cash in foreign bank accounts of $800 and $5,107, respectively.

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consist of payments primarily related to a professional fee retainer, payroll advance and short-term deposits.

 

Property and Equipment, Net

 

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally between three and five years. As of November 30, 2017 and August 31, 2017, property and equipment consists of computer equipment and solar equipment for containers with a total cost of $55,673. Accumulated depreciation as of November 30, 2017 and August 31, 2017 is $4,938 and $2,168, respectively. Depreciation expense for the three months ended November 30, 2017 and 2016 was $2,770 and $134, respectively.

 

Accrued Expenses

 

Accrued expenses are recorded when incurred and primarily consist of accrued interest on notes payable and amounts due for supplies and travel. Accrued payroll consists of salary amounts earned but deferred by the Company's management team.

 

Derivative Liabilities

 

The Company has certain financial instruments that contain embedded derivatives. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be accounted for separately. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to income or expense as part of gain or loss on extinguishment.

 

Revenue Recognition

 

The Company recognizes revenue once pervasive evidence that an agreement exists; the product and/or service have been rendered; the fee is fixed and determinable; and collection of the amount due is reasonably assured.

 

Franchise Revenue

 

Our franchise-related revenue is comprised of three separate and distinct earnings processes: area development fees, initial franchise fees, and continuing royalty payments.

 
 
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Area Development Fees – Our area development fee consists of an initial, non-refundable payment of $15,000 per unit to be developed in consideration for the services we perform in preparation of executing each area development agreement. $5,000 of this initial area development fee relates to services, which include, but are not limited to, conducting market and territory analysis, are completed prior to our execution of the area development agreement and receipt of the corresponding area development fee. As a result, we recognize this portion of the area development fee as revenue upon receipt. The remaining $10,000 is allocated to the opening of the franchise and is recognized in accordance with our revenue recognition policy on initial franchise fee revenue noted below. From inception through November 30, 2017, the Company had not executed any area development agreements.

 

Initial Franchise Fees – The Company executes franchise agreements that set the terms of its arrangement with each franchisee. The franchise agreements require the franchisee to pay an initial, non-refundable fee of $15,000. Initial franchise fee revenue from the sale of a franchise is recognized when the Company has substantially performed or satisfied all of its material obligations relating to the sale. Substantial performance has occurred when the Company has (a) performed substantially all of its initial services required by the franchise agreement, such as assistance in site selection, personnel training and implementation of an accounting and quality control system; and (b) completed all of its other material pre-opening obligations. Additionally, at the contract signing, the franchisee is required to fund $90,000 for purchases of equipment, inventory, point of sale software and computer hardware, furniture, fixtures and décor and signage and payment of import taxes and freight costs. Revenue for these items is recognized upon delivery of the assets. The Company defers revenue from the initial franchise fee and other amounts due at contract signing until the respective revenue recognition milestones are met. From inception through November 30, 2017, the Company had sold three franchise units. The Company has completed the services required to recognize the revenue for one of the franchise units. As such, the Company has recognized franchise revenue of $3,613 and associated franchise expenses of $17,081 for the three months ended November 30, 2016. For the three months ended November 30, 2017, the Company recognized no revenue and franchise expenses of $15 on the one franchise unit.

 

Management decided to repurchase the remaining two franchise units and plans to utilize them for corporate-owned franchise purposes. As such, the respective investments made by the franchisees will be refunded. The total refund amount of $206,999 is classified as other liabilities at November 30, 2017 and August 31, 2017.

 

Continuing Royalty Payments – On an ongoing basis, royalties of 14% of gross revenues on authorized products and services will be recognized in the period in which they are earned. There were no revenues from continuing royalty payments for the three months ended November 30, 2017 and 2016.

 

Product Revenue

 

Product revenue represents amounts earned for equipment delivered and set up by the Company for digital classroom purposes within schools in its franchise markets, but not included in the franchises themselves. For products that include installation, and if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. For revenue that includes customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. Certain of the Company’s products require specialized installation. Revenue for these products is deferred until installation is completed. There were no revenues from products for the three months ended November 30, 2017 and 2016.

 

The Company is currently dedicating substantial efforts towards the cultivation of a proposed partnership with Inovasure and the Development Bank of South Africa. The Company hopes to participate in a Public Private Partnership with both entities, and once consummated, management will migrate to a joint development and corporate-owned franchise model that encompasses development, management and maintenance in its revenue model.

 

Advertising

 

Advertising expenditures are charged to expense as incurred and are included in general and administrative expense. Total advertising expense for the three months ended November 30, 2017 and 2016 was $-0- and $49,003, respectively.

 

Research and Development

 

Research and development expenditures are charged to expense as incurred.


 
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Fair Value of Financial Instruments

 

The Company’s financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

 

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

 

The three-level hierarchy for fair value measurements is defined as follows:

 

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

 

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

 

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

 

The following table summarizes fair value measurements by level at November 30, 2017 and August 31, 2017, measured at fair value on a recurring basis:

 

November 30, 2017

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Liabilities

 

$ -

 

 

$ -

 

 

$ 181,305

 

 

$ 181,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2017

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Liabilities

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. 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 income in the period that includes the enactment date.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.


 
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The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be classified as additional income taxes in the consolidated statements of income. No interest or penalties were recognized for the three months ended November 30, 2017 or 2016.

 

Tax years 2015 and forward remain open to examination under United States statute of limitations. Management is not aware of any material uncertain tax positions and no liability has been recognized at November 30, 2017 or August 31, 2017.

 

Earnings Per Share

 

Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding.

 

Foreign Currency Translation

 

For financial reporting purposes, the functional currency of the foreign operations of My Power Solutions, Inc. is the local currency. The assets and liabilities of foreign operations for which the local currency is the functional currency are translated into the U.S. dollar at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the period. The accumulated foreign currency translation adjustment is presented as a component of accumulated other comprehensive loss in the consolidated statement of changes in stockholders’ equity (deficit).

 

Reclassifications

 

Certain amounts in the prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported stockholders’ deficit or net loss.

 

Recent Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of operations.

 

NOTE 3 - STOCKHOLDERS’ EQUITY (DEFICIT)

 

In September 2013, the Company authorized the issue of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock at a par value of $.0001. There is a total of 8,659,802 and 8,511,850 shares of common stock issued and outstanding at November 30, 2017 and August 31, 2017, respectively. Preferred stockholders could receive preferential treatment relative to declared dividends, should there be any, and to distributions upon a liquidation event. As of November 30, 2017, no preferred stock has been issued.

 

Since incorporation, the Company has raised capital through private sales of its common stock. As of November 30, 2017, of our 8,659,802 outstanding shares of common stock, 6,106,000 shares were issued to various stockholders in exchange for services and/or under restricted stock agreements. Relative to those shares, since inception, the Company has recognized total expense of $6,081,000. During the three months ended November 30, 2017 and 2016, the Company issued no shares for stock compensation expense.

 

Poverty Dignified, Inc. conducted a Private Investment in Public Equity transaction, in which the Company offered 1,000,000 unregistered shares to accredited investors at a discounted price of $0.75 per share to raise an additional $750,000 of growth capital. During the year ended August 31, 2017, the Company sold 784,302 shares of common stock under this Private Investment in Public Equity offering for proceeds of $588,226.

 
 
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Poverty Dignified, Inc. is currently doing a Private Placement Memorandum, in which the Company is offering 2,000,000 shares at a price of $1.50 per share to raise an additional $3,000,000 in growth capital. In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share. Through August 31, 2017, under this Private Placement Memorandum, the Company has issued 144,000 shares of common stock at a discounted price of $0.75 per share for proceeds of $108,000 and has issued 49,700 shares of common stock at the offering price of $1.50 per share for proceeds of $74,550. During the three months ended November 30, 2017, the Company issued 10,800 shares at a discounted price of $.075 per share and 6,000 shares at a discounted price of $1.50 for total proceeds of $17,100.

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

The Company maintains a month to month lease on its corporate headquarters location. The Company has a 24 month lease for its office in South Africa. The lease expires on May 31, 2018. As of November 30, 2017, total future minimum lease payments total approximately $5,300.

 

NOTE 5 – CONVERTIBLE NOTES PAYABLE

 

On April 13, 2017, the Company entered into a Securities Purchase Agreement whereas, Peak One Opportunity Fund, L.P. (the "buyer") wishes to purchase from the Company securities consisting of the Company’s convertible debentures due three years from issuance for an aggregate principal amount of up to $400,000 (which includes an aggregate purchase price of $370,000 and an original issue discount ("OID") of $30,000) (the “Debentures“). The Debentures are to be issued in three tranches. On April 21, 2017, the Company issued the first (the "Signing Debenture") of the three Debentures amounting to $100,000 of principal and a $10,000 OID. At closing, the Company paid a commitment fee to the buyer of $2,500 and paid the buyer’s legal costs of $2,500, resulting in net proceeds of $85,000. The debenture is convertible at a conversion price of $1.50 up to 180 days after the issuance date and if no event of default. If an Event of Default, as such term is defined in the Debentures, has occurred, or 180 days after the Issuance Date, as such term is defined in the Debentures, the conversion price is the lesser of (a) $1.50 or (b) sixty five percent (65%) of the lowest closing bid price of the common stock for the twenty (20) trading days immediately preceding the date of the date of conversion of the Debentures. As additional consideration, the Company issued 30,000 shares of common stock to Peak One Investments, LLC (the General Partner of the buyer) upon execution of this agreement. In relation to this transaction, the Company also incurred deferred finance costs totaling $2,500 for legal fees and commitment fees and $8,500 for a due diligence fee. Accordingly, the Company recorded debt discount of $41,379 related to the restricted shares issued, based on the relative fair value allocation of the net proceeds between the face value of debentures and the fair value of the restricted shares and deferred finance costs of $11,000. During the three months ended November 30, 2017, the holder’s option to convert became active and the Company recorded a derivative liability of $116,364, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. A portion of the derivative liability was attributed to debt discount, with the remaining amount recorded as a loss on valuation of derivative liabilities. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the three months ended November 30, 2017, the holder effected three conversions for a total of 101,076 shares to extinguish a portion of the long-term convertible debenture. As a result, the Company recorded a loss on extinguishment of debt of $44,575. The balance of this long-term convertible debenture, net of discount, at November 30, 2017 is $1,834.

 

On April 24, 2017, the Company entered into a Securities Purchase Agreement whereas, Auctus Fund, LLC (the "buyer") wishes to purchase from the Company a 10% convertible note for a principal amount of $65,000. On April 24, 2017, the Company issued a convertible promissory note (the “note”) to the buyer for $65,000 in proceeds. The note matures on January 5, 2018. The note is convertible at a conversion price of the lesser of (i) 50% of lowest trading price during the 25 days prior to the date of the note or (ii) 50% of the lowest trading price during the 25 days prior to the conversion date. At the closing, the Company paid legal and compliance fees of $2,750, a management fee to an affiliate of the buyer of $5,500 and a due diligence fee of $5,675 to the group that introduced the Company to the buyer. Accordingly, the Company recorded a debt discount of $65,000, with $51,075 attributable to the allocation to the beneficial conversion feature and $13,925 related to deferred finance costs. During the three months ended November 30, 2017, the holder’s option to convert became active and the Company recorded a derivative liability of $68,506, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. A portion of the derivative liability was attributed to debt discount, with the remaining amount recorded to reclassify the beneficial conversion feature. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the three months ended November 30, 2017, the holder effected one conversion for a total of 30,000 shares to extinguish a portion of the long-term convertible debenture. As a result, the Company recorded a loss on extinguishment of debt of $6,475. The balance of this convertible note payable, net of discount, at November 30, 2017 is $39,990.

 
 
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On November 15, 2017, the Company issued a convertible note to Power Up Lending Group, LTD. for $48,000. The note bears interest at 12%, matures on August 20, 2018, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date. As such, there is no beneficial conversion or embedded derivative at issuance or at November 30, 2017. The balance of this convertible note payable, net of discount, at November 30, 2017 is $45,167.

 

On November 15, 2017, the Company entered into a Securities Purchase Agreement whereas, Morningview Financial, LLC (the "buyer") wishes to purchase from the Company a 10% convertible note for a principal amount of $55,000. On November 15, 2017, the Company issued a convertible promissory note (the “note”) to the buyer for $50,000 in proceeds, after a $5,000 original issue discount. The note matures on November 15, 2018. The note is convertible at a conversion price of 50% of the lowest trading price during the 20 days prior to the conversion date. At the closing, the Company paid closing costs and a consulting fee totaling $7,000. Accordingly, the Company recorded a debt discount of $12,000. At issuance, the holder’s option to convert was active and the Company recorded a derivative liability of $63,442, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. A portion of the derivative liability was attributed to debt discount, with the remaining amount recorded to loss on valuation of derivative liabilities. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. The balance of this convertible note payable, net of discount, at November 30, 2017 is $2,292.

 

Amortization of the debt discounts recorded as interest expense during the three months ended November 30, 2017 totaled $40,293.

 

NOTE 6 – DERIVATIVE LIABILITIES

 

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the conversion options on convertible notes payable become derivatives at the point the holder’s option to convert becomes active and there is active trading of the Company’s stock.

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of November 30, 2017. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in November 30, 2017 and August 31, 2017:

 

 

 

Three Months Ended

November 30, 2017

 

 

Year Ended

August 31, 2017

 

Expected term

 

0.197- 2.49 years

 

 

 

-

 

Expected average volatility

 

57% - 128

%

 

 

-

 

Expected dividend yield

 

 

-

 

 

 

-

 

Risk-free interest rate

 

1.10%-1.81

%

 

 

-

 

 
 
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The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2017:

 

Fair Value Measurements Using Significant Observable Inputs (Level 3)

 

Balance - August 31, 2017

 

$ -

 

Addition of new derivative liabilities as debt discounts, upon issuance of convertible notes

 

 

43,000

 

Addition of new derivative liabilities as debt discount, upon holder’s option becoming active

 

 

73,782

 

Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes

 

 

80,455

 

Reclassification of beneficial conversion feature to derivative liabilities

 

 

51,075

 

Reduction in derivative liabilities due to conversions of convertible notes

 

 

(63,529 )

Gain on change in fair value of the derivative liabilities

 

 

(3,478 )

Balance – November 30, 2017

 

$ 181,305

 

 

The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible as of November 30, 2017 amounted to $181,305. During the three months ended November 30, 2017, $116,782 of the value assigned to the derivative liabilities was recognized as a debt discount to the convertible notes, $80,455 was recognized as a “day 1” derivative loss on convertible notes, $51,075 of new derivative liabilities recognized from reclass of additional paid in capital, $63,529 was recorded as a reduction to the derivative liabilities upon the conversion of convertible notes, and $3,478 was recorded as gain on change in fair value of derivative liability, respectively.

 

The following table summarizes the loss on derivative liability included in the income statement for the three months ended November 30, 2017 and 2016, respectively.

 

 

 

Three Months Ended

 

 

 

November 30,

 

 

 

2017

 

 

2016

 

Day one loss due to derivative liabilities on convertible notes and warrants

 

$ 80,455

 

 

$ -

 

Gain on change in fair value of the derivative liabilities

 

 

(3,478 )

 

 

-

 

Loss on change in the fair value of derivative liabilities

 

$ 76,977

 

 

$ -

 

 

NOTE 7 – INCOME TAXES

 

Due to the operating loss and the inability to recognize an income tax benefit, there is no provision for current or deferred federal or state income taxes for the period from inception through November 30, 2017.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.

 

The Company’s total deferred tax asset, calculated using federal and state effective tax rates is as follows:

 

 

 

November 30,

2017

 

 

 August 31,

2017

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$ 1,060,542

 

 

$ 933,112

 

Organization costs

 

 

92,218

 

 

 

94,116

 

Accrued payroll

 

 

293,283

 

 

 

269,324

 

Gross deferred tax asset

 

 

1,446,043

 

 

 

1,296,552

 

Valuation allowance

 

 

(1,446,043 )

 

 

(1,296,552 )

Net deferred tax asset

 

$ -

 

 

$ -

 

 
 
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The Company has not recognized a deferred tax asset for its stock compensation expense due to its non-deductibility. The Company has no plans to pursue any tax benefits relative to its recognized stock compensation expense.

 

The reconciliation of income taxes computed at the federal statutory income tax rate of 35% to total income taxes for the three months ended November 30, 2017 and 2016 is as follows:

 

 

 

2017

 

 

2016

 

Income tax computed at the federal statutory rate

 

$ (149,492 )

 

$ (135,126 )

State income tax, net of federal tax benefit

 

 

-

 

 

 

-

 

Total

 

 

(149,492 )

 

 

(135,126 )

Change in valuation allowance

 

 

149,492

 

 

 

135,126

 

Provision for income taxes

 

$ -

 

 

$ -

 

 

Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance. The valuation allowance increased by $149,492 and $135,126 during the three months ended November 30, 2017 and 2016, respectively.

 

As of November 30, 2017, the Company had a federal and state net operating loss carryforward in the amount of $3,030,121. The net operating loss carryforward differs from the accumulated deficit incurred to date primarily due to the non-deductibility of stock compensation and organizational costs capitalized for income tax purposes. Our federal net operating losses will begin to expire in 2034 and our state tax loss carryforwards will begin to expire in 2029.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

As of November 30, 2017, the Company has issued 6,106,000 shares of common stock to various stockholders, in exchange for cash and services. No such shares were issued during the three months ended November 30, 2017.

 

Due to Officer

 

On March 13, 2016, John K. Lowther, Chief Executive Officer and Director, advanced the Company $12,916. The balance outstanding at November 30, 2017 and August 31, 2017 is $6,725 and $6,944, respectively. This advance does not bear interest.

 

Notes Payable – Related Party

 

During the year ended August 31, 2016, Power It Perfect, Inc. loaned the Company $194,500 for working capital purposes in exchange for promissory notes. During the year ended August 31, 2017, Power It Perfect, Inc. loaned the Company an additional $208,160 for working capital purposes in exchange for promissory notes. During the three months ended November 30, 2017, Power It Perfect, Inc. loaned the Company an additional $81,800 for working capital purposes in exchange for promissory notes. All the notes bear interest at five percent per annum, are non-collateralized and due on demand, as soon as the Company has operating cash flow available for repayment. The balance of the notes payable was $568,173 at November 30, 2017 and $486,373 at August 31, 2017. Accrued interest on the notes, which is included in accrued expenses, totaled $11,256 at November 30, 2017 and $4,626 at August 31, 2017. There are no conversion provisions associated with the notes.

 
 
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NOTE 9 – SUBSIDIARY OPERATIONS

 

Poverty Dignified, Inc. owns 100% of My Power Solutions, Inc., which holds and manages the Company’s franchise operations in Africa. The following represents summarized financial information of My Power Solutions, Inc.:

 

 

 

Three Months Ended

 

 

 

November 30,

2017

 

 

 November 30,

2016

 

Franchise revenue

 

$ -

 

 

$ 3,613

 

Net loss

 

 

(119,079 )

 

 

(76,570 )

 

 

 

November 30,

2017

 

 

August 31,

2017

 

Total assets

 

$ 56,152

 

 

$ 146,950

 

Total liabilities

 

 

939,382

 

 

 

444,761

 

 

Total liabilities of My Power Solutions, Inc. includes amounts due to Poverty Dignified, Inc. of $691,335 at November 30, 2017 and $601,267 at August 31, 2017 that were eliminated in consolidation.

 

NOTE 10 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through January 19, 2018, which is the date when these consolidated financial statements were issued, and is aware of none requiring disclosure, except as follows:

 

On December 14, 2017, Peak One Opportunity Fund, L.P. (“Peak One”) converted $15,000 of debentures at a share price of $0.16 per share for 92,592 shares that they are currently selling into the market. The current gross convertible balance remaining is $40,000.

 

On December 18, 2017, the Company entered into a $56,000 8% convertible note payable agreement with EMA Financial, LLC. The note matures on December 18, 2018. The note is convertible at a conversion price of 50% of the lowest trading price during the 20 days prior to the conversion date. After the original issue discount totaling $3,000, net proceeds to the Company were $53,000.

 

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act). Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”) requires that the company recognize the effects of changes in tax laws or tax rates in the financial statements for the period in which such changes were enacted. Among other things, changes in tax laws or tax rates can affect the amount of taxes payable for the current period, as well as the amount and timing of deferred tax liabilities and deferred tax assets. The Company is a fiscal year reporting company, because the 2017 Tax Act became law in December 2017, and as such would be required to account for the impacts related to the 2017 Tax Act in the financial statements included in their annual report on Form 10-K for August 31, 2018 due in November 2018. The Company has elected to take advantage of the extended measurement period provided by SEC Staff Accounting Bulletin No. 118, and will report the effect of the changes from the 2017 Tax Act when the calculations are complete, or reasonable estimates can be determined. The Company has begun the process of analysis of the 2017 Tax Act and will recognize the effect of the changes in tax laws or rates in the period that the process has been completed.

 
 
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Item 2. Management`s Discussion and Analysis of Financial Condition and Results of Operations

 

With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.

 

Background Overview

 

Poverty Dignified, Inc. is incorporated in the State of Nevada in September 2013. We were formed to operate as a renewable energy company, incubating franchise business concepts designed to affect the individual, community and local economy in rural and peri-urban areas across the globe. In September 2013, we commenced our planned principal operations. To date, we have invested in developing our business plan, developing relationships with a variety of potential marketplaces, developing our wholly-owned subsidiary, My Power Solutions, Inc, and developing our franchise agreement. On March 30, 2015, we sold our first franchise. As of the date of this filing, we have one operational franchise.

 

Since our inception on September 27, 2013 to November 30, 2017, we have generated revenues of $146,180 and $143,844 of franchise expenses and cost of product revenue from one franchise and have an accumulated loss of $10,211,966, due in part from recording stock compensation for issuing our stock at par value to certain insiders in exchange for cash and services. Since incorporation, the Company has raised capital through private sales of its common stock. As of November 30, 2017, 6,106,000 of our 8,659,802 outstanding shares of common stock were issued to various stockholders in exchange for services and/or under restricted stock agreements. Relative to those shares, since inception, the Company has recognized total expense of $6,081,000. Although we do not value the services at this price, we value the stock at the per share price under the current Private Placement Memorandum or other equity offerings in effect at the time the services are rendered, which we believe represents the fair value of the stock issued.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of November 30, 2017, the Company had cash of $27,342, a working capital deficit of $1,938,299 and a stockholders’ deficit of $1,889,398. The Company has incurred net losses from start-up costs and minimal operations since inception to November 30, 2017 and continues to expend cash in order to accomplish its business objectives. Based on the Company’s current progress in its business plan, it has not successfully implemented its plan to mitigate the going concern issue. Specifically, the Company has only one operational unit and has not been effective in reducing operating expenses. As a result, as of November 30, 2017, these issues raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

In order to continue as a going concern and achieve a profitable level of operations, we will need, among other things, additional capital resources. Management’s plan to continue as a going concern includes raising investment capital through leveraging equity in the Company, generating revenue through operations and by securing additional debt and/or equity financing. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans to raise additional investment capital or generate revenue through operations. Our ability to continue as a going concern is dependent upon management’s ability to successfully implement the plans described above. Management cannot provide any assurance that unforeseen circumstances that may occur at any time within the next twelve months, or thereafter, will not increase the need for us to raise additional capital on an immediate basis. There can be no assurance that we will be able to continue to raise funds in subsequent debt or equity financings, in which case the Company may be unable to meet its obligations.

  

The Company's primary source of operating funds since inception has been equity financings through a private placement. In its private placement memorandum dated January 2014 and closed November 2014, the Company raised $1,182,180 for its operations, research and development, and marketing of its franchise opportunities. Additionally, the Company has borrowed funds from a related party for working capital purposes and $568,173 remains outstanding under notes payable to this related party at November 30, 2017.

 
 
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Through November 30, 2017, we have one operational franchise. As such, the Company has recognized revenues of $146,180 and associated franchise expenses and cost of product revenue of $143,844 since its inception through November 30, 2017. The Company needs to generate additional revenues or raise additional capital in order to be able to accomplish its business plan. In the interim, the Company will accrue for management salaries and will continue to borrow funds from affiliates as needed.

 

Since our original Private Placement Offering was not sufficient to capitalize the Company, Poverty Dignified, Inc. conducted a Private Investment in Public Equity transaction, in which the Company offered 1,000,000 unregistered shares to accredited investors at a discounted price of $0.75 per share to raise an additional $750,000 of growth capital. Under this offering, the Company sold 999,970 shares of common stock for proceeds of $749,977, including 784,302 shares of common stock for proceeds of $588,226 during the year ended August 31, 2017. Poverty Dignified, Inc. is currently doing a Private Placement Memorandum, in which the Company is offering 2,000,000 shares at a price of $1.50 per share to raise an additional $3,000,000 in growth capital. In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share. Through August 31, 2017, under this Private Placement Memorandum, the Company has issued 144,000 shares of common stock at a discounted price of $0.75 per share for proceeds of $108,000 and has issued 36,000 shares of common stock at the offering price of $1.50 per share for proceeds of $54,000. During the three months ended November 30, 2017, the Company issued 10,800 shares at a discounted price of $.075 per share and 6,000 shares at a discounted price of $1.50 for total proceeds of $17,100.

 

During the second or third quarter of fiscal year 2018, Poverty Dignified, Inc. plans to ask for approval for a secondary offering. Upon approval, the Company plans to register 1,000,000 shares in an S-1 registration. Once "effective" by the SEC, these shares will be made available to the public market.

 

During the year ended August 31, 2017, the Company entered into two separate convertible note payable agreements, which provided net proceeds of $125,075, after payment of debt issuance costs totaling $24,925.

 

During the three months ended November 30, 2017, the Company entered into two separate convertible note payable agreements for $55,000 and $48,000, respectively. After an original issue discount of $5,000 and the payment of debt issuance costs totaling $10,000, net proceeds to the Company were $88,000.

 

Subsequent to November 30, 2017, the Company has entered into a convertible note payable agreement for $56,000. After an original issue discount totaling $3,000, net proceeds to the Company were $53,000.

 

Under the second phase of its expanded franchise capacity, Poverty Dignified, Inc’s wholly-owned subsidiary, My Power Solutions, Inc., is currently in the final stages of completing its involvement in a Public Private Partnership with the Development Bank of South Africa. Should this Public Private Partnership befully executed, My Power Solutions, Inc. will have the responsibility of placing 240 franchise units in rural communities over the next thirty-six months, beginning in early 2018. It will be working within a consortium, headed by InovaSure, a South African organization created to provide energy security to the people of South Africa, to bring electricity, connectivity and digital education to 240,000 homes. This Public Private Partnership would impact our near-term operational cash flow significantly though upfront development funds, projected to be $150,000 per location, or $36,000,000, over the next thirty-six months. Additionally, MPS would receive ongoing revenues to manage and maintain each of the 240 franchise units over a twenty-five year period.

 

Poverty Dignified, Inc. is an "Incubation" company. The Company is constantly incubating other business concepts and technologies that will be wholly-owned subsidiaries of Poverty Dignified. These concepts could contribute to the overall profitability of Poverty Dignified, Inc. and allow the necessary funds to be in place to offset any additional costs from the operations of My Power Solutions, Inc.

 

Results of Operations

 

For the three months ended November 30, 2017

 

There were no revenues for the three months ended November 30, 2017. There was a net loss of $427,119.

 

Our expenses for the three months ended November 30, 2017 were related to franchise expenses of $15, professional fees of $52,065, and general and administrative costs of $314,393. General and administrative costs primarily consisted of payroll expenses of $164,696 and $15,969 of travel related costs. $68,453 of the payroll expenses related to amounts accrued for, but not paid to, the Company’s management team.

 
 
19
 
Table of Contents

  

The Company recorded a loss on the changes in fair value of derivative liabilities of $76,977 for the three months ended November 30, 2017. As a result of conversions of convertible debt during the three months ended November 30, 2017, the Company recorded a loss on extinguishment of debt of $51,050.

 

For the three months ended November 30, 2016

 

There were revenues of $3,613 for the three months ended November 30, 2016. There was a net loss of $386,074.

 

Our expenses for the three months ended November 30, 2016 were related to franchise expenses of $17,081, research and development of $306, professional fees of $57,907, and general and administrative costs of $314,393. General and administrative costs primarily consisted of payroll expenses of $155,623, $49,003 in advertising and $69,953 of travel related costs. $70,168 of the payroll expenses related to amounts accrued for, but not paid to, the Company’s management team.

 

Liquidity and Capital Resources

 

The Company currently has one operational franchise in South Africa. From inception to November 30, 2017, we have generated revenues of $146,180 and $143,844 of franchise expenses and cost of product revenue from one franchise and have incurred operating expenses totaling $9,979,481, of which $6,081,000 was non-cash compensation. We do not expect to incur many of these costs on a regular basis as they were for research and development and stock to our founders and consultants. Although we do believe we will continue to need the services of our founders and consultants, we do not believe that we will continue to issue large quantities of stock for those services. Stock to our founders and consultants was tendered at par value and for various services. We also believe that we will not invest as much capital for research and development, and therefore, our expenses will decrease. Furthermore, we issued significant amounts of stock in exchange for services. We do not believe that we will continue this trend in the future. The Company needs to generate additional revenues or raise additional capital in order to be able to accomplish its business plan. In the interim, the Company will accrue for management salaries and will continue to borrow funds from affiliates as needed.

 

The Company's primary source of operating funds since inception has been equity financings through a private placement. In its private placement memorandum dated January 2014 and closed November 2014, the Company raised $1,182,180 for its operations, research and development, and marketing of its franchise opportunities. Additionally, the Company has borrowed funds from a related party for working capital purposes and $568,173 remains outstanding under notes payable to this related party at November 30, 2017.

 

Since our original Private Placement Offering was not sufficient to capitalize the Company, Poverty Dignified, Inc. conducted a Private Investment in Public Equity transaction, in which the Company offered 1,000,000 unregistered shares to accredited investors at a discounted price of $0.75 per share to raise an additional $750,000 of growth capital. Under this offering, the Company sold 999,970 shares of common stock for proceeds of $749,977, including 784,302 shares of common stock for proceeds of $588,226 during the year ended August 31, 2017.

 

Poverty Dignified, Inc. is currently doing a Private Placement Memorandum, in which the Company is offering 2,000,000 shares at a price of $1.50 per share to raise an additional $3,000,000 in growth capital. In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share. Through August 31, 2017, under this Private Placement Memorandum, the Company has issued 144,000 shares of common stock at a discounted price of $0.75 per share for proceeds of $108,000 and has issued 36,000 shares of common stock at the offering price of $1.50 per share for proceeds of $54,000. During the three months ended November 30, 2017, the Company issued 10,800 shares at a discounted price of $.075 per share and 6,000 shares at a discounted price of $1.50 for total proceeds of $17,100.

 

During the second or third quarter of fiscal year 2018, Poverty Dignified, Inc. plans to ask for approval for a secondary offering. Upon approval, the Company plans to register 1,000,000 shares in an S-1 registration. Once "effective" by the SEC, these shares will be made available to the public market.

 
 
20
 
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During the year ended August 31, 2017, the Company entered into two separate convertible note payable agreements, which provided net proceeds of $125,075, after payment of debt issuance costs totaling $24,925.

 

During the three months ended November 30, 2017, the Company entered into two separate convertible note payable agreements for $55,000 and $48,000, respectively. After an original issue discount of $5,000 and the payment of debt issuance costs totaling $10,000, net proceeds to the Company were $88,000.

 

As of November 30, 2017, we had cash of $27,342 and have had a net increase in cash of $20,196 during the three months ended November 30, 2017. We believe in the near future we will generate revenues from operations. We are substantially complete with our research and development activities as it relates to My Power Solutions and our operations in Africa. We do not expect to incur any additional research and development expenses at this time with respect to the aforementioned My Power Solutions business concept. However, if we want to develop and expand our business concept, we will need to reinvest all of our earnings into our operations. Therefore, we do not believe we will have any profits in the near future, nor we will be distributing any dividends.

 

We do not currently have enough cash on hand to deploy our current business plan in 2018. In order to achieve a profitable level of operations, we will need, among other things, additional capital resources. Management’s plan to continue as a going concern includes raising investment capital through leveraging equity in the Company, generating revenue through operations and by securing additional debt and/or equity financing. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans to raise additional investment capital or generate revenue through operations. Our ability to continue as a going concern is dependent upon management’s ability to successfully implement the plans described above. Management cannot provide any assurance that unforeseen circumstances that may occur at any time within the next twelve months, or thereafter, will not increase the need for us to raise additional capital on an immediate basis. There can be no assurance that we will be able to continue to raise funds in subsequent debt or equity financings, in which case the Company may be unable to meet its obligations.

 

Subsequent to November 30, 2017, we have entered into a convertible note payable agreement for $56,000. After an original issue discount totaling $3,000, net proceeds to the Company were $53,000.

 

Under the second phase of its expanded franchise capacity, Poverty Dignified, Inc’s wholly-owned subsidiary, My Power Solutions, Inc., is currently in the final stages of completing its involvement in a Public Private Partnership with the Development Bank of South Africa. Should this Public Private Partnership be fully executed, My Power Solutions, Inc. will have the responsibility of placing 240 franchise units in rural communities over the next thirty-six months, beginning in early 2018. It will be working within a consortium, headed by InovaSure, a South African organization created to provide energy security to the people of South Africa, to bring electricity, connectivity and digital education to 240,000 homes. This Public Private Partnership would impact our near-term operational cash flow significantly though upfront development funds, projected to be $150,000 per location, or $36,000,000, over the next thirty-six months. Additionally, MPS would receive ongoing revenues to manage and maintain each of the 240 franchise units over a twenty-five year period.

 

Poverty Dignified, Inc. is an "Incubation" company. The Company is constantly incubating other business concepts and technologies that will be wholly-owned subsidiaries of Poverty Dignified. These concepts could contribute to the overall profitability of Poverty Dignified, Inc. and allow the necessary funds to be in place to offset any additional costs from the operations of My Power Solutions, Inc.

 

Equity Distribution to Management

 

Since our incorporation, we have raised capital through private sales of our common equity. As of November 30, 2017, we have issued 6,106,000 shares of our common stock to various shareholders, in exchange for cash and services. Since inception, we have recognized total expense of $6,081,000. No such expenses were recognized during the three months ended November 30, 2017 or 2016.

 
 
21
 
Table of Contents

  

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not required

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Based upon an evaluation of the effectiveness of disclosure controls and procedures, our principal executive and financial officer has concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were not effective. The Company’s principal executive and financial officer has determined that there are material weaknesses in our disclosure controls and procedures.

 

The material weaknesses in our disclosure control procedures are as follows:

 

1)

lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures; and

2)

inadequate segregation of duties consistent with control objectives;

 

We recognize the importance of the control environment as it sets the overall tone for the organization and is the foundation for all other components of internal control.

 

As of January 19, 2018, while we have hired a third-party consultant to help us with our public reporting and disclosures we have not taken action to correct the material weaknesses identified above in our internal control over financial reporting. Once the Company has additional sales activities and has sufficient personnel available, then our Board of Directors, in connection with the aforementioned weaknesses, will implement the following remediation measures:

 

We will hire additional personnel with sufficient qualifications to allow us to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. We plan to use some of the funds through the private placement offering to allocate to this additional salary cost.

 

And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

 

If we are able to raise additional capital, we anticipate having sufficient funds to at least partially, if not fully, implement our plans by August 31, 2018. Additionally, we plan to test our updated controls and remediate our deficiencies by August 31, 2018.

 
 
22
 
Table of Contents

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

 

No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable

 

Item 5. Other Information

 

None

 
 
23
 
Table of Contents

 

Item 6. Exhibits

 

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

 

 

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

 

 

Exhibit 32

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 
24
 
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SIGNATURES

 

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Poverty Dignified, Inc.

 

/s/ John K. Lowther                                

John K. Lowther

President and Chief Executive Officer

(Principal Executive Officer)

 

/s/ George C. Critz, III                          

George C. Critz, III

Vice-President and Chief Financial Officer

(Principal Financial Officer)

 

Dated: January 19, 2018

 

 

25

 

EX-31.1 2 povd_ex311.htm CERTIFICATION povd_ex311.htm

EXHIBIT 31.1

 

CEO Certification

 

I, John, K. Lowther, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Poverty Dignified, Inc. (the "Company");

 

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

 

4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

 

 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d) disclosed in this report any changes in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

 

5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

 

 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

 

 

 

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting

 

January 19, 2018

 

   
/s/ John K. Lowther
John K. Lowther  
President and Chief Executive Officer  
(Principal Executive Officer)  

 

EX-31.2 3 povd_ex312.htm CERTIFICATION povd_ex312.htm

EXHIBIT 31.2

 

CFO Certification

 

I, George C. Critz, III, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Poverty Dignified, Inc., (the "Company");

 

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

 

4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

 

 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d) disclosed in this report any changes in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

 

5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

 

 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

 

 

 

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting

 

January 19, 2018

 

   
/s/ George C. Critz, III
George C. Critz, III  
Vice-President and Chief Financial Officer  
(Principal Financial Officer)  

 

EX-32 4 povd_ex32.htm CERTIFICATION povd_ex32.htm

EXHIBIT 32

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Poverty Dignified, Inc. (the "Company") on Form 10-Q for the period ended November 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John K. Lowther, President and Chief Executive Officer, and I, George C. Critz, III, Vice-President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of the undersigned’s knowledge and belief:

 

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

 

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

   
/s/ John K. Lowther
John K. Lowther  

President and Chief Executive Officer

 

(Principal Executive Officer)

 

 

 

/s/ George C. Critz, III

 

George C. Critz, III

 

Vice-President and Chief Financial Officer

 

(Principal Financial Officer)

 

 

 

Dated: January 19, 2018

 

 

 

 

 

 

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Document and Entity Information - shares
3 Months Ended
Nov. 30, 2017
Jan. 19, 2018
Document And Entity Information    
Entity Registrant Name Poverty Dignified, Inc.  
Entity Central Index Key 0001591615  
Document Type 10-Q  
Document Period End Date Nov. 30, 2017  
Amendment Flag false  
Current Fiscal Year End Date --08-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   8,746,394
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2018  
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Consolidated Balance Sheets - USD ($)
Nov. 30, 2017
Aug. 31, 2017
Current assets    
Cash $ 27,342 $ 7,146
Prepaid inventory
Prepaid expenses and other current assets 14,617 27,219
Total current assets 41,959 34,365
Property and equipment, net 50,735 53,505
Total assets 92,694 87,870
Current liabilities    
Accounts payable 66,793 58,845
Notes payable - related party 568,173 486,373
Accrued payroll expenses 837,950 769,497
Accrued expenses 24,864 26,622
Other liabilities 206,999 206,999
Franchise liability
Due to officer 6,725 6,944
Convertible notes payable, net of discount of $72,381 and $32,500, respectively 87,449 32,500
Derivative liabilities 181,305
Total current liabilities 1,980,258 1,587,780
Long term convertible debenture, net of discount of $53,166 and $46,559, respectively 1,834 53,441
Total liabilities 1,982,092 1,641,221
Stockholders' equity (deficit)    
Preferred stock par value $.0001:10,000,000 shares authorized; no shares issued and outstanding
Common stock par value $.0001: 100,000,000 shares authorized; 8,659,802 and 8,511,850 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively 866 851
Additional paid in capital 8,364,396 8,272,310
Accumulated deficit (10,211,966) (9,784,847)
Accumulated other comprehensive loss (42,694) (41,665)
Total stockholders' equity (deficit) (1,889,398) (1,553,351)
Total liabilities and stockholders' equity (deficit) $ 92,694 $ 87,870
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Consolidated Balance Sheets (Parenthetical) - USD ($)
Nov. 30, 2017
Aug. 31, 2017
Current liabilities    
Convertible notes payable, net of discount $ 72,381 $ 32,500
Long term convertible debenture, net of discount $ 53,166 $ 46,559
Stockholders' equity (deficit)    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 8,659,802 8,511,850
Common stock, shares outstanding 8,659,802 8,511,850
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Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Consolidated Statements Of Operations And Comprehensive Loss    
Franchise revenue $ 3,613
Franchise and operating expenses    
Franchise expenses 15 17,081
Research and development 306
Professional fees 52,065 57,907
General and administrative    
Payroll 164,696 155,623
Advertising 49,003
Travel 15,969 69,953
Other 16,320 35,320
Total general and administrative 196,985 309,899
Total franchise and operating expenses 249,065 385,193
Net operating loss (249,065) (381,580)
Interest expense (50,027) (4,494)
Loss on valuation of derivative liabilities (76,977)
Loss on extinguishment of debt (51,050)
Net Loss (427,119) (386,074)
Other comprehensive loss:    
Foreign currency translation adjustment (1,029) (5,376)
Comprehensive loss $ (428,148) $ (391,450)
Net loss per common share - Basic and diluted $ (0.05) $ (0.05)
Weighted average common shares outstanding - Basic and diluted 8,585,826 7,628,182
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Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) - 3 months ended Nov. 30, 2017 - USD ($)
Common Stock
Additional Paid In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Beginning Balance, Shares at Aug. 31, 2017 8,511,850        
Beginning Balance, Amount at Aug. 31, 2017 $ 851 $ 8,272,310 $ (9,784,847) $ (41,665) $ (1,553,351)
Issuance of common stock, Shares 16,800        
Issuance of common stock, Amount $ 2 17,098 17,100
Issuance of common stock through conversion of convertible notes payable, Shares 131,152        
Issuance of common stock through conversion of convertible notes payable, Amount $ 13 126,063 126,076
Reclassification of beneficial conversion feature to derivative liabilities (51,075) (51,075)
Other comprehensive loss (1,029) (1,029)
Net loss (427,119) (427,119)
Ending Balance, Shares at Nov. 30, 2017 8,659,802        
Ending Balance, Amount at Nov. 30, 2017 $ 866 $ 8,364,396 $ (10,211,966) $ (42,694) $ (1,889,398)
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Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended 12 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Aug. 31, 2017
Cash Flows From Operating Activities      
Net loss $ (427,119) $ (386,074)  
Adjustments to reconcile net loss to net cash used in operating activities:      
Stock compensation  
Depreciation 2,770 134  
Amortization of debt discounts 40,293  
Loss on valuation of derivative liabilities 76,977  
Loss on extinguishment of debt 51,050  
Changes in operating assets and liabilities:      
Prepaid expenses and other current assets 12,602 (7,641)  
Accounts payable 7,948 2,535  
Accrued payroll expenses 68,453 70,168  
Accrued expenses 1,570 (1,132)  
Deferred revenue and other liabilities 9,235  
Net cash used in operating activities (165,456) (312,775)  
Cash Flows From Financing Activities      
Proceeds from notes payable - related party 81,800  
Payments on notes payable - related party (99,048)  
Advances from (payments to) officer, net (219) (133)  
Issuance of common stock 17,100 449,000  
Proceeds from convertible notes payable 98,000  
Debt issuance costs (10,000)  
Net cash provided by financing activities 186,681 349,819  
Effect of foreign currency translation (1,029) (5,376)  
Net increase in cash 20,196 31,668  
Cash - beginning of period 7,146 20,557 $ 20,557
Cash - end of period 27,342 52,225 $ 7,146
Non-Cash Financing Activities:      
Original issue discount in connection with convertible note payable 5,000  
Issuance of common stock through conversion of convertible notes payable 126,076  
Reclassification of beneficial conversion feature to derivative liabilities 51,075  
Supplementary Disclosure Of Cash Flow Information      
Cash paid during the period for interest $ 4,802 $ 5,851  
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NATURE OF OPERATIONS AND BASIS OF PRESENTATION
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Poverty Dignified, Inc. was incorporated in the State of Nevada on September 27, 2013, and is headquartered in Hurst, Texas. The Company has established itself as a renewable energy company, incubating franchise business concepts designed to affect the individual, community and local economy in rural and peri-urban areas across the globe. My Power Solutions, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc., was incorporated in the State of Nevada on March 13, 2014 as a franchise business opportunity with Franchise Disclosure Documents for franchise sales in both the United States and South African markets. Africhise, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc. is a Delaware Corporation, and was formed on August 28, 2015 to be the franchise management arm of My Power Solutions, Inc's franchise operations in Africa. These entities are collectively referred herein to as Poverty Dignified, or the Company.

 

Going Concern and Management’s Plans

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of November 30, 2017, the Company had cash of $27,342, a working capital deficit of $1,938,299 and a stockholders’ deficit of $1,889,398. The Company has incurred net losses from start-up costs and minimal operations since inception to November 30, 2017 and continues to expend cash in order to accomplish its business objectives. Based on the Company’s current progress in its business plan, it has not successfully implemented its plan to mitigate the going concern issue. Specifically, the Company has only one operational unit and has not been effective in reducing operating expenses. As a result, as of November 30, 2017, these issues raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company needs additional revenues or must raise additional capital, reduce expenses and curtail cash outflows in order to be able to accomplish its business plan. In the interim, the Company will accrue for management salaries and defer certain payments and will continue to borrow funds from affiliates as needed. From the Company’s inception through November 30, 2017, the Company has one operational franchise unit. As such, the Company has recognized franchise revenue of $146,180 and associated franchise expenses and cost of product revenue of $143,844 from inception through November 30, 2017.

 

The Company's primary source of operating funds since inception has been equity financings through a private placement. In its private placement memorandum dated January 2014 and closed November 2014, the Company raised $1,182,180 for its operations, research and development, and marketing of its franchise opportunities.

 

Since our original Private Placement Offering was not sufficient to capitalize the Company, Poverty Dignified, Inc. conducted a Private Investment in Public Equity transaction, in which the Company offered 1,000,000 unregistered shares to accredited investors at a discounted price of $0.75 per share to raise an additional $750,000 of growth capital. Under this offering, the Company sold 999,970 shares of common stock for proceeds of $749,977, including 784,302 shares of common stock for proceeds of $588,226 during the year ended August 31, 2017. Poverty Dignified, Inc. is currently doing a Private Placement Memorandum, in which the Company is offering 2,000,000 shares at a price of $1.50 per share to raise an additional $3,000,000 in growth capital. In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share. Through August 31, 2017, under this Private Placement Memorandum, the Company issued 144,000 shares of common stock at a discounted price of $0.75 per share for proceeds of $108,000 and issued 49,700 shares of common stock at the offering price of $1.50 per share for proceeds of $74,550. During the three months ended November 30, 2017, the Company issued 10,800 shares at a discounted price of $.075 per share and 6,000 shares at a discounted price of $1.50 for total proceeds of $17,100.

 

During the second or third quarter of fiscal year 2018, Poverty Dignified, Inc. plans to ask for approval for a secondary offering. Upon approval, the Company plans to register 1,000,000 shares in an S-1 registration. Once "effective" by the SEC, these shares will be made available to the public market.

 

The Company has borrowed funds from a related party for working capital purposes and $568,173 remains outstanding under notes payable to this related party at November 30, 2017.

 

During the year ended August 31, 2017, the Company entered into two separate convertible note payable agreements, which provided net proceeds of $125,075, after payment of debt issuance costs totaling $24,925.

 

During the three months ended November 30, 2017, the Company entered into two separate convertible note payable agreements for $55,000 and $48,000, respectively. After an original issue discount of $5,000 and the payment of debt issuance costs totaling $10,000, net proceeds to the Company were $88,000.

 

Subsequent to November 30, 2017, the Company has entered into a convertible note payable agreement for $56,000. After an original issue discount totaling $3,000, net proceeds to the Company were $53,000.

 

Under the second phase of its expanded franchise capacity, Poverty Dignified, Inc’s wholly-owned subsidiary, My Power Solutions, Inc., is currently in the final stages of completing its involvement in a Public Private Partnership with the Development Bank of South Africa. Should this Public Private Partnership befully executed, My Power Solutions, Inc. will have the responsibility of placing 240 franchise units in rural communities over the next thirty-six months, beginning in early 2018. It will be working within a consortium, headed by InovaSure, a South African organization created to provide energy security to the people of South Africa, to bring electricity, connectivity and digital education to 240,000 homes. This Public Private Partnership would impact our near-term operational cash flow significantly though upfront development funds, projected to be $150,000 per location, or $36,000,000, over the next thirty-six months. Additionally, MPS would receive ongoing revenues to manage and maintain each of the 240 franchise units over a twenty-five year period.

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Form 10-K, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the year ended August 31, 2017. The interim results for the three months ended November 30, 2017 are not necessarily indicative of results for the full fiscal year.

 

The unaudited consolidated financial statements include the accounts of Poverty Dignified, Inc., My Power Solutions, Inc. and Africhise, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Risks and Uncertainties

 

Poverty Dignified’s activities are subject to significant risks and uncertainties, including failing to secure funding to operationalize the franchise business concept.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash

 

The Company maintains funds in various financial institutions that are members of the Federal Deposit Insurance Corporation (“FDIC”). As such, funds are insured based on Federal Reserve limits. The Company has not experienced any losses in the past, and management believes it is not exposed to any significant credit risk on the current account balances. At times, cash balances may exceed insured limits.

 

The Company has determined that the functional currency of its foreign subsidiaries is the local currency. At November 30, 2017 and August 31, 2017, the Company had cash in foreign bank accounts of $800 and $5,107, respectively.

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consist of payments primarily related to a professional fee retainer, payroll advance and short-term deposits.

 

Property and Equipment, Net

 

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally between three and five years. As of November 30, 2017 and August 31, 2017, property and equipment consists of computer equipment and solar equipment for containers with a total cost of $55,673. Accumulated depreciation as of November 30, 2017 and August 31, 2017 is $4,938 and $2,168, respectively. Depreciation expense for the three months ended November 30, 2017 and 2016 was $2,770 and $134, respectively.

 

Accrued Expenses

 

Accrued expenses are recorded when incurred and primarily consist of accrued interest on notes payable and amounts due for supplies and travel. Accrued payroll consists of salary amounts earned but deferred by the Company's management team.

 

Derivative Liabilities

 

The Company has certain financial instruments that contain embedded derivatives. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be accounted for separately. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to income or expense as part of gain or loss on extinguishment.

 

Revenue Recognition

 

The Company recognizes revenue once pervasive evidence that an agreement exists; the product and/or service have been rendered; the fee is fixed and determinable; and collection of the amount due is reasonably assured.

 

Franchise Revenue

 

Our franchise-related revenue is comprised of three separate and distinct earnings processes: area development fees, initial franchise fees, and continuing royalty payments.

 

Area Development Fees – Our area development fee consists of an initial, non-refundable payment of $15,000 per unit to be developed in consideration for the services we perform in preparation of executing each area development agreement. $5,000 of this initial area development fee relates to services, which include, but are not limited to, conducting market and territory analysis, are completed prior to our execution of the area development agreement and receipt of the corresponding area development fee. As a result, we recognize this portion of the area development fee as revenue upon receipt. The remaining $10,000 is allocated to the opening of the franchise and is recognized in accordance with our revenue recognition policy on initial franchise fee revenue noted below. From inception through November 30, 2017, the Company had not executed any area development agreements.

 

Initial Franchise Fees – The Company executes franchise agreements that set the terms of its arrangement with each franchisee. The franchise agreements require the franchisee to pay an initial, non-refundable fee of $15,000. Initial franchise fee revenue from the sale of a franchise is recognized when the Company has substantially performed or satisfied all of its material obligations relating to the sale. Substantial performance has occurred when the Company has (a) performed substantially all of its initial services required by the franchise agreement, such as assistance in site selection, personnel training and implementation of an accounting and quality control system; and (b) completed all of its other material pre-opening obligations. Additionally, at the contract signing, the franchisee is required to fund $90,000 for purchases of equipment, inventory, point of sale software and computer hardware, furniture, fixtures and décor and signage and payment of import taxes and freight costs. Revenue for these items is recognized upon delivery of the assets. The Company defers revenue from the initial franchise fee and other amounts due at contract signing until the respective revenue recognition milestones are met. From inception through November 30, 2017, the Company had sold three franchise units. The Company has completed the services required to recognize the revenue for one of the franchise units. As such, the Company has recognized franchise revenue of $3,613 and associated franchise expenses of $17,081 for the three months ended November 30, 2016. For the three months ended November 30, 2017, the Company recognized no revenue and franchise expenses of $15 on the one franchise unit.

 

Management decided to repurchase the remaining two franchise units and plans to utilize them for corporate-owned franchise purposes. As such, the respective investments made by the franchisees will be refunded. The total refund amount of $206,999 is classified as other liabilities at November 30, 2017 and August 31, 2017.

 

Continuing Royalty Payments – On an ongoing basis, royalties of 14% of gross revenues on authorized products and services will be recognized in the period in which they are earned. There were no revenues from continuing royalty payments for the three months ended November 30, 2017 and 2016.

 

Product Revenue

 

Product revenue represents amounts earned for equipment delivered and set up by the Company for digital classroom purposes within schools in its franchise markets, but not included in the franchises themselves. For products that include installation, and if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. For revenue that includes customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. Certain of the Company’s products require specialized installation. Revenue for these products is deferred until installation is completed. There were no revenues from products for the three months ended November 30, 2017 and 2016.

 

The Company is currently dedicating substantial efforts towards the cultivation of a proposed partnership with Inovasure and the Development Bank of South Africa. The Company hopes to participate in a Public Private Partnership with both entities, and once consummated, management will migrate to a joint development and corporate owned franchise model that encompasses development, management and maintenance in its revenue model.

 

Advertising

 

Advertising expenditures are charged to expense as incurred and are included in general and administrative expense. Total advertising expense for the three months ended November 30, 2017 and 2016 was $-0- and $49,003, respectively.

 

Research and Development

 

Research and development expenditures are charged to expense as incurred.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

 

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

 

The three-level hierarchy for fair value measurements is defined as follows:

 

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

 

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

 

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

 

The following table summarizes fair value measurements by level at November 30, 2017 and August 31, 2017, measured at fair value on a recurring basis:

 

November 30, 2017   Level 1     Level 2     Level 3     Total  
Liabilities                        
Derivative Liabilities   $ -     $ -     $ 181,305     $ 181,305  
                                 
August 31, 2017   Level 1     Level 2     Level 3     Total  
Liabilities                                
Derivative Liabilities   $ -     $ -     $ -     $ -  

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. 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 income in the period that includes the enactment date.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.

 

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be classified as additional income taxes in the consolidated statements of income. No interest or penalties were recognized for the three months ended November 30, 2017 or 2016.

 

Tax years 2015 and forward remain open to examination under United States statute of limitations. Management is not aware of any material uncertain tax positions and no liability has been recognized at November 30, 2017 or August 31, 2017.

 

Earnings Per Share

 

Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding.

 

Foreign Currency Translation

 

For financial reporting purposes, the functional currency of the foreign operations of My Power Solutions, Inc. is the local currency. The assets and liabilities of foreign operations for which the local currency is the functional currency are translated into the U.S. dollar at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the period. The accumulated foreign currency translation adjustment is presented as a component of accumulated other comprehensive loss in the consolidated statement of changes in stockholders’ equity (deficit).

 

Reclassifications

 

Certain amounts in the prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported stockholders’ deficit or net loss.

 

Recent Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of operations.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS EQUITY (DEFICIT)
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 3 - STOCKHOLDERS EQUITY (DEFICIT)

In September 2013, the Company authorized the issue of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock at a par value of $.0001. There is a total of 8,659,802 and 8,511,850 shares of common stock issued and outstanding at November 30, 2017 and August 31, 2017, respectively. Preferred stockholders could receive preferential treatment relative to declared dividends, should there be any, and to distributions upon a liquidation event. As of November 30, 2017, no preferred stock has been issued.

 

Since incorporation, the Company has raised capital through private sales of its common stock. As of November 30, 2017, of our 8,659,802 outstanding shares of common stock, 6,106,000 shares were issued to various stockholders in exchange for services and/or under restricted stock agreements. Relative to those shares, since inception, the Company has recognized total expense of $6,081,000. During the three months ended November 30, 2017 and 2016, the Company issued no shares for stock compensation expense.

 

Poverty Dignified, Inc. conducted a Private Investment in Public Equity transaction, in which the Company offered 1,000,000 unregistered shares to accredited investors at a discounted price of $0.75 per share to raise an additional $750,000 of growth capital. During the year ended August 31, 2017, the Company sold 784,302 shares of common stock under this Private Investment in Public Equity offering for proceeds of $588,226.

 

Poverty Dignified, Inc. is currently doing a Private Placement Memorandum, in which the Company is offering 2,000,000 shares at a price of $1.50 per share to raise an additional $3,000,000 in growth capital. In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share. Through August 31, 2017, under this Private Placement Memorandum, the Company has issued 144,000 shares of common stock at a discounted price of $0.75 per share for proceeds of $108,000 and has issued 49,700 shares of common stock at the offering price of $1.50 per share for proceeds of $74,550. During the three months ended November 30, 2017, the Company issued 10,800 shares at a discounted price of $.075 per share and 6,000 shares at a discounted price of $1.50 for total proceeds of $17,100.

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COMMITMENTS AND CONTINGENCIES
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 4 - COMMITMENTS AND CONTINGENCIES

The Company maintains a month to month lease on its corporate headquarters location. The Company has a 24 month lease for its office in South Africa. The lease expires on May 31, 2018. As of November 30, 2017, total future minimum lease payments total approximately $5,300.

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CONVERTIBLE NOTES PAYABLE
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 5 - CONVERTIBLE NOTES PAYABLE

On April 13, 2017, the Company entered into a Securities Purchase Agreement whereas, Peak One Opportunity Fund, L.P. (the "buyer") wishes to purchase from the Company securities consisting of the Company’s convertible debentures due three years from issuance for an aggregate principal amount of up to $400,000 (which includes an aggregate purchase price of $370,000 and an original issue discount ("OID") of $30,000) (the “Debentures“). The Debentures are to be issued in three tranches. On April 21, 2017, the Company issued the first (the "Signing Debenture") of the three Debentures amounting to $100,000 of principal and a $10,000 OID. At closing, the Company paid a commitment fee to the buyer of $2,500 and paid the buyer’s legal costs of $2,500, resulting in net proceeds of $85,000. The debenture is convertible at a conversion price of $1.50 up to 180 days after the issuance date and if no event of default. If an Event of Default, as such term is defined in the Debentures, has occurred, or 180 days after the Issuance Date, as such term is defined in the Debentures, the conversion price is the lesser of (a) $1.50 or (b) sixty five percent (65%) of the lowest closing bid price of the common stock for the twenty (20) trading days immediately preceding the date of the date of conversion of the Debentures. As additional consideration, the Company issued 30,000 shares of common stock to Peak One Investments, LLC (the General Partner of the buyer) upon execution of this agreement. In relation to this transaction, the Company also incurred deferred finance costs totaling $2,500 for legal fees and commitment fees and $8,500 for a due diligence fee. Accordingly, the Company recorded debt discount of $41,379 related to the restricted shares issued, based on the relative fair value allocation of the net proceeds between the face value of debentures and the fair value of the restricted shares and deferred finance costs of $11,000. During the three months ended November 30, 2017, the holder’s option to convert became active and the Company recorded a derivative liability of $116,364, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. A portion of the derivative liability was attributed to debt discount, with the remaining amount recorded as a loss on valuation of derivative liabilities. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the three months ended November 30, 2017, the holder effected three conversions for a total of 101,076 shares to extinguish a portion of the long-term convertible debenture. As a result, the Company recorded a loss on extinguishment of debt of $44,575. The balance of this long-term convertible debenture, net of discount, at November 30, 2017 is $1,834.

 

On April 24, 2017, the Company entered into a Securities Purchase Agreement whereas, Auctus Fund, LLC (the "buyer") wishes to purchase from the Company a 10% convertible note for a principal amount of $65,000. On April 24, 2017, the Company issued a convertible promissory note (the “note”) to the buyer for $65,000 in proceeds. The note matures on January 5, 2018. The note is convertible at a conversion price of the lesser of (i) 50% of lowest trading price during the 25 days prior to the date of the note or (ii) 50% of the lowest trading price during the 25 days prior to the conversion date. At the closing, the Company paid legal and compliance fees of $2,750, a management fee to an affiliate of the buyer of $5,500 and a due diligence fee of $5,675 to the group that introduced the Company to the buyer. Accordingly, the Company recorded a debt discount of $65,000, with $51,075 attributable to the allocation to the beneficial conversion feature and $13,925 related to deferred finance costs. During the three months ended November 30, 2017, the holder’s option to convert became active and the Company recorded a derivative liability of $68,506, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. A portion of the derivative liability was attributed to debt discount, with the remaining amount recorded to reclassify the beneficial conversion feature. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the three months ended November 30, 2017, the holder effected one conversion for a total of 30,000 shares to extinguish a portion of the long-term convertible debenture. As a result, the Company recorded a loss on extinguishment of debt of $6,475. The balance of this convertible note payable, net of discount, at November 30, 2017 is $39,990.

 

On November 15, 2017, the Company issued a convertible note to Power Up Lending Group, LTD. for $48,000. The note bears interest at 12%, matures on August 20, 2018, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date. As such, there is no beneficial conversion or embedded derivative at issuance or at November 30, 2017. The balance of this convertible note payable, net of discount, at November 30, 2017 is $45,167.

 

On November 15, 2017, the Company entered into a Securities Purchase Agreement whereas, Morningview Financial, LLC (the "buyer") wishes to purchase from the Company a 10% convertible note for a principal amount of $55,000. On November 15, 2017, the Company issued a convertible promissory note (the “note”) to the buyer for $50,000 in proceeds, after a $5,000 original issue discount. The note matures on November 15, 2018. The note is convertible at a conversion price of 50% of the lowest trading price during the 20 days prior to the conversion date. At the closing, the Company paid closing costs and a consulting fee totaling $7,000. Accordingly, the Company recorded a debt discount of $12,000. At issuance, the holder’s option to convert was active and the Company recorded a derivative liability of $63,442, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. A portion of the derivative liability was attributed to debt discount, with the remaining amount recorded to loss on valuation of derivative liabilities. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. The balance of this convertible note payable, net of discount, at November 30, 2017 is $2,292.

 

Amortization of the debt discounts recorded as interest expense during the three months ended November 30, 2017 totaled $40,293.

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DERIVATIVE LIABILITIES
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 6 - DERIVATIVE LIABILITIES

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the conversion options on convertible notes payable become derivatives at the point the holder’s option to convert becomes active and there is active trading of the Company’s stock.

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of November 30, 2017. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in November 30, 2017 and August 31, 2017:

 

   

Three Months Ended

November 30, 2017

   

Year Ended

August 31, 2017

 
Expected term   0.197- 2.49 years       -  
Expected average volatility   57% - 128 %     -  
Expected dividend yield     -       -  
Risk-free interest rate   1.10%-1.81 %     -  
                 

 

The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2017:

 

Fair Value Measurements Using Significant Observable Inputs (Level 3)  
Balance - August 31, 2017   $ -  
Addition of new derivative liabilities as debt discounts, upon issuance of convertible notes     43,000  
Addition of new derivative liabilities as debt discount, upon holder’s option becoming active     73,782  
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes     80,455  
Reclassification of beneficial conversion feature to derivative liabilities     51,075  
Reduction in derivative liabilities due to conversions of convertible notes     (63,529 )
Gain on change in fair value of the derivative liabilities     (3,478 )
Balance – November 30, 2017   $ 181,305  

 

The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible as of November 30, 2017 amounted to $181,305. During the three months ended November 30, 2017, $116,782 of the value assigned to the derivative liabilities was recognized as a debt discount to the convertible notes, $80,455 was recognized as a “day 1” derivative loss on convertible notes, $51,075 of new derivative liabilities recognized from reclass of additional paid in capital, $63,529 was recorded as a reduction to the derivative liabilities upon the conversion of convertible notes, and $3,478 was recorded as gain on change in fair value of derivative liability, respectively.

 

The following table summarizes the loss on derivative liability included in the income statement for the three months ended November 30, 2017 and 2016, respectively.

 

    Three Months Ended  
    November 30,  
    2017     2016  
Day one loss due to derivative liabilities on convertible notes and warrants   $ 80,455     $ -  
Gain on change in fair value of the derivative liabilities     (3,478 )     -  
Loss on change in the fair value of derivative liabilities   $ 76,977     $ -  
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INCOME TAXES
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 7 - INCOME TAXES

Due to the operating loss and the inability to recognize an income tax benefit, there is no provision for current or deferred federal or state income taxes for the period from inception through November 30, 2017.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.

 

The Company’s total deferred tax asset, calculated using federal and state effective tax rates is as follows:

 

 

   

November 30,

2017

   

August 31,

2017

 
Deferred tax assets:            
Net operating loss carryforwards   $ 1,060,542     $ 933,112  
Organization costs     92,218       94,116  
Accrued payroll     293,283       269,324  
Gross deferred tax asset     1,446,043       1,296,552  
Valuation allowance     (1,446,043 )     (1,296,552 )
Net deferred tax asset   $ -     $ -  

 

 

The Company has not recognized a deferred tax asset for its stock compensation expense due to its non-deductibility. The Company has no plans to pursue any tax benefits relative to its recognized stock compensation expense.

 

The reconciliation of income taxes computed at the federal statutory income tax rate of 35% to total income taxes for the three months ended November 30, 2017 and 2016 is as follows:

 

    2017     2016  
Income tax computed at the federal statutory rate   $ (149,492 )   $ (135,126 )
State income tax, net of federal tax benefit     -       -  
Total     (149,492 )     (135,126 )
Change in valuation allowance     149,492       135,126  
Provision for income taxes   $ -     $ -  

 

Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance. The valuation allowance increased by $149,492 and $135,126 during the three months ended November 30, 2017 and 2016, respectively.

 

As of November 30, 2017, the Company had a federal and state net operating loss carryforward in the amount of $3,030,121. The net operating loss carryforward differs from the accumulated deficit incurred to date primarily due to the non-deductibility of stock compensation and organizational costs capitalized for income tax purposes. Our federal net operating losses will begin to expire in 2034 and our state tax loss carryforwards will begin to expire in 2029.

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RELATED PARTY TRANSACTIONS
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 8 - RELATED PARTY TRANSACTIONS

As of November 30, 2017, the Company has issued 6,106,000 shares of common stock to various stockholders, in exchange for cash and services. No such shares were issued during the three months ended November 30, 2017.

 

Due to Officer

 

On March 13, 2016, John K. Lowther, Chief Executive Officer and Director, advanced the Company $12,916. The balance outstanding at November 30, 2017 and August 31, 2017 is $6,725 and $6,944, respectively. This advance does not bear interest.

 

Notes Payable – Related Party

 

During the year ended August 31, 2016, Power It Perfect, Inc. loaned the Company $194,500 for working capital purposes in exchange for promissory notes. During the year ended August 31, 2017, Power It Perfect, Inc. loaned the Company an additional $208,160 for working capital purposes in exchange for promissory notes. During the three months ended November 30, 2017, Power It Perfect, Inc. loaned the Company an additional $81,800 for working capital purposes in exchange for promissory notes. All the notes bear interest at five percent per annum, are non-collateralized and due on demand, as soon as the Company has operating cash flow available for repayment. The balance of the notes payable was $568,173 at November 30, 2017 and $486,373 at August 31, 2017. Accrued interest on the notes, which is included in accrued expenses, totaled $11,256 at November 30, 2017 and $4,626 at August 31, 2017. There are no conversion provisions associated with the notes.

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SUBSIDIARY OPERATIONS
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 9 - SUBSIDIARY OPERATIONS

Poverty Dignified, Inc. owns 100% of My Power Solutions, Inc., which holds and manages the Company’s franchise operations in Africa. The following represents summarized financial information of My Power Solutions, Inc.:

 

    Three Months Ended  
    November 30,
2017
    November 30,
2016
 
Franchise revenue   $ -     $ 3,613  
Net loss     (119,079 )     (76,570 )

 

    November 30,
2017
    August 31,
2017
 
Total assets   $ 56,152     $ 146,950  
Total liabilities     939,382       444,761  

 

Total liabilities of My Power Solutions, Inc. includes amounts due to Poverty Dignified, Inc. of $691,335 at November 30, 2017 and $601,267 at August 31, 2017 that were eliminated in consolidation. 

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SUBSEQUENT EVENTS
3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
NOTE 10 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through January 19, 2018, which is the date when these consolidated financial statements were issued, and is aware of none requiring disclosure, except as follows:

 

On December 14, 2017, Peak One Opportunity Fund, L.P. (“Peak One”) converted $15,000 of debentures at a share price of $0.16 per share for 92,592 shares that they are currently selling into the market. The current gross convertible balance remaining is $40,000.

 

On December 18, 2017, the Company entered into a $56,000 8% convertible note payable agreement with EMA Financial, LLC. The note matures on December 18, 2018. The note is convertible at a conversion price of 50% of the lowest trading price during the 20 days prior to the conversion date. After the original issue discount totaling $3,000, net proceeds to the Company were $53,000.

 

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act). Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”) requires that the company recognize the effects of changes in tax laws or tax rates in the financial statements for the period in which such changes were enacted. Among other things, changes in tax laws or tax rates can affect the amount of taxes payable for the current period, as well as the amount and timing of deferred tax liabilities and deferred tax assets. The Company is a fiscal year reporting company, because the 2017 Tax Act became law in December 2017, and as such would be required to account for the impacts related to the 2017 Tax Act in the financial statements included in their annual report on Form 10-K for August 31, 2018 due in November 2018. The Company has elected to take advantage of the extended measurement period provided by SEC Staff Accounting Bulletin No. 118, and will report the effect of the changes from the 2017 Tax Act when the calculations are complete, or reasonable estimates can be determined. The Company has begun the process of analysis of the 2017 Tax Act and will recognize the effect of the changes in tax laws or rates in the period that the process has been completed.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Nov. 30, 2017
Summary Of Significant Accounting Policies Policies  
Cash

The Company maintains funds in various financial institutions that are members of the Federal Deposit Insurance Corporation (“FDIC”). As such, funds are insured based on Federal Reserve limits. The Company has not experienced any losses in the past, and management believes it is not exposed to any significant credit risk on the current account balances. At times, cash balances may exceed insured limits.

 

The Company has determined that the functional currency of its foreign subsidiaries is the local currency. At November 30, 2017 and August 31, 2017, the Company had cash in foreign bank accounts of $800 and $5,107, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of payments primarily related to a professional fee retainer, payroll advance and short-term deposits.

Property and Equipment, Net

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally between three and five years. As of November 30, 2017 and August 31, 2017, property and equipment consists of computer equipment and solar equipment for containers with a total cost of $55,673. Accumulated depreciation as of November 30, 2017 and August 31, 2017 is $4,938 and $2,168, respectively. Depreciation expense for the three months ended November 30, 2017 and 2016 was $2,770 and $134, respectively.

Accrued Expenses

Accrued expenses are recorded when incurred and primarily consist of accrued interest on notes payable and amounts due for supplies and travel. Accrued payroll consists of salary amounts earned but deferred by the Company's management team.

Derivative Liabilities

The Company has certain financial instruments that contain embedded derivatives. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be accounted for separately. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to income or expense as part of gain or loss on extinguishment.

Revenue Recognition

The Company recognizes revenue once pervasive evidence that an agreement exists; the product and/or service have been rendered; the fee is fixed and determinable; and collection of the amount due is reasonably assured.

Franchise Revenue

Our franchise-related revenue is comprised of three separate and distinct earnings processes: area development fees, initial franchise fees, and continuing royalty payments.

 

Area Development Fees – Our area development fee consists of an initial, non-refundable payment of $15,000 per unit to be developed in consideration for the services we perform in preparation of executing each area development agreement. $5,000 of this initial area development fee relates to services, which include, but are not limited to, conducting market and territory analysis, are completed prior to our execution of the area development agreement and receipt of the corresponding area development fee. As a result, we recognize this portion of the area development fee as revenue upon receipt. The remaining $10,000 is allocated to the opening of the franchise and is recognized in accordance with our revenue recognition policy on initial franchise fee revenue noted below. From inception through November 30, 2017, the Company had not executed any area development agreements.

 

Initial Franchise Fees – The Company executes franchise agreements that set the terms of its arrangement with each franchisee. The franchise agreements require the franchisee to pay an initial, non-refundable fee of $15,000. Initial franchise fee revenue from the sale of a franchise is recognized when the Company has substantially performed or satisfied all of its material obligations relating to the sale. Substantial performance has occurred when the Company has (a) performed substantially all of its initial services required by the franchise agreement, such as assistance in site selection, personnel training and implementation of an accounting and quality control system; and (b) completed all of its other material pre-opening obligations. Additionally, at the contract signing, the franchisee is required to fund $90,000 for purchases of equipment, inventory, point of sale software and computer hardware, furniture, fixtures and décor and signage and payment of import taxes and freight costs. Revenue for these items is recognized upon delivery of the assets. The Company defers revenue from the initial franchise fee and other amounts due at contract signing until the respective revenue recognition milestones are met. From inception through November 30, 2017, the Company had sold three franchise units. The Company has completed the services required to recognize the revenue for one of the franchise units. As such, the Company has recognized franchise revenue of $3,613 and associated franchise expenses of $17,081 for the three months ended November 30, 2016. For the three months ended November 30, 2017, the Company recognized no revenue and franchise expenses of $15 on the one franchise unit.

 

Management decided to repurchase the remaining two franchise units and plans to utilize them for corporate-owned franchise purposes. As such, the respective investments made by the franchisees will be refunded. The total refund amount of $206,999 is classified as other liabilities at November 30, 2017 and August 31, 2017.

 

Continuing Royalty Payments – On an ongoing basis, royalties of 14% of gross revenues on authorized products and services will be recognized in the period in which they are earned. There were no revenues from continuing royalty payments for the three months ended November 30, 2017 and 2016.

Product Revenue

Product revenue represents amounts earned for equipment delivered and set up by the Company for digital classroom purposes within schools in its franchise markets, but not included in the franchises themselves. For products that include installation, and if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and installation revenue is recognized when the installation is complete. For revenue that includes customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. Certain of the Company’s products require specialized installation. Revenue for these products is deferred until installation is completed. There were no revenues from products for the three months ended November 30, 2017 and 2016.

 

The Company is currently dedicating substantial efforts towards the cultivation of a proposed partnership with Inovasure and the Development Bank of South Africa. The Company hopes to participate in a Public Private Partnership with both entities, and once consummated, management will migrate to a joint development and corporate owned franchise model that encompasses development, management and maintenance in its revenue model.

Advertising

Advertising expenditures are charged to expense as incurred and are included in general and administrative expense. Total advertising expense for the three months ended November 30, 2017 and 2016 was $-0- and $49,003, respectively.

Research and Development

Research and development expenditures are charged to expense as incurred.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

 

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

 

The three-level hierarchy for fair value measurements is defined as follows:

 

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

 

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

 

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

 

The following table summarizes fair value measurements by level at November 30, 2017 and August 31, 2017, measured at fair value on a recurring basis:

 

November 30, 2017   Level 1     Level 2     Level 3     Total  
Liabilities                        
Derivative Liabilities   $ -     $ -     $ 181,305     $ 181,305  
                                 
August 31, 2017   Level 1     Level 2     Level 3     Total  
Liabilities                                
Derivative Liabilities   $ -     $ -     $ -     $ -  
Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. 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 income in the period that includes the enactment date.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.

 

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be classified as additional income taxes in the consolidated statements of income. No interest or penalties were recognized for the three months ended November 30, 2017 or 2016.

 

Tax years 2015 and forward remain open to examination under United States statute of limitations. Management is not aware of any material uncertain tax positions and no liability has been recognized at November 30, 2017 or August 31, 2017.

Earnings Per Share

Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding.

Foreign Currency Translation

For financial reporting purposes, the functional currency of the foreign operations of My Power Solutions, Inc. is the local currency. The assets and liabilities of foreign operations for which the local currency is the functional currency are translated into the U.S. dollar at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the period. The accumulated foreign currency translation adjustment is presented as a component of accumulated other comprehensive loss in the consolidated statement of changes in stockholders’ equity (deficit).

Reclassifications

Certain amounts in the prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported stockholders’ deficit or net loss.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of operations.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Nov. 30, 2017
Summary Of Significant Accounting Policies Tables  
Fair value measurements by level
November 30, 2017   Level 1     Level 2     Level 3     Total  
Liabilities                        
Derivative Liabilities   $ -     $ -     $ 181,305     $ 181,305  
                                 
August 31, 2017   Level 1     Level 2     Level 3     Total  
Liabilities                                
Derivative Liabilities   $ -     $ -     $ -     $ -  
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
DERIVATIVE LIABILITIES (Tables)
3 Months Ended
Nov. 30, 2017
Derivative Liabilities Tables  
Weighted-average assumptions
   

Three Months Ended

November 30, 2017

   

Year Ended

August 31, 2017

 
Expected term   0.197- 2.49 years       -  
Expected average volatility   57% - 128 %     -  
Expected dividend yield     -       -  
Risk-free interest rate   1.10%-1.81 %     -  
Summarizes the derivative liabilities included
Fair Value Measurements Using Significant Observable Inputs (Level 3)  
Balance - August 31, 2017   $ -  
Addition of new derivative liabilities as debt discounts, upon issuance of convertible notes     43,000  
Addition of new derivative liabilities as debt discount, upon holder’s option becoming active     73,782  
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes     80,455  
Reclassification of beneficial conversion feature to derivative liabilities     51,075  
Reduction in derivative liabilities due to conversions of convertible notes     (63,529 )
Gain on change in fair value of the derivative liabilities     (3,478 )
Balance – November 30, 2017   $ 181,305  
Summarizes the loss on derivative liability included in the income statement
    Three Months Ended  
    November 30,  
    2017     2016  
Day one loss due to derivative liabilities on convertible notes and warrants   $ 80,455     $ -  
Gain on change in fair value of the derivative liabilities     (3,478 )     -  
Loss on change in the fair value of derivative liabilities   $ 76,977     $ -  
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES (Tables)
3 Months Ended
Nov. 30, 2017
Income Taxes Tables  
Schedule of Deferred Tax Assets and Liabilities
   

November 30,

2017

   

August 31,

2017

 
Deferred tax assets:            
Net operating loss carryforwards   $ 1,060,542     $ 933,112  
Organization costs     92,218       94,116  
Accrued payroll     293,283       269,324  
Gross deferred tax asset     1,446,043       1,296,552  
Valuation allowance     (1,446,043 )     (1,296,552 )
Net deferred tax asset   $ -     $ -  
Schedule of Effective Income Tax Rate Reconciliation
    2017     2016  
Income tax computed at the federal statutory rate   $ (149,492 )   $ (135,126 )
State income tax, net of federal tax benefit     -       -  
Total     (149,492 )     (135,126 )
Change in valuation allowance     149,492       135,126  
Provision for income taxes   $ -     $ -  
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSIDIARY OPERATIONS (Tables)
3 Months Ended
Nov. 30, 2017
Subsidiary Operations Tables  
Summarized financial information of subsidiary operations

    Three Months Ended  
    November 30,
2017
    November 30,
2016
 
Franchise revenue   $ -     $ 3,613  
Net loss     (119,079 )     (76,570 )

 

    November 30,
2017
    August 31,
2017
 
Total assets   $ 56,152     $ 146,950  
Total liabilities     939,382       444,761  

 

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Details Narrative) - USD ($)
3 Months Ended 11 Months Ended 12 Months Ended 50 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Nov. 30, 2014
Aug. 31, 2017
Nov. 30, 2017
State of incorporation Nevada        
Date of incorporation Sep. 27, 2013        
Cash $ 27,342     $ 7,146 $ 27,342
Working capital deficit 1,938,299       1,938,299
Stockholders' equity (deficit) (1,889,398)     (1,553,351) (1,889,398)
Notes payable - related party 568,173     486,373 568,173
Franchise revenue $ 3,613     146,180
Franchise expense         143,844
Offering price $ 0.075        
Proceeds of common stock $ 17,100 $ 449,000      
Debt issuance costs       24,925  
Description of shares to be registered secondary offering for public market

During the second or third quarter of fiscal year 2018, Poverty Dignified, Inc. plans to ask for approval for a secondary offering. Upon approval, the Company plans to register 1,000,000 shares in an S-1 registration. Once “effective” by the SEC, these shares will be made available to the public market.

       
Convertible note payable, net proceeds       125,075  
Description for expansion of franchise capacity

Under the second phase of its expanded franchise capacity, Poverty Dignified, Inc’s wholly-owned subsidiary, My Power Solutions, Inc., is currently in the final stages of completing its involvement in a Public Private Partnership with the Development Bank of South Africa. Should this Public Private Partnership befully executed, My Power Solutions, Inc. will have the responsibility of placing 240 franchise units in rural communities over the next thirty-six months, beginning in early 2018. It will be working within a consortium, headed by InovaSure, a South African organization created to provide energy security to the people of South Africa, to bring electricity, connectivity and digital education to 240,000 homes. This Public Private Partnership would impact our near-term operational cash flow significantly though upfront development funds, projected to be $150,000 per location, or $36,000,000, over the next thirty-six months. Additionally, MPS would receive ongoing revenues to manage and maintain each of the 240 franchise units over a twenty-five year period.

       
Subsequent Event [Member]          
Convertible note payable $ 56,000       56,000
Original issue debt discount 3,000        
Convertible note payable, net proceeds 53,000        
Convertible Notes Payable [Member]          
Debt issuance costs 10,000        
Original issue debt discount 5,000        
Convertible note payable, net proceeds 88,000        
Convertible Notes Payable 1 [Member]          
Convertible note payable 55,000       55,000
Convertible Notes Payable 2 [Member]          
Convertible note payable $ 48,000       $ 48,000
Private Placement [Member]          
Financings through a private placement     $ 1,182,180    
Shares issued 6,000       6,000
Shares offering $ 2,000,000   $ 1,000,000 $ 2,000,000  
Offering price $ 1.50   $ 0.75 $ 1.50  
Offering price description

In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share

       
Growth capital $ 3,000,000   $ 750,000 $ 3,000,000  
Number of common stock sold     999,970 784,302  
Proceeds of common stock     $ 749,977 $ 588,226  
Private Placement 1 [Member]          
Shares issued       144,000  
Offering price       $ 0.75  
Proceeds of common stock       $ 108,000  
Private Placement 2 [Member]          
Shares issued       49,700  
Offering price       $ 1.50  
Proceeds of common stock       $ 74,550  
Private Placement 3 [Member]          
Shares issued 10,800       10,800
Offering price $ 0.075        
Private Placement 4 [Member]          
Shares issued 6,000       6,000
Offering price $ 1.50        
Proceeds of common stock $ 17,100        
Public Private Partnership [Member]          
Projected cash flow per location 150,000        
Projected cash flow over the term of franchise $ 36,000,000        
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
Nov. 30, 2017
Aug. 31, 2017
Derivative Liabilities $ 181,305
Level 1 [Member]    
Derivative Liabilities
Level 2 [Member]    
Derivative Liabilities
Level 3 [Member]    
Derivative Liabilities $ 181,305
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended 50 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Nov. 30, 2017
Aug. 31, 2017
Accumulated depreciation $ 4,938   $ 4,938 $ 2,168
Depreciation expense 2,770 $ 134    
Non-refundable payment 15,000   15,000  
Initial area development fee 5,000   5,000  
Initial franchise fee revenue 10,000   10,000  
Non-refundable fee 15,000   15,000  
Miscellaneous expenses, taxes and costs 90,000   90,000  
Franchise revenue 3,613 146,180  
Royalty revenue 0 0    
Franchise expenses $ 15 17,081    
Gross revenues royalty percentage 14.00%      
Advertising expense $ 49,003    
Property and equipment 50,735   50,735 53,505
Other liabilities 206,999   206,999 206,999
Cash $ 800   800 5,107
Minimum [Member]        
Estimated useful lives 3 years      
Maximum [Member]        
Estimated useful lives 5 years      
Computer Equipment [Member]        
Property and equipment $ 55,673   $ 55,673  
Solar Equipment [Member]        
Property and equipment       $ 55,673
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)
3 Months Ended 11 Months Ended 12 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Nov. 30, 2014
Aug. 31, 2017
Common stock, par value $ 0.0001     $ 0.0001
Preferred stock, authorized 10,000,000     10,000,000
Preferred stock, issued 0     0
Preferred stock, outstanding 0     0
Preferred stock, par value $ 0.0001     $ 0.0001
Common stock, authorized 100,000,000     100,000,000
Common stock, issued 8,659,802     8,511,850
Common stock, outstanding 8,659,802     8,511,850
Stock-based compensation    
Total recognized expense $ 6,081,000      
Offering price $ 0.075      
Proceeds of common stock $ 17,100 $ 449,000    
Private Placement 1 [Member]        
Offering price       $ 0.75
Proceeds of common stock       $ 108,000
Shares issued       144,000
Private Placement 2 [Member]        
Offering price       $ 1.50
Proceeds of common stock       $ 74,550
Shares issued       49,700
Private Placement [Member]        
Common stock, issued 6,106,000      
Unregistered shares offering $ 2,000,000   $ 1,000,000 $ 2,000,000
Offering price $ 1.50   $ 0.75 $ 1.50
Growth capital $ 3,000,000   $ 750,000 $ 3,000,000
Number of common stock sold     999,970 784,302
Proceeds of common stock     $ 749,977 $ 588,226
Shares issued 6,000      
Offering price description

In this Private Placement Memorandum, the Company has the option to sell shares at a price lower than the $1.50 per share

     
Private Investment [Member]        
Unregistered shares offering       $ 1,000,000
Offering price       $ 0.75
Growth capital       $ 750,000
Number of common stock sold       784,302
Proceeds of common stock       $ 588,226
Private Placement 3 [Member]        
Offering price $ 0.075      
Shares issued 10,800      
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
COMMITMENTS AND CONTINGENCIES (Details Narrative)
3 Months Ended
Nov. 30, 2017
USD ($)
Commitments And Contingencies Details Narrative  
Future minimum lease payments $ 5,300
Lease expiry date May 31, 2018
Term of lease 24 months
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Apr. 13, 2017
Nov. 15, 2017
Apr. 24, 2017
Apr. 21, 2017
Nov. 30, 2017
Nov. 30, 2016
Aug. 31, 2017
Convertible note payable, net of discount         $ 87,449   $ 32,500
Amortization of debt discounts         $ 40,293  
Common stock shares issued         8,659,802   8,511,850
Long term convertible debenture, net of discount         $ 1,834   $ 53,441
Proceeds from issuance of convertible debt         98,000  
Beneficial conversion feature         51,075    
Loss on extinguishment of debt         (51,050)  
Peak One Opportunity Fund, L.P[Member              
Debt Discount       $ 2,500      
Legal and compliance fee       2,500      
Due diligence fee       $ 8,500      
Peak One Investments, LLC [Member]              
Common stock shares issued       30,000      
Deferred finance costs       $ 11,000      
Tranche One [Member]              
Original issue discount on debentures       10,000      
Debt Issue       100,000      
Proceeds from long term convertible debenture       $ 85,000      
Convertible conversion price       $ 1.50      
Power Up Lending Group Ltd [Member] | Convertible promissory note [Member]              
Convertible note payable, net of discount         45,167    
Debt Discount   $ 3,000          
Interest rate   12.00%          
Proceeds from issuance of convertible debt   $ 48,000          
Maturity date   Aug. 20, 2018          
Description for conversion price  

convertible into common stock at 58% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion.

         
Securities Purchase Agreement [Member]              
Convertible note payable, net of discount $ 400,000            
Purchase price 370,000            
Original issue discount on debentures $ 30,000            
Debt Discount       $ 41,379      
Long term convertible debenture, net of discount         $ 1,834    
Description for conversion price       The debenture is convertible at a conversion price of $1.50 up to 180 days after the issuance date and if no event of default. If an Event of Default, as such term is defined in the Debentures, has occurred, or 180 days after the Issuance Date, as such term is defined in the Debentures, the conversion price is the lesser of (a) $1.50 or (b) sixty five percent (65%) of the lowest closing bid price of the common stock for the twenty (20) trading days immediately preceding the date of the date of conversion of the Debentures.      
Long-term convertible debenture, shares         101,076    
Loss on extinguishment of debt         $ 44,575    
Securities Purchase Agreement [Member] | Option [Member]              
Derivative liability determined using the Black-Scholes valuation model         116,364    
Securities Purchase Agreement [Member] | Morningview Financial, LLC [Member] | Convertible promissory note [Member]              
Convertible note payable, net of discount   $ 55,000     2,292    
Debt Discount   $ 12,000          
Interest rate   10.00%          
Proceeds from issuance of convertible debt   $ 50,000          
Maturity date   Nov. 15, 2018          
Description for conversion price  

The note is convertible at a conversion price of 50% of the lowest trading price during the 20 days prior to the conversion date.

         
Derivative liability determined using the Black-Scholes valuation model   $ 63,442          
Consulting fees   7,000          
Discount on original issue   $ 5,000          
Securities Purchase Agreement [Member] | Auctus Fund, LLC [Member] | Convertible promissory note [Member]              
Convertible note payable, net of discount     $ 65,000        
Amortization of debt discounts         40,293    
Debt Discount     65,000        
Long term convertible debenture, net of discount         $ 39,990    
Deferred finance costs     $ 13,925        
Interest rate     10.00%        
Proceeds from issuance of convertible debt     $ 65,000        
Maturity date     Jan. 05, 2018        
Description for conversion price     The note is convertible at a conversion price of the lesser of (i) 50% of lowest trading price during the 25 days prior to the date of the note or (ii) 50% of the lowest trading price during the 25 days prior to the conversion date        
Legal and compliance fee     $ 2,750        
Management fee to an affiliate     5,500        
Due diligence fee     5,675        
Beneficial conversion feature     $ 51,075        
Long-term convertible debenture, shares         30,000    
Loss on extinguishment of debt         $ 6,475    
Securities Purchase Agreement [Member] | Auctus Fund, LLC [Member] | Convertible promissory note [Member] | Option [Member]              
Derivative liability determined using the Black-Scholes valuation model         $ 68,506    
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
DERIVATIVE LIABILITIES (Details)
3 Months Ended 12 Months Ended
Nov. 30, 2017
Aug. 31, 2017
Expected average volatility  
Expected dividend yield
Risk-free interest rate  
Minimum [Member]    
Expected term 2 months 10 days  
Expected average volatility 57.00%  
Risk-free interest rate 1.10%  
Maximum [Member]    
Expected term 2 years 5 months 27 days  
Expected average volatility 128.00%  
Risk-free interest rate 1.81%  
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
DERIVATIVE LIABILITIES (Details 1) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Derivative Liabilities Details 1    
Balance - August 31, 2017  
Addition of new derivative liabilities as debt discounts, upon issuance of convertible notes 43,000  
Addition of new derivative liabilities as debt discount, upon holder’s option becoming active 73,782  
Addition of new derivative liabilities recognized as day one loss on derivatives from convertible notes 80,455
Reclassification of beneficial conversion feature to derivative liabilities 51,075  
Reduction in derivative liabilities due to conversions of convertible notes (63,529)  
Gain on change in fair value of the derivative liabilities (3,478)
Balance - November 30, 2017 $ 181,305  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
DERIVATIVE LIABILITIES (Details 2) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Derivative Liabilities Details 2    
Day one loss due to derivative liabilities on convertible notes and warrants $ 80,455
Gain on change in fair value of the derivative liabilities (3,478)
Loss on change in the fair value of derivative liabilities $ 76,977
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
DERIVATIVE LIABILITIES (Details Narrative) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Aug. 31, 2017
Fair value of the derivative liability $ 181,305  
Derivative liabilities debt discount 40,293  
Day one loss due to derivative liabilities on convertible notes and warrants 80,455  
Reduction in derivative liabilities due to conversions of convertible notes (63,529)    
Gain on change in fair value of the derivative liabilities (3,478)  
Convertible Note [Member]      
Fair value of the derivative liability 181,305    
Derivative liabilities debt discount 116,782    
Day one loss due to derivative liabilities on convertible notes and warrants 80,455    
Reclassification of additional paid in capital conversion feature 51,075    
Reduction in derivative liabilities due to conversions of convertible notes 63,529    
Gain on change in fair value of the derivative liabilities $ 3,478    
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES (Details) - USD ($)
Nov. 30, 2017
Aug. 31, 2017
Deferred tax assets:    
Net operating loss carryforwards $ 1,060,542 $ 933,112
Organization costs 92,218 94,116
Accrued payroll 293,283 269,324
Gross deferred tax asset 1,446,043 1,296,552
Valuation allowance (1,446,043) (1,296,552)
Net deferred tax asset
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES (Details 1) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Income Taxes Details 1    
Income tax computed at the federal statutory rate $ (149,492) $ (135,126)
State income tax, net of federal tax benefit
Total (149,492) (135,126)
Change in valuation allowance 149,492 135,126
Provision for income taxes
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES (Details Narrative) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Income Taxes Details Narrative    
Increase in valuation allowance $ 149,492 $ 135,126
Federal and state net operating loss carryforwards $ 3,030,121  
Percentage of federal statutory income tax rate 35.00% 35.00%
Federal net operating loss expiry year Begin to expire in 2034  
State tax loss carryforwards expiry year, description Begin to expire in 2029  
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.8.0.1
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Aug. 31, 2017
Aug. 31, 2016
Mar. 13, 2016
Common stock, issued 8,659,802   8,511,850    
Due to officer $ 6,725   $ 6,944    
Proceeds from notes payable - related party 81,800      
Notes payable $ 568,173   486,373    
Private Placement [Member]          
Common stock, issued 6,106,000        
Chief Executive Officer [Member]          
Due to officer         $ 12,916
Power It Perfect, Inc [Member]          
Proceeds from notes payable - related party $ 81,800   208,160 $ 194,500  
Interest rate 5.00%        
Accrued interest $ 11,256   $ 4,626    
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSIDIARY OPERATIONS (Details) - USD ($)
3 Months Ended
Nov. 30, 2017
Nov. 30, 2016
Aug. 31, 2017
Net loss $ (427,119) $ (386,074)  
Total assets 92,694   $ 87,870
Total liabilities 1,982,092   1,641,221
Subsidiary Operations [Member]      
Franchise revenue 3,613  
Net loss (119,079) $ (76,570)  
Total assets 56,152   146,950
Total liabilities $ 939,382   $ 444,761
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSIDIARY OPERATIONS (Details Narrative) - USD ($)
Nov. 30, 2017
Aug. 31, 2017
Total liabilities $ 1,982,092 $ 1,641,221
My Power Solutions, Inc [Member]    
Total liabilities $ 691,335 $ 601,267
Equity method investment ownership percentage 100.00%  
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSEQUENT EVENTS (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Dec. 18, 2017
Nov. 30, 2017
Dec. 14, 2017
Aug. 31, 2017
Common stock shares issued   8,659,802   8,511,850
Convertible note payable, net of discount   $ 87,449   $ 32,500
Subsequent Event [Member]        
Original issue debt discount   $ 3,000    
Subsequent Event [Member] | Peak One Opportunity Fund, L.P[Member        
Convertible debt     $ 15,000  
Convertible debt per share     $ 0.16  
Common stock shares issued     92,592  
Gross convertible balance remaining     $ 40,000  
Subsequent Event [Member] | EMA Financial LLC [Member]        
Description for conversion price The note is convertible at a conversion price of 50% of the lowest trading price during the 20 days prior to the conversion date.      
Convertible note payable, net of discount $ 56,000      
Interest rate 8.00%      
Maturity date Dec. 18, 2018      
Original issue debt discount $ 3,000      
Proceeds from convertible debt $ 53,000      
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