0001399306-18-000028.txt : 20180927 0001399306-18-000028.hdr.sgml : 20180927 20180926180147 ACCESSION NUMBER: 0001399306-18-000028 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 58 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180927 DATE AS OF CHANGE: 20180926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Simlatus Corp CENTRAL INDEX KEY: 0001399306 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 202675800 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-53276 FILM NUMBER: 181088799 BUSINESS ADDRESS: STREET 1: 175 JOERSCHKE DR. STREET 2: SUITE A CITY: GRASS VALLEY STATE: CA ZIP: 94945-5259 BUSINESS PHONE: (530) 205-3437 MAIL ADDRESS: STREET 1: 175 JOERSCHKE DR. STREET 2: SUITE A CITY: GRASS VALLEY STATE: CA ZIP: 94945-5259 FORMER COMPANY: FORMER CONFORMED NAME: Grid Petroleum Corp. DATE OF NAME CHANGE: 20091120 FORMER COMPANY: FORMER CONFORMED NAME: Sunberta Resources Inc. DATE OF NAME CHANGE: 20070511 10-K/A 1 form-10ka.htm FORM 10K/A
 

 

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-K/A

Amendment No. 1 

 

 

 

(Mark One)

 

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

 

For the Fiscal Year Ended March 31, 2018

 

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ________ to ________

 

Commission File Number 000-53276

 

SIMLATUS CORPORATION

(Exact name of registrant as specified in its charter)

 

     
Nevada   20-2675800
(State or other jurisdiction of Incorporation)   (IRS Employer Identification Number)
 

175 Joerschke Drive, Ste. A
Grass Valley, CA 95945

(Address of principal executive offices)

     

(530) 205-3437

(Registrant’s Telephone Number)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 

Yes o No x

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 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 o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o      Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)   Smaller reporting company x
Emerging growth company o        

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

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

 

On September 29, 2017, the last business day of the registrants most recently completed second quarter, the aggregate market value of the Common Stock held by non-affiliates of the registrant was $22, based upon the closing price on that date of the Common Stock of the registrant of $0.0001. For purposes of this response, the registrant has assumed that its directors, executive officers and beneficial owners of 5% or more of its Common Stock are deemed affiliates of the registrant.

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

 

As of September 13, 2018, there were 2,914,797 shares of the registrant’s $0.00001 par value common stock issued and outstanding.

 

Documents incorporated by reference: None

 

 

Explanatory Note

 

The sole purpose of this Amendment No. 1 to the Annual Report on Form 10-K (the "Form 10-K"), as filed with the Securities and Exchange Commission on September 24, 2018 is to furnish Exhibit 101 to the Form 10-K in accordance with Rule 405 of Regulation S-T. Exhibit 101 provides the financial statements and related notes from the Form 10-K formatted in XBRL (eXtensible Business Reporting Language). Exhibit 101 was not furnished with the Form 10-K previously and no other changes have been made to the Form 10-K.

 

This Amendment No. 1 to the Form 10-K does not reflect events that may have occurred subsequent to the original filing date of the Form 10-K and does not modify or update in any way disclosures made in the Form 10-K as originally filed.

 

Pursuant to Rule 406T of Regulation S-T, the interactive data files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

 

 

Table of Contents

 

       
      Page
   PART I   
       
Item 1  Business  3
Item 1A  Risk Factors  6
Item 1B  Unresolved Staff Comments  6
Item 2  Properties  6
Item 3  Legal Proceedings  6
Item 4  Mine Safety Disclosures  6
       
   PART II   
       
Item 5  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities  6
Item 6  Selected Financial Data  7
Item 7  Management’s Discussion and Analysis of Financial Condition and Results of Operations  7
Item 7A  Quantitative and Qualitative Disclosures about Market Risk  11
Item 8  Financial Statements and Supplementary Data  12
Item 9  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  41
Item 9A  Controls and Procedures  42
Item 9B  Other Information  43
       
   PART III   
       
Item 10  Directors and Executive Officers and Corporate Governance  44
Item 11  Executive Compensation  47
Item 12  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  49
Item 13  Certain Relationships and Related Transactions  49
Item 14  Principal Accountant Fees and Services  51
       
   PART IV   
       
Item 15  Exhibits  52

2

 

FORWARD-LOOKING STATEMENTS

 

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

 

As used in this annual report, the terms “Simlatus”, “we”, “us”, “our” and “our company” refer to Simlatus Corporation, unless otherwise indicated.

 

PART I

 

ITEM 1. BUSINESS

 

General Overview

 

Simlatus manufactures, in their facility and through various suppliers, its own product line of commercial audio and video systems that offer advanced applications used within the commercial and government broadcast industry and other industries where such applications are required. The Company products are sold through a global distribution network of established audio/video equipment retailers that have been selling the Simlatus products for approximately 20 years.

 

Simlatus Corporation (“SIML” or “Company”) was incorporated in the State of Nevada under the name Sunberta Resources Inc. on November 15, 2006, as a mining and exploration of mineral claims business.  On November 18, 2009, the Company changed its name to Grid Petroleum Corp. and continued with the mining and exploration of mineral claims operations, exploring mining claims in Alberta, Canada, Vancouver Island, British Columbia, England and the United States.

 

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”) whereby RJM’s owners became the directors of the Company and were to be issued $6,250,000 worth of the Company’s stock; $5,000,000 of Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company’s Preferred Stock. On the same date the entire management of RJM became the entire management of the Company.

 

RJM was incorporated in the State of California on June 11, 2014 for the purpose of operating a broadcast equipment production business.

3

 

The Company’s transaction with RJM has been treated as a reverse recapitalization of the Company, with the Company (the legal acquirer of RJM) considered the accounting acquiree, and RJM, whose management took control of the Company (the legal acquiree of the Company) considered the accounting acquirer. The Company did not recognize goodwill or any intangible assets in connection with the transaction. All costs related to the transaction are being charged to operations as incurred. The $6,250,000 worth of shares of Company stock, to be issued in conjunction with the transaction, was presented as a liability until such time that the shares were issued and the liability reduced. The historical financial statements include the operations of the accounting acquirer for all periods presented.

 

On March 25, 2016, the Company approved a name change to Simlatus Corporation, stock symbol SIML, which was executed on April 4, 2016. The new name change better describes the Company’s new business and new revenues in selling commercial broadcast equipment on a global basis. Simlatus Corporation develops, manufactures, markets and owns proprietary advanced broadcast equipment and software and sells this audio and video broadcast equipment worldwide. These systems have been sold worldwide over the past 15 years including some of the major broadcast companies.   

 

The Company currently sells approximately 55 different audio/video products and is preparing to market its newest audio/video product referred to as SyncPal™. In addition to the Company’s traditional line of audio/video products, it has commenced the research & development of its Immersive Broadcast System, referred to as the Simlatus-IBS™. The Simlatus-IBS™ will include commercial augmented reality and virtual reality applications for studio engineers. These applications, both hardware and software, will allow the customer to control and manage the studio audio/video systems from anywhere in the world. These products are being developed to serve a market segment that is presently being strongly embraced by consumers and is forecasted, by some of the most widely recognized tech companies in the world, as becoming a multi-billion-dollar market in the very near future. The Market Analysis and IP Portfolio will include new patents specifically developed for these products and owned by the Company.

 

Competition and Marketing

 

The Company has performed an in-depth investigation and analysis of our competition and determines this as one of the most important components of our comprehensive market analysis. This allows us to assess our competitor’s strengths and weaknesses in our marketplace and implement effective strategies to improve our competitive advantage. The Company has identified our competition to determine and weigh our attributes, assess our strengths and weaknesses, and uncover our objectives and strategies in our market segment. Key factors contributing to market growth is adoption of HDTV and entertainment distribution via the Internet. The Company has begun to focus new product development in digital and analog/digital conversion solutions to better satisfy changing market demand. Immersive technologies with augmented reality and virtual reality await the near future for the Broadcast Industry. Simlatus has access to top professionals in Immersive Technology and is now designing their new Immersive Broadcast Studio (IBS).

 

The global broadcast switcher market is expected to reach $2B by 2020, as compared to the broadcast switcher market in 2013 of $1.28B. The CAGR growth of 6.7% will occur from 2014 to 2020, whereas augmented reality devices which combine virtual objects with the real world through high-tech glasses, are forecast to become a $120 billion business by 2020. New media channels and automation will substantially drive market growth over the next 5 years, and Simlatus has initiated its B2B and B4B platform with its domestic and international distribution

 

We have determined that a business marketing a product similar to, or as a substitute for, our own product in the same geographic area is a direct competitor. Firms offering dissimilar or substitute products in relation to our products or services are considered indirect competitors. Indirect competition would exist between the manufacturing of commercial broadcast equipment selling to the same customers. To achieve and maintain a competitive advantage in reaching and selling to our target market, our management has gained a thorough knowledge of our competition. An in-depth competitive analysis has provided the company with understanding of how our existing and potential customers rate the competition, a positive identification of our competitor’s strengths and weaknesses, and a mechanism to develop effective competitive strategies in our target market.

4

 

Our competitors are a part of a concentrated market where only a handful of competitors exist. We have identified approximately 22 competitors in our industry. Our top 3 competitors are Ensemble Designs, Inc., Thomson Video Networks, Inc., and Ericcson A.B. The company currently manufacturers a product for Ensemble Designs, Inc.

 

The basis in which our company is able to compete is based upon the price point and quality that we provide to our end-user. We have 25 distributors providing global sales of all of our 55 products. Simlatus offers a wide range of broadcast products including switchers, controllers, protection switches, HD and Analog Routers, Audio Distribution and our SoundPal family of audio/video signaling products. Our newest product being SyncPal.

 

Our competitors are profitable, and the industry is expanding into augmented/virtual audio-video products. Our product line and Ensemble Designs, Inc. have been in business for approximately 20 years. The attributes that the majority of customers request is pricing and support. Simlatus and all of our competition provide warranty and repair services for all products. Our current customers include Fox News, DirecTV, Warner Bros. and a variety of government-based buyers for military and government locations.

 

We provide an informative website for all of our products, company information and distribution. We provide various testimonial statements from major customers. We further advertise in trade journals and through our distribution websites. Each of our products includes a complete manual and specifications data sheet.

 

Our sales staff has more access to competitive information than anyone else in our organization. Customers often show our sales people sales literature, contracts, price quotes, and other information from competitors. It is our responsibility to obtain customers to discuss problems they have with a competitor’s product. Customers will also reveal our competition’s product benefits, strengths, and customer service programs. We instruct our sales force to ask for copies of any competitive literature if and when that’s possible. All sales staff maintains a record of all competitive information they discover and devote a regular portion of each sales meeting to a discussion of the competition. Our other employees working in other areas of the company also become exposed to competitive information.

 

In regards to our Trade Associations, Simlatus compiles and has access to published industry statistics and reports regarding industry news and leaders through trade association magazines and newsletters. Most trade associations also sponsor trade shows and other professional meetings. This is an opportunity for our company to experience first-hand what our competition is producing. It also provides the opportunity to discover new players who may soon become our competition.

 

We interview our customers, suppliers, and industry experts about our competition’s product and service periodically. Once we’ve gathered all of the competitive data we analyze the data to determine product information, market share, marketing strategies, and to identify our competition’s strengths and weaknesses. We rely on our sales staff and customer feedback what product features and benefits are most important to our customers and potential customers. A product’s or services competitive position is largely determined by how well it is differentiated from our competition and by its price.

 

Our products have been sold for approximately 20 years and our sales strategy provides the company an advantage with our existing dealers & customers, existing product line, existing Broadcast users, Manufacturing Processes, Experienced Personnel, Professional Management, and Quality Product Reputation. Simlatus is positioned with current sales of their commercial broadcasting support systems and is now structuring the R&D virtual/augmented reality products to develop a strategic technology roadmap which will enable the company to expand into high-growth digital television and over-the-top (OTT) markets. These products are being developed for Simlatus’ existing consumers and newer markets. Further, Simlatus understands market trends, including worldwide movement towards high speed, IP software solutions. Simlatus will continue to focus on driving adoption of upgraded technology and the company’s R&D focus will be on programs to out-pace competition.

 

Employees

 

As of the date of this filing, the Company has 3 employees. In addition, the Company contracts 14 engineering consultants and engages 8 suppliers for product development and manufacturing.

5

 

ITEM 1A. RISK FACTORS

 

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

Our principal executive offices are located at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. Additional space may be required as the Company expands its operations. Management does not foresee any significant difficulties in obtaining any required additional space. The Company currently does not own any real property.

 

ITEM 3. LEGAL PROCEEDINGS

 

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 4. MINE SAFETY DISCLOSURE

 

None.

 

PART II

 

ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Common Stock

 

Our common stock is currently quoted on the OTC Markets. Our common stock has been quoted on the OTC Markets since October 17, 2007 trading under the symbol “SBRT”. On January 15, 2008, our symbol was changed to “SBTR” and on December 15, 2009, our symbol was changed to “GRPR” to reflect our Company’s name change. On April 21, 2016, our symbol was changed to “SIML” to reflect our Company’s name change to Simlatus Corporation. Because we are quoted on the OTC Markets, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

 

The following table sets forth the high and low bid prices for our common stock per quarter as reported by the OTCQB for the period from April 1, 2017 through March 31, 2018, and April 1, 2016 through March 31, 2017, based on our fiscal year end March 31. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

 

   First Quarter   Second Quarter   Third Quarter   Fourth Quarter 
2018 - High   0.0009    0.0002    0.0001    0.0001 
2018 - Low   0.0001    0.0001    0.0001    0.0001 
2017 - High   0.5    0.1    0.0235    0.0015 
2017 - Low   0.01    0.001    0.0007    0.0002 

6

 

Record Holders

 

As of March 31, 2018, there were 2,914,797 shares of the registrant’s $0.00001 par value common stock issued and outstanding, which were held by 26 shareholders of record.

 

Dividends

 

We have not paid dividends on our common stock, and do not anticipate paying dividends on our common stock in the foreseeable future.

 

Securities authorized for issuance under equity compensation plans

 

We have no compensation plans under which our equity securities are authorized for issuance.

 

Performance graph

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Recent Sales of Unregistered Securities

 

On April 27, 2017, the Company issued 53,333 shares of common stock for services valued $24,000, based on the market price of the Company’s common stock on the date of agreement.

 

During the year ended March 31, 2018, the holders of convertible notes converted a total of $161,336 of principal into 2,081,577 shares of common stock. The common stock was valued at $818,595 based on the market price of the Company’s stock on the date of conversion. The issuance extinguished $1,202,404 worth of derivative liabilities and $202,809 was recorded as a loss on settlement of debt.

 

Recent issuances of unregistered securities subsequent to our fiscal year ended of March 31, 2018

 

None.

 

Issuer Repurchases of Equity Securities

 

None.

 

ITEM 6. SELECTED FINANCIAL DATA

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

7

 

Results for the Year Ended March 31, 2018 Compared to the Year Ended March 31, 2017

 

Revenues:

 

The Company’s revenues were $23,405 for the year ended March 31, 2018 compared to $68,955 for the year ended March 31, 2017. The decrease in revenue was due to a decrease in audio and video broadcasting product orders from the prior year.

 

Cost of Sales:

 

The Company’s cost of materials was $89,263 for the year ended March 31, 2018, compared to $52,203 for the year ended March 31, 2017. Although there was decrease in cost of materials due to a reduction in materials necessary to fulfill orders, the overall increase in cost of sales was due to inventory impairment of $61,188 recorded during the year ended March 31, 2018.

 

Operating Expenses:

 

Operating expenses consisted primarily of consulting fees, professional fees, salaries and wages, office expenses and fees associated with preparing reports and SEC filings relating to being a public company. Operating expenses for the year ended March 31, 2018, and March 31, 2017, were $862,527 and $827,176, respectively. The increase was primarily attributable to an increase in professional fees related to new consulting agreements. During the year ended March 31, 2018, the Company increased promotional activities and incurred additional costs to meet SEC reporting requirements.

 

Other Income (Expense):

 

Other income (expense) for the year ended March 31, 2018, and March 31, 2017, was $(3,470,164) and $(5,173,408), respectively. Other income (expense) consisted of gain or loss on debt forgiveness, gain or loss on derivative valuation and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to interest and penalties on outstanding notes payable, the initial interest expense associated with the valuation of derivative instruments at issuance, and the accretion of the convertible debentures over their respective terms. The decrease primarily resulted from the fluctuation of the Company’s stock price which impacted the valuation of the derivative liabilities and the change in the gain/loss on debt settlement between periods based on the amount of debt converted and the difference between the value of the stock issued and the debt extinguished.

 

Net Loss:

 

Net loss for the year ended March 31, 2018, was $4,398,549 compared with a net loss of $5,983,832 for the year ended March 31, 2017. The decreased net loss can be explained by the changes in the gain in the fair value of derivative liabilities offset with and the gain on settlement of debt recorded in the prior period.

 

Impact of Inflation

 

We believe that the rate of inflation has had a negligible effect on our operations.

 

Liquidity and Capital Resources

 

   March 31,   March 31, 
   2018   2017 
Current Assets  $8,626   $79,959 
Current Liabilities   11,803,229    10,890,103 
Working Capital (Deficit)  $(11,794,603)  $(10,810,144)

8

 

The overall working capital (deficit) increased from $(10,810,144) at March 31, 2017 to $(11,794,603) at March 31, 2018.

 

   March 31,   March 31, 
   2018   2017 
Cash Flows from (used in) Operating Activities  $(236,089)  $(208,598)
Cash Flows from (used in) Investing Activities   —      —   
Cash Flows from (used in) Financing Activities   237,190    205,575 
Net Increase (decrease) in Cash During Period  $1,101   $(3,023)

 

During the year ended March 31, 2018, cash used in operating activities was $236,089 compared to $208,598 for the year ended March 31, 2017. The increase in the cash used in operating activities is primarily attributed to the loss in the settlement with the former CEO, penalties on convertible debt and accrued interest.

 

During the year ended March 31, 2018 cash used in investing activities was $0 compared to $0 for the year ended March 31, 2017.

 

During the year ended March 31, 2018, cash from financing activity was $237,190 compared to $205,575 for the year ended March 31, 2017. The increase in cash from financing activity primarily resulted from an increase in the proceeds from convertible notes during the year ended March 31, 2018.

 

As of March 31, 2018, the Company had a cash balance and asset total of $2,431 and $8,626 respectively, compared with $1,330 and $79,959 of cash and total assets, respectively, as of March 31, 2017. The decrease in assets was due to the amortization of prepaid expenses and inventory impairment.

 

As of March 31, 2018, the Company had total liabilities of $11,864,229 compared with $10,890,103 as of March 31, 2017. The increase in total liabilities was primarily attributed to the to a loss in the fair value of derivative liabilities and an increase in convertible note payable accrued interest.

 

Going Concern

 

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing funds.

 

As of March 31, 2018, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our March 31, 2018 audited financial statements that they have substantial doubt that we will be able to continue as a going concern.

 

Future Financings

 

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

9

 

Off-Balance Sheet Arrangements

 

We have no significant 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 are material to stockholders.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Recently Issued Accounting Pronouncements

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the standard on April 1, 2018, using a modified retrospective approach, with the cumulative effect of initially applying the standard recognized in retained earnings at the date of adoption.

 

While the Company does not expect the adoption of this standard to have a material impact on the Company’s net Revenues in the Statements of Income, the Company anticipates revenues for certain wholesale transactions and substantially all digital commerce sales will be recognized upon shipment rather than upon delivery to the customer.

 

Additionally, provisions for post-invoice sales discounts, returns and miscellaneous claims will be recognized as accrued liabilities rather than as reductions to Accounts receivable, net; and the estimated cost of inventory associated with the provision for sales returns will be recorded within Prepaid expenses and other current assets on the Balance Sheets. The Company continues to evaluate the impact of this new standard, including on accounting policies, disclosures, internal control over financial reporting and its contracts with customers.

 

In February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

10

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). Among other provisions, this ASU requires that when determining whether certain financial instruments should be classified as liabilities or equity instruments, an entity should not consider the down round feature. The ASU also recharacterizes as a scope exception the indefinite deferral available to private companies with mandatorily redeemable financial instrument and certain noncontrolling interests, which does not have an accounting effect but addresses navigational concerns within the FASB Accounting Standards Codification. The provisions of the ASU related to down rounds are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

 

Contractual Obligations

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company does not hold any assets or liabilities requiring disclosure under this item.

11

 

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

SIMLATUS CORPORATION

FINANCIAL STATEMENTS

 

Table of Contents

 

    Page
Report of Independent Registered Public Accounting Firm   13
Prior Auditor Report of Independent Registered Public Accounting Firm   14
Balance Sheets as of March 31, 2018 and 2017   15
Statements of Operations for the years ended March 31, 2018 and 2017   16
Statements of Shareholders’ Equity (Deficit) for the years ended March 31, 2018 and 2017   17
Statements of Cash Flows for the years ended March 31, 2018 and 2017   18
Notes to Financial Statements   19

12

 

(M&K CPAS LOGO)

 

 

To the Board of Directors and

Stockholders of Simlatus Corporation

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Simlatus Corporation (the Company) as of March 31, 2018, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the year ended March 31, 2018, and the related notes and schedules (collectively referred to as the financial statements). The financial statements for the period ended March 31, 2017 were audited by other auditors who report expressed an unqualified opinion on the financial statements. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018, and the results of its operations and its cash flows for the year ended March 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered losses from operations which raise substantial doubt about its ability to continue as a going concern. Managements plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ M&K CPAS, PLLC

 

We have served as the Company’s auditor since 2018.

 

Houston, TX

September 24, 2018

13

 

 (MAC LOGO)

 

Mac Accounting Group, LLP

Certified Public Accountants

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors

Simlatus Corporation

Grass Valley, California

 

We have audited the accompanying balance sheet of Simlatus Corporation as of March 31, 2017, and the related statement of operations, stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Simlatus Corporation as of March 31, 2017, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has experienced losses from operations since inception, has limited business operations, and has total liabilities in excess of total assets. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

(SIGNATURE) 

 

Midvale, Utah

October 25, 2017

 

 

www.macaccountinggroup.com

1070 Mecham Lane, Midvale, Utah 84047

801.414.3664

14

 

SIMLATUS CORP.
BALANCE SHEETS

 

   March 31,   March 31, 
   2018   2017 
ASSETS          
Current Assets          
Cash  $2,431   $1,330 
Accounts receivable   4,760     
Inventory, net   1,435    68,629 
Prepaid expenses       10,000 
Total Current Assets   8,626    79,959 
           
TOTAL ASSETS  $8,626   $79,959 
           
LIABILITIES          
Current Liabilities:          
Accounts payable  $230,553   $83,839 
Accrued wages   751,754    656,326 
Deferred revenue   3,528     
Derivative liabilities   6,627,023    5,316,130 
Convertible notes payable in default, net of discount   511,923    497,280 
Convertible notes payable, net of discount   262,910    279,497 
Convertible notes payable, interest   3,289,044    1,215,519 
Related party liabilities   126,494    2,841,512 
Total Current Liabilities   11,803,229    10,890,103 
           
Long term notes payable   61,000     
           
Total Liabilities   11,864,229    10,890,103 
           
Commitments and contingencies        
           
SHAREHOLDERS’ DEFICIT          
Preferred stock, $0.001 par value 20,000,000 shares authorized          
  Series A: 10,000,000 shares authorized   3,490    2,213 
    3,489,510 shares issued and outstanding at March 31, 2018          
    2,213,154 shares issued and outstanding at March 31, 2017          
  Series B: 10,000,000 shares authorized   1    1 
    500 shares issued and outstanding at March 31, 2018          
    1,000 shares issued and outstanding at March 31, 2017          
Common stock, $0.00001 par value 900,000,000 authorized   29    7 
2,914,797 shares issued and outstanding at March 31, 2018          
733,059 shares issued and outstanding at March 31, 2017          
Additional paid in capital   (954,735)   (4,306,526)
Accumulated deficit   (10,904,388)   (6,505,839)
Total Shareholders’ Deficit   (11,855,603)   (10,810,144)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT  $8,626   $79,959 

 

The accompanying notes are an integral part of these financial statements

15

 

SIMLATUS CORP.
STATEMENT OF OPERATIONS

 

   Years ended 
   March 31, 
   2018   2017 
Sales  $23,405   $68,955 
Cost of materials   89,263    52,203 
Gross profit (loss)   (65,858)   16,752 
           
Operating expenses:          
G&A expenses   337,739    193,410 
Professional fees   178,955    183,767 
Salaries and wages   345,833    449,999 
Total operating expenses   862,527    827,176 
           
Loss from operations   (928,385)   (810,424)
           
Other income (expense):          
Gain on settlement of debt   555,633    1,302,334 
Change in fair value of derivative liability   442,559    (3,952,365)
Loss on former CEO settlement   (1,465,948)    
Interest expense   (2,800,599)   (2,523,389)
Loss on conversion of debt   (201,809)    
Other income       12 
Total other expense   (3,470,164)   (5,173,408)
           
Net loss before income taxes   (4,398,549)   (5,983,832)
Income tax expense        
Net loss  $(4,398,549)  $(5,983,832)
           
Per share information          
Weighted number of common shares          
outstanding, basic and diluted   2,543,411    198,978 
Net loss per common share, basic and diluted   (1.73)   (30.07)

 

The accompanying notes are an integral part of these financial statements

16

 

SIMLATUS CORP.
STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)
YEARS ENDED MARCH 31, 2018 AND 2017

 

   Preferred Stock   Preferred Stock           Additional       Total 
   Series A   Series B   Common Stock   Paid-In   Accumulated   Shareholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity (Deficit) 
Balances for March 31, 2016 (Restated)   1,519,500    1,520    1,000    1    1,077        (9,813,504)   (522,007)   (10,333,990)
                                              
Conversion of promissory notes to stock                   392,473    4    1,241,750        1,241,754 
Preferred shares issued for liabilities pursuant to agreement @ $1.79   698,324    698                    1,249,302        1,250,000 
Shares issued for liabilities pursuant to agreement                   265,909    3    2,964,202        2,964,205 
Shares issued for services pursuant to agreement                   45,733        51,720        51,720 
Preferred Series A stock converted to common stock   (4,670)   (5)           27,867        4        (1)
Net loss                               (5,983,832)   (5,983,832)
Balances for March 31, 2017   2,213,154    2,213    1,000    1    733,059    7    (4,306,526)   (6,505,839)   (10,810,144)
                                              
Conversion of debt to common stock                   2,081,578    21    1,020,404        1,020,425 
Shares issued for settlement with former CEO   536,351    536    (250)               959,532        960,068 
Shares issued for debt settlement   5,587    6                    9,994        10,000 
Shares issued for services                   53,333    1    23,999        24,000 
Preferred Series A stock converted to common stock   (12,788)   (12)           127,888    1    11         
Common stock exchanged for Preferred Series A stock   747,206    747            (81,061)   (1)   1,324,594        1,325,340 
Preferred Series B stock returned to treasury           (250)                        
Imputed interest                           13,257        13,257 
Net loss                               (4,398,549)   (4,398,549)
Balances for March 31, 2018   3,489,510    3,490    500    1    2,914,797    29    (954,735)   (10,904,388)   (11,855,603)

 

The accompanying notes are an integral part of these financial statements

17

 

SIMLATUS CORP.
STATEMENTS OF CASH FLOWS

 

   Years ended 
   March 31, 
   2018   2017 
Cash flows from operating activities:          
Net loss  $(4,398,549)  $(5,983,832)
Adjustments to reconcile net income to net cash provided by operating activities:          
Amortization of convertible debt discount   425,018    525,079 
Inventory impairment   61,188     
Imputed interest   13,257     
Loss on former CEO settlement   1,465,948     
Penalties on convertible debt   94,471     
New derivatives recorded as loan fees       688,844 
Common stock issued for services   24,000    51,720 
Change in fair value of derivative liability   (442,559)   3,952,365 
Gain on settlement of debt   (555,633)   (1,302,334)
Loss on conversion of debt   201,809     
Decrease (increase) in operating assets:          
Accounts receivable   (4,760)   1,695 
Inventory   6,006    (8,692)
Prepaid expenses   10,000    (10,000)
Increase (decrease) in operating liabilities:          
Accounts payable   86,186    162,151 
Accrued expenses   410,639    476,957 
Accrued interest   2,290,658    1,237,449 
Advances from related parties   76,232     
Net cash used in operating activities   (236,089)   (208,598)
           
Cash flows from investing activities:        
           
Cash flows from financing activities:          
Proceeds from notes payable       15,000 
Payments on notes payable       (5,687)
Proceeds from convertible notes payable   237,190    146,000 
Proceeds from (payments to) related parties, net       50,262 
Net cash provided by financing activities   237,190    205,575 
           
Net increase (decrease) in cash   1,101    (3,023)
           
Cash, beginning of period   1,330    4,353 
Cash, end of period  $2,431   $1,330 
           
Supplemental disclosures of cash flow information:          
Cash paid for income taxes  $   $ 
Cash paid for interest  $   $ 
           
Schedule of non-cash investing & financing activities:          
Accrued expenses converted to convertible note payable  $150,875   $ 
Settlement with former CEO  $819,460   $ 
Shares issued for liabilities  $   $3,458,750 
Derivative debt discount  $323,007   $539,485 
Derivative settlements  $722,055   $ 
Common stock converted to Preferred Series A stock  $747   $ 
Preferred Series B stock converted to common stock  $12   $ 
Convertible notes payable converted to common stock  $161,336   $395,821 
Accrued interest converted to convertible notes payable  $   $198,640 
Accounts payable converted to convertible notes payable  $   $127,534 
Note payable converted to convertible notes payable  $   $35,859 
Related party liabilities to derivative liabilities  $2,791,250   $ 

 

The accompanying notes are an integral part of these financial statements

18

 

1.BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

 

Simlatus Corporation (“SIML” or “Company”) was incorporated in the State of Nevada under the name Sunberta Resources Inc. on November 15, 2006, as a mining and exploration of mineral claims business.  On November 18, 2009, the Company changed its name to Grid Petroleum Corp. and continued with the mining and exploration of mineral claims operations, exploring mining claims in Alberta, Canada, Vancouver Island, British Columbia, England and the United States.

 

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”) whereby RJM’s owners became the directors of the Company and were to be issued $6,250,000 worth of the Company’s stock; $5,000,000 of Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company’s Preferred Stock (the “Acquisition”). On the same date, the entire management of RJM became the entire management of the Company. The Company’s transaction with RJM has been treated as a reverse recapitalization of the Company, with the Company (the legal acquirer of RJM) considered the accounting acquiree and RJM, whose management took control of the Company (the legal acquiree of the Company), considered the accounting acquirer. The historical financial statements include the operations of the accounting acquirer (RJM) for all periods presented.

 

RJM was incorporated in the State of California on June 11, 2014, for the purpose of operating a broadcast equipment production business.

 

On March 25, 2016, the Company approved a name change to Simlatus Corporation, stock symbol SIML, which was executed on April 4, 2016. The new name change better describes the Company’s new business and new revenues in selling commercial broadcast equipment on a global basis. Simlatus Corporation develops, manufactures, markets and owns proprietary advanced broadcast equipment and software and sells this audio and video broadcast equipment worldwide. These systems have been sold worldwide over the past 15 years including some of the major broadcast companies.   

 

The Company currently sells approximately 55 different audio/video products and is preparing to market its newest audio/video product referred to as SyncPal™. In addition to the Company’s traditional line of audio/video products, it has commenced the research & development of its Immersive Broadcast System, referred to as the Simlatus-IBS™. The Simlatus-IBS™ will include commercial augmented reality and virtual reality applications for studio engineers. These applications, both hardware and software, will allow the customer to control and manage the studio audio/video systems from anywhere in the world. These products are being developed to serve a market segment that is presently being strongly embraced by consumers and is forecasted, by some of the most widely recognized tech companies in the world, as becoming a multi-billion-dollar market in the very near future. The Market Analysis and IP Portfolio will include new patents specifically developed for these products and owned by the Company.

 

Financial Statement Presentation 

 

The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Fiscal Year End 

 

The Company has selected March 31 as its fiscal year end.

19

 

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

 

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.

 

Revenue recognition and Related Allowances

 

The Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) as amended, as of April 1, 2018 with no material impact. The Company primarily generates net revenue through product sales to distributors and to retail customers on its website. Revenue is recognized upon transfer of control of promised products to customers which is generally upon shipment in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at March 31, 2018 and March 31, 2017 is $0.

 

Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the fiscal year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

 

Loss Per Share

 

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on November 1, 2017 (see Note 10). Diluted earnings (loss) per share is equal to the basic per share for the years ended March 31, 2018 and 2017. Common stock equivalents are not included in the loss per share since they are anti-dilutive. All per share amounts have been adjusted for the reverse stock split.

 

Inventories

 

Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. During the year ended March 31, 2018, the Company recorded an impairment to inventory of $61,188. During the year ended March 31, 2017, the Company recorded an allowance for obsolete inventory of $125,329. As of March 31, 2018 and March 31, 2017, the Company’s inventories consist primarily of raw materials and supplies rather than finished goods and are presented net of an allowance for obsolete inventory of $1,435 and $68,629, respectively.

20

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

 

These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2018 and 2017 for each fair value hierarchy level:

 

March 31, 2018  Derivative Liabilities   Total 
Level 1  $   $ 
Level 2  $   $ 
Level 3  $6,627,023   $6,627,023 
           
March 31, 2017  Derivative Liabilities   Total 
Level 1  $   $ 
Level 2  $   $ 
Level 3  $5,316,130   $5,316,130 

 

In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of March 31, 2018 and 2017, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

21

 

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. 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 of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

As of the date of this filing, the Company is delinquent in filing their tax returns, and there is uncertainty regarding potential penalties and interest.  The last return filed by the Company was March 31, 2012, and the Company has not accrued any potential penalties or interest from that period forward.  The Company will need to file returns for the years ending March 31, 2013, 2014, 2015, 2016 and 2017, which are still open for examination.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the standard on April 1, 2018, using a modified retrospective approach, with the cumulative effect of initially applying the standard recognized in retained earnings at the date of adoption.

 

While the Company does not expect the adoption of this standard to have a material impact on the Company’s net Revenues in the Statements of Income, the Company anticipates revenues for certain wholesale transactions and substantially all digital commerce sales will be recognized upon shipment rather than upon delivery to the customer.

 

Additionally, provisions for post-invoice sales discounts, returns and miscellaneous claims will be recognized as accrued liabilities rather than as reductions to Accounts receivable, net; and the estimated cost of inventory associated with the provision for sales returns will be recorded within Prepaid expenses and other current assets on the Balance Sheets. The Company continues to evaluate the impact of this new standard, including on accounting policies, disclosures, internal control over financial reporting and its contracts with customers.

 

In February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). Among other provisions, this ASU requires that when determining whether certain financial instruments should be classified as liabilities or equity instruments, an entity should not consider the down round feature. The ASU also recharacterizes as a scope exception the indefinite deferral available to private companies with mandatorily redeemable financial instrument and certain noncontrolling interests, which does not have an accounting effect but addresses navigational concerns within the FASB Accounting Standards Codification. The provisions of the ASU related to down rounds are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

22

 

2.GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2018, the Company has an accumulated deficit of $10,904,388 since its inception and working capital deficit of $11,794,603, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

 

The Company does not have sufficient cash to fund its desired research and development objectives for its augmented/virtual reality product development for the next 12 months. The Company has arranged financing and intends to utilize the cash received to fund the research and development project. This financing may be insufficient to fund expenditures or other cash requirements required to complete the product design for the augmented/virtual reality markets. There can be no assurance the Company will be successful in completing any new product development. The Company plans to seek additional financing if necessary in private or public equity offering(s) to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

 

These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

 

3.PREPAID EXPENSES

 

   March 31,   March 31, 
   2018   2017 
Prepaid expenses  $   $10,000 

 

Prepaid fees represent amounts paid in advance for future contractual benefits to be received. Contracting expenses paid in advance are recorded as a prepaid asset and then amortized to the statements of operations when services are rendered, or over the life of the contract using the straight-line method.

 

During the years ended March 31, 2018 and 2017, the Company amortized prepaid expenses of $0 and $10,000, respectively, for legal fees billed and paid in advance for April through August 2017, at $2,000 per month.

 

4.CONVERTIBLE NOTES PAYABLE

 

As of March 31, 2018, and March 31, 2017, notes payable were comprised of the following:

 

   Original  Due  Interest  Conversion  March 31,   March 31, 
   Note Date  Date  Rate  Rate  2018   2017 
ARC Capital Ltd  10/1/2015  4/2/2016  24%  Variable  $2,625   $11,625 
Asher Enterprises #4  9/16/2011  6/20/2012  22%  Variable   13,000    13,000 
Auctus Fund #1  12/16/2016  9/16/2017  24%  Variable   46,750    46,750 
Auctus Fund #2  8/9/2017  5/9/2017  24%  Variable   46,750     
Blackbridge Capital #2  5/3/2016  5/3/2017  5%  Variable   80,400    80,400 
Carl Ambrose  3/23/2017  9/1/2018  3%  Variable       20,914 
Direct Capital #26  4/7/2016  10/7/2016  8%  Variable       25,000 
Direct Capital #27  5/17/2016  11/17/2016  8%  Variable       36,000 
EMA Financial  11/9/2016  11/9/2017  24%  Variable   272,576    35,000 
Emunah Funding #1  10/18/2017  10/18/2018  0%  Variable   110,000     
Emunah Funding #2  10/18/2017  10/18/2018  0%  Variable   20,000     
Emunah Funding #3  10/18/2017  10/18/2018  0%  Variable   30,000     
Emunah Funding #4  10/20/2018  7/20/2018  8%  Variable   55,440     
Frank Trapp  3/23/2017  12/31/2017  5%  Variable       14,945 
GHS Investment #3  2/7/2017  Demand  0%  Variable       98,800 
GW Holdings  10/13/2015  4/1/2015  24%  Variable   42,500    42,500 
James Powell  9/7/2015  Demand  8%  Variable   150,875     
Rockwell Capital #5  2/28/2017  Demand  0%  Variable       19,782 
Southridge Partners  10/27/2015  3/1/2014  22%  Variable       15,655 
Syndication Capital #1  12/31/2012  10/10/2011  22%  0.01   5,000    5,000 
Tide Pool  1/1/2015  7/1/2015  22%  Variable       348,500 
Tri-Bridge Ventures #1  1/19/2017  10/19/2017  8%  Variable   9,000    25,000 
Tri-Bridge Ventures #2  1/19/2017  10/19/2017  8%  Variable       150,000 
V2IP #2  5/13/2016  Demand  12%  Variable   10,000    10,000 
                894,916    998,871 
Less debt discount         (120,083)   (222,094)
Notes payable, net of discount*        $774,833   $776,777 

 

*During the years ended March 31, 2018 and March 31, 2017, the balance of notes payable, net of discount that are in default is $511,923 and $497,280, respectively.

23

 

ARC Capital Ltd

 

On October 1, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby ARC Capital Ltd acquired $16,000 in principal and $5,625 of interest of a Direct Capital Group, Inc. convertible note in exchange for $21,625. The note bears interest at 8% per annum (increases to 24% per annum upon an event of default), matured on April 2, 2016, and is convertible into common stock at 50% of the lowest closing market price of the prior 15 trading days including the day upon which the notice of conversion is received by the Company. The Company recorded a debt discount from the derivative equal to $21,625 due to this conversion feature. The note had accrued interest of $8,260 as of March 31, 2018 and $5,470 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $9,000 and $10,000, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $2,625 and $11,625, respectively. This note is currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Asher Enterprises, Inc.

 

On September 16, 2011, the Company accepted and agreed to a Debt Purchase Agreement, whereby Asher Enterprises, Inc. acquired $40,000 of a Special Situations Fund One convertible note in exchange for $40,000. The note bears interest at 8% per annum (increases to 22% per annum upon an event of default), matured on June 20, 2012, and is convertible into common stock at 50% multiplied by the average of the 3 lowest closing market prices of the 10 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $40,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $21,038 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $13,000 and $13,000, respectively. This note currently in default.

24

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Auctus Fund LLC

 

On August 9, 2017, the Company issued a convertible note to Auctus Fund LLC for $46,750, of which $40,000 was received in cash $6,750 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matured on August 22, 2017, and is convertible into the lower of 1) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the date of the note, and 2) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $46,750 due to this conversion feature. Pursuant to the default terms of the note, the Company entered a penalty of $210,097 in interest during the year ended March 31, 2018. The note had accrued interest of $213,094 as of March 31, 2018 and $2,997 as of March 31,2017. The debt discounts had a balance of $6,679 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $40,071 and $0 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $46,750 and $46,750, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On December 16, 2016, the Company issued a convertible note to Auctus Fund LLC for $46,750, of which $40,000 was received in cash $6,750 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matured on September 16, 2017, and is convertible into the lower of 1) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the date of the note, and 2) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $46,750 due to this conversion feature. Pursuant to the default terms of the note, the Company entered a penalty of $191,562 in interest during the year ended March 31, 2018. The note had accrued interest of $204,127 as of March 31, 2018 and $1,345 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $28,835 as of March 31, 2017. The Company recorded debt discount amortization expense of $28,835 and $17,915 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $46,750 and $46,750, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Blackbridge Capital

 

On May 3, 2016, the Company accepted and agreed to a Debt Purchase Agreement, whereby Blackbridge Capital acquired $100,000 in principal of a Direct Capital Group, Inc. convertible note in exchange for $100,000. The note bears interest at 5% per annum, matured on May 3, 2017, and is convertible into common stock at 50% of the lowest market price of the 20 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $100,000 due to this conversion feature. The note had accrued interest of $7,703 as of March 31, 2018 and $3,683 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $7,269 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $0 and $19,600, respectively, were converted into shares. The Company recorded debt discount amortization expense of $7,269 during the year ended March 31, 2018 and $73,668 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $80,400 and $80,400, respectively. This note currently in default.

25

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Carl Ambrose

 

On March 23, 2017, the Company transferred a promissory note with Carl Ambrose into a convertible note for $20,914. The note bears interest at 3%, matures on September 1, 2018, and is convertible into convertible into common stock at 50% of the lowest trading price of the date of conversion. The Company recorded a debt discount from the derivative equal to $20,914 due to this conversion feature. On April 20, 2017, the note was acquired by Tri-Bridge Ventures LLC for $20,914. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $20,596 as of March 31, 2017. The Company recorded debt discount amortization expense of $20,596 and $317 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $0 and $20,914, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Direct Capital Group, Inc.

 

On April 7, 2016, the Company issued a convertible note to Direct Capital Group, Inc. for $25,000, for cash consideration. The note bears interest at 6% (increases to 8% per annum upon an event of default), matured on October 7, 2016, and is convertible into common stock at 68% multiplied by the average closing price for the 5 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $1,711 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $0 and $0 as of March 31, 2018 and 2017, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On May 17, 2016, the Company issued a convertible note to Direct Capital Group, Inc. for $36,000, for cash consideration. The note bears interest at 6% (increases to 8% per annum upon an event of default), matured on November 17, 2016, and is convertible into 68% multiplied by the average closing price for the 5 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $36,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $2,146 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $0 and $0 as of March 31, 2018 and 2017, respectively.

 

On October 1, 2017, the Company accepted the request from Direct Capital Group, Inc, to cancel the two convertible notes with a total principal amount of $61,000 and interest of $6,304 and exchange the notes for a promissory note (see Note #5).

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

EMA Financial, LLC

 

On November 9, 2016, the Company issued a convertible note to EMA Financial, LLC for $35,000, of which $30,000 was received in cash $5,000 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matured on November 9, 2017, and is convertible into the lower of 1) the closing market price on the trading day immediately preceding the closing date of the note, and 2) 50% of the lowest trading price during the 25 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $35,000 due to this conversion feature. Pursuant to the default terms of the note, the Company entered a penalty of $250,330 in principal and $23,143 in interest during the year ended March 31, 2018. The note had accrued interest of $26,415 as of March 31, 2018 and $1,362 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $21,384 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $12,754 and $0, respectively, were converted into shares. The Company recorded debt discount amortization expense of $21,384 and $13,616 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $272,576 and $35,000, respectively. This note currently in default.

26

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Emunah Funding LLC

 

On October 18, 2017, the Company issued a convertible note to Emunah Funding LLC in consideration of liquidated damages in the amount of $110,000. The note bears no interest, matures on October 18, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $110,000 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $60,575 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $49,425 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $110,000 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On October 18, 2017, the Company accepted and agreed to a Debt Purchase Agreement, whereby Emunah Funding LLC acquired $20,000 of debt from a Tri-Bridge Ventures LLC convertible note in exchange for $25,000. The note bears no interest, matures on October 18, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $13,767 and $0 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $5,000 and $0, respectively, were converted into shares. The Company recorded debt discount amortization expense of $11,233 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $20,000 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On October 18, 2017, the Company accepted and agreed to a Debt Purchase Agreement, whereby Emunah Funding LLC acquired $35,817 of debt from a Tri-Bridge Ventures LLC convertible note in exchange for $30,000. The note bears no interest, matures on October 18, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $30,000 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $16,521 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $13,479 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $30,000 and $0, respectively.

27

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 20, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $22,542 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $32,898 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $55,440 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Frank Trapp

 

On March 23, 2017, the Company transferred a promissory note with Frank Trapp into a convertible note for $14,945. The note bears interest at 5%, matured on December 31, 2017, and is convertible into convertible into common stock at 50% of the lowest trading price of the date of conversion. The Company recorded a debt discount from the derivative equal to $14,945 due to this conversion feature. On April 20, 2017, the note was acquired by Tri-Bridge Ventures LLC for $14,945. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $14,523 as of March 31, 2017. The Company recorded debt discount amortization expense of $14,523 and $422 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $0 and $14,945, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

GHS Investments, LLC

 

On February 7, 2017, the Company entered into a Settlement and Release Agreement, as well as an Exchange Convertible Promissory Note (collectively “Settlement Documents”), with GHS Investments, LLC (“GHS”).

 

On April 28, 2016, GHS entered into a Debt Assignment Agreement and a Convertible Promissory Note (collectively “Debt Assignment”) with Direct Capital Group, Inc., wherein, GHS purchased Fifteen Thousand Eight Hundred Eighty Six Dollars ($15,886) of interest that had accumulated on a Two Hundred Forty Thousand Dollars ($240,000) Note between Direct Capital Group, Inc. and Grid Petroleum Corporation, dating back to June 30, 2015, for consulting services provided by Direct Capital to Grid Petroleum.  GHS paid John Fullenkamp, the sole officer of Direct Capital Group, Inc., the purchase price of $15,886.

 

The Company did not receive any proceeds or compensation from the assignment of the $15,886 to GHS.  A Replacement Note (GHS Note #2) was entered between the Company and GHS; a conversion notice was presented to the Company on May 5, 2016, and GHS converted Nine Thousand Seven Hundred Forty Dollars ($9,740) into unrestricted common shares.  The share price on May 4, 2016, closed at $0.0002; the lowest intra-day trade during the time period set forth in the Replacement Note was $0.0001; and the shares were converted at the price of $0.00005 per share.  The remaining principal balance of the GHS Note #2 on May 5, 2016 was $6,146.

28

 

The next conversion request of Three Thousand Seven Hundred Dollars ($3,700) by GHS was denied by the Company; on August 7, 2016, the stock price was $0.12, there was an intra-day trade of $0.001 during the time period allowed under the terms of the GHS Note #2, and the request to convert shares at $0.0005.  The Company disputed the conversion, and interest and penalties were applied to the GHS Note #2, increasing the remaining $6,146 of the $15,886 GHS Note #2 to over $500,000. Following several months of negotiating, the Company and GHS agreed to reduce the GHS Note #2 to $150,000. GHS is prohibited from converting more than $14,000 per week and from selling more than $2,800 per day.

 

The note bears no interest, matured on April 1, 2015, and is convertible into common stock at 50% multiplied but the average of the 3 lowest closing market prices for the 10 days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $150,000 due to this conversion feature. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $98,800 and $51,200, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 and $119,092 as of March 31, 2018 and 2017, respectively. As of March 31, 2018, the entire balance of the note has been converted to stock.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

GW Holdings Group, LLC

 

On October 13, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby GW Holdings Group, LLC acquired $50,000 in principal and $10,411 of interest of a New Venture Attorneys convertible note in exchange for $60,411. The note bears interest at 8% per annum (increases to 24% per annum upon an event of default), matured on April 1, 2015, and is convertible into common stock at 50% multiplied by the average of the 3 lowest closing prices of the 10 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $60,411 due to this conversion feature. On April 27, 2016 and May 23, 2016, GW Holdings requested conversions which were not honored. Pursuant to the terms of the note, penalties of $2,000 per day per conversion were accrued as interest. The note had accrued interest of $2,770,200 as of March 31, 2018 and $996,814 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal and interest amounts of $0 and $4,153, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $42,500 and $42,500, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

James Powell

 

On September 7, 2015, the Company issued a convertible note with the Company’s former President, James Powell for non-cash consideration for accrued fees of $150,875. The note bears interest at 8%, is due on demand, and is convertible into convertible into common stock at 50% of the lowest trading price for the 15 days prior to the date of conversion. The note had accrued interest of $30,952 as of March 31, 2018 and $0 as of March 31,2017. The principal balance as of March 31, 2018 and 2017, was $150,875 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

29

 

Rockwell Capital Partners

 

On February 28, 2017, the Company entered into a Settlement Agreement with Rockwell Capital Partners, wherein Rockwell agreed to purchase a number of outstanding debts, in the total amount of $81,163, pursuant to a Claims Purchase Agreement and an order of the Court, following a Fairness Hearing under Section 3(a)(10) of the Securities Act of 1933 (the “Act”). Pursuant to the Order of the Court, shares of common stock shall be issued to Rockwell in exchange of the debt, and pursuant to the Order.

 

On March 1, 2017, an Order was entered by the Twelfth Judicial Circuit Court in and for Sarasota County, Florida, approving the Settlement Agreement and Stipulation regarding the sale of Shares under Section 3(a)(1) of the Act. As of March 31, 2017, Rockwell purchased $40,582 in outstanding debts, and the remaining settlement amount of $40,581 was cancelled.

 

The note bears no interest, is due on demand, and is convertible into convertible into common stock at 50% of the lowest closing price for the 15 days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $40,582 due to this conversion feature. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amount of $19,782 and $20,800, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 and $40,582 as of March 31, 2018 and 2017, respectively. As of March 31, 2018, the entire balance of the note has been converted to stock.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Southridge Partners LP

 

On October 27, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby Southridge Partners LP acquired $22,000 in principal and $8,730 of interest of two Direct Capital Group, Inc’s convertible notes in exchange for $30,730 to be paid in two tranches of $15,655 each. The second tranche was not paid, and during the year ended March 31, 2018 the note principal balance was reduced to $15,655 and interest by $3,282. The note bears interest at 8% per annum (increases to 22% per annum upon an event of default), matured on March 1, 2014, and is convertible into common stock at 50% of the lowest closing market price of the 15 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $15,655 due to this conversion feature. The note had accrued interest of $285 as of March 31, 2018 and $3,567 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $0 and $15,655, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Syndication Capital, LLC

 

On December 31, 2012, the Company issued a convertible note with Syndication Capital, LLC, Inc. for non-cash consideration for unpaid consulting fees of $105,000. The note bears interest of 22%, matured on October 10, 2011 and is convertible into convertible into common stock at a fixed rate of $.0001. On August 4, 2013, Gel Properties, LLC acquired $100,000 of the note. The note had accrued interest of $18,853 as of March 31, 2018 and $17,753 as of March 31,2017. The principal balance as of March 31, 2018 and 2017, was $5,000 and $5,000, respectively. This note currently in default.

30

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Tide Pool Ventures

 

On January 1, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby Tide Pool Ventures Corporation acquired $360,000 in principal from a Direct Capital Group, Inc convertible note in exchange for $20,000. The note bears interest at 8% per annum (increases to 22% per annum upon an event of default), matured on March 1, 2014, and is convertible into common stock at 50% of the lowest trading price of the 15 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $360,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $152,436 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. On February 7, 2018, the Company entered into a Settlement and Release Agreement with Tide Pool, whereby Tide Pool agreed to extinguish the principal balance of $348,000 and accrued interest of $217,133 for $10,000, to be issued in Series A preferred stock. The Company issued 5,587 Series A preferred stock at $1.79 per share, pursuant to the agreement, and recorded a gain of $555,633 on settlement of debt. The principal balance as of March 31, 2018 and 2017, was $0 and $348,500, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Tri-Bridge Ventures LLC

 

On January 19, 2017, the Company issued a convertible note to Tri-Bridge Ventures LLC for $25,000 for cash consideration. The note bears interest at 8%, matured on October 19, 2017, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature. The note had accrued interest of $1,306 as of March 31, 2018 and $389 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $18,498 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $16,000 and $0, respectively, were converted into shares. The Company recorded debt discount amortization expense of $18,498 and $6,502 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $9,000 and $25,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On January 19, 2017, the Company issued a convertible note to Tri-Bridge Ventures LLC for $150,000 for non-cash consideration for an S-1 registration. The note bears interest at 8%, matured on October 19, 2017, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $150,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $2,334 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $110,989 as of March 31, 2017. The Company recorded debt discount amortization expense of $110,989 and $39,011 as of March 31, 2018 and 2017, respectively. On December 1, 2017, the Company and Tri-Bridge Ventures entered into a Settlement and Release Agreement and the principal balance of $150,000 and accrued interest of $10,389 was extinguished due to the terms of the agreement not materializing. The principal balance as of March 31, 2018 and 2017, was $0 and $150,000, respectively.

31

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On April 21, 2017, the Company issued a convertible note to Tri-Bridge Ventures LLC for $20,000 for cash consideration. The note bears interest at 8%, matured on January 21, 2018, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $20,000 and $0 as of March 31, 2018 and March 31, 2017, respectively. On October 18, 2017, the principal balance of $20,000 was reassigned to Emunah Funding LLC pursuant to a Debt Purchase Agreement in exchange for $25,000. The principal balance as of March 31, 2018 and March 31, 2017, was $0 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On April 20, 2017, the Company accepted and agreed to a Debt Purchase Agreement, whereby Tri-Bridge Ventures Corporation acquired $20,914 of the Carl Ambrose note and $14,945 of the Frank Trapp note in exchange for $35,817. The note bears interest at 8% per annum, matured on April 20, 2018, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $35,817 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $35,817 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. On October 18, 2017, the principal balance of $35,817 was reassigned to Emunah Funding LLC pursuant to a Debt Purchase Agreement in exchange for $30,000, and the Company recorded a gain on settlement of debt of $5,859. The principal balance as of March 31, 2018 and 2017, was $0 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

V2IP, LLC

 

On May 31, 2016, the Company accepted and agreed to a Debt Purchase Agreement, whereby V2IP, LLC acquired $20,000 in accrued interest from a Direct Capital Group, Inc convertible note in exchange for $20,000. The note bears interest at 6% per annum (increases to 12% per annum upon an event of default), is due on demand, and is convertible into common stock at 50% of the lowest trading price of the 10 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature. The note had accrued interest of $1,129 as of March 31, 2018 and $529 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $10,000 and $10,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

As of March 31, 2018, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities.

32

 

Convertible Note Conversions   

 

During the year ended March 31, 2018, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

 

   Principal   Note Fee   Total   Conversion   Shares Issued   Shares Issued    
Date  Conversion   Conversion   Conversion   Price   Pre-Split   Post-Split   Issued to
4/5/2017  $4,800   $   $4,800   $0.0160    48,000,000    32,000   Rockwell
4/11/2017   9,500.00        9,500    0.0154    44,186,047    29,457   GHS
4/12/2017   5,000.00        5,000    0.0128    50,000,000    33,333   Rockwell
4/17/2017   5,200.00        5,200    0.0129    52,000,000    34,667   Rockwell
4/18/2017   14,000.00        14,000    0.0138    61,135,372    40,757   GHS
4/24/2017   4,781.62        4,782    0.0136    47,816,200    31,877   Rockwell
5/1/2017   14,000.00        14,000    0.0129    68,292,683    45,528   GHS
5/10/2017   12,000.00        12,000    0.0128    69,364,162    46,243   GHS
5/12/2017   2,600.00        2,600    0.0097    130,000,000    86,667   Tri-Bridge
5/17/2017   4,440.00    900    5,340    0.0080    89,000,000    59,333   EMA
5/22/2017   9,000.00        9,000    0.0075    180,000,000    120,000   ARC
5/22/2017   3,600.00        3,600    0.0056    180,000,000    120,000   Tri-Bridge
5/23/2017   14,000.00        14,000    0.0055    93,959,732    62,640   GHS
5/30/2017   4,600.00        4,600    0.0056    230,000,000    153,333   Tri-Bridge
5/31/2017   2,700.00    900    3,600    0.0055    120,000,000    80,000   EMA
6/2/2017   5,200.00        5,200    0.0056    260,000,000    173,333   Tri-Bridge
6/5/2017   480.00    900    1,380    0.0058    138,000,000    92,000   EMA
6/5/2017   10,000.00        10,000    0.0056    97,087,379    64,725   GHS
6/14/2017   2,245.00        2,245    0.0056    314,500,000    209,667   EMA
6/16/2017   12,800.00        12,800    0.0056    182,857,143    121,905   GHS
6/22/2017   2,889.00    900    3,789    0.0058    378,900,000    252,600   EMA
6/23/2017   12,500.00        12,500    0.0059    178,571,429    119,048   GHS
11/13/2017   5,000.00    1,250    6,250    0.0001    108,695,652    72,464   Emunah
   $161,336   $4,850   $166,186         3,122,365,799    194,559,520    

33

 

During the year ended March 31, 2017, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

 

   Principal   Interest   Total   Conversion   Shares Issued   Shares Issued    
Date  Conversion   Conversion   Conversion   Price   Pre-Split   Post-Split   Issued to
4/5/2016  $7,800   $   $7,800   $0    156,000    104   Direct Capital
4/5/2016   4,180        4,180    0.0500    83,600    56   Microcap
4/8/2016   4,404        4,404    0.0500    88,078    59   GHS
4/6/2016   4,000    153    4,153    0.0500    83,051    55   GW Holdings
4/12/2016       3,072    3,072    0.0500    61,440    41   Microcap
4/12/2016   4,000        4,000    0.0500    80,000    53   V2IP
4/13/2016   2,114        2,114    0.0500    42,282    28   Coventry
4/21/2016   5,090        5,090    0.0500    101,800    68   GHS
4/25/2016   2,000    142    2,142    0.0107    200,000    133   Blackbridge
4/27/2016   3,254    588    3,842    0.0500    76,832    51   GHS
4/26/2016   6,000        6,000    0.0500    120,000    80   Tide Pool
4/28/2016   4,800        4,800    0.0500    96,000    64   Rockwell
5/2/2016   2,510        2,510    0.0500    50,200    33   A Super
4/29/2016   10,850        10,850    0.0500    217,000    145   Direct Capital
4/7/2016   2,900    485    3,385    0.0500    67,700    45   LG
5/3/2016   6,975        6,975    0.0500    139,500    93   Rockwell
4/28/2016   6,000        6,000    0.0500    120,000    80   V2IP
5/5/2016   9,740        9,740    0.0500    194,800    130   GHS
5/4/2016   7,500        7,500    0.0500    150,000    100   Rockwell
5/6/2016   4,275        4,275    0.0500    85,500    57   Rockwell
5/6/2016   19,600        19,600    0.0490    400,000    267   Blackbridge
5/13/2016   10,000        10,000    0.0500    200,000    133   V2IP
8/4/2016   15,000        15,000    0.0150    1,000,000    667   A Super
8/4/2016   68,500        68,500    0.0050    13,700,000    9,133   Direct Capital
8/3/2016   35,000        35,000    0.0050    7,000,000    4,667   N600PG
11/30/2016   8,000        8,000    0.0008    10,000,000    6,667   Rockwell
12/7/2016   6,000        6,000    0.0006    10,000,000    6,667   Rockwell
12/13/2016   4,800        4,800    0.0004    12,000,000    8,000   Rockwell
12/21/2016   6,000        6,000    0.0004    15,000,000    10,000   Rockwell
12/27/2016   6,000        6,000    0.0004    15,000,000    10,000   Rockwell
1/3/2017   7,000        7,000    0.0004    20,000,000    13,333   Rockwell
12/30/2016   10,000        10,000    0.0004    25,000,000    16,667   ARC
1/5/2017   7,500        7,500    0.0003    25,000,000    16,667   Rockwell
1/9/2017   6,250        6,250    0.0003    25,000,000    16,667   Rockwell
1/18/2017   6,250        6,250    0.0003    25,000,000    16,667   Rockwell
1/25/2017   7,000        7,000    0.0003    28,000,000    18,667   Rockwell
1/27/2017   8,000        8,000    0.0003    32,000,000    21,333   Rockwell
1/31/2017   8,250        8,250    0.0003    33,000,000    22,000   Rockwell
2/9/2017   14,000        14,000    0.0005    27,027,028    18,018   GHS
3/3/2017   14,000        14,000    0.0005    29,411,765    19,608   GHS
3/6/2017   6,600        6,600    0.0002    33,000,000    22,000   Rockwell
3/9/2017   6,000        6,000    0.0002    40,000,000    26,667   Rockwell
3/14/2017   14,000        14,000    0.0004    33,333,334    22,222   GHS
3/15/2017   902        902    0.0001    9,021,300    6,014   Rockwell
3/15/2017   3,600        3,600    0.0001    36,000,000    24,000   Rockwell
3/23/2017   4,600        4,600    0.0001    46,000,000    30,667   Rockwell
3/28/2017   9,200        9,200    0.0003    35,249,043    23,499   GHS
   $410,444   $4,440   $414,883         588,556,252    392,371    

34

 

5.LONG TERM NOTE PAYABLE

 

On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. The Company recorded a gain of $6,304 in accrued interest and the derivative liability of $87,505 was revalued and settled to additional paid in capital.

 

6.DERIVATIVE LIABILITIES

 

During the year ended March 31, 2018, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at March 31, 2018 based on the Monte Carlo simulation method consistent with the terms of the related debt.

 

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2018:

 

   Notes   Warrants   Stock Payable   Total 
Balance, beginning of period  $5,316,130   $   $   $5,316,130 
Initial recognition of derivative liability   315,167    8,117        323,284 
Derivatives to stock payable           2,791,250    2,791,250 
Conversion of derivative instruments to Common Stock   (722,055)       (638,750)   (1,360,805)
(Gain) loss on derivative liability valuation   (889,953)   (5,986)   453,103    (442,836)
Balance, end of period  $4,019,289   $2,131   $2,605,603   $6,627,023 

 

Convertible Notes

 

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2018:

 

   Commitment date    Valuation date
Expected dividends  0%  0%
Expected volatility  338%-423%  91.6%-102%
Expected term  .5 – 2 years  .25 – 2 years
Risk free interest  .92%-1.41%  1.66%-2.12%

 

During the year ended March 31, 2017, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at March 31, 2017 using the Black-Scholes option pricing model to estimate fair value for those instruments convertible into common shares at inception, at conversion or extinguishment date, and at each reporting date.

 

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2017:

 

   March 31, 
   2017 
Balance, beginning of period  $2,944,855 
Initial recognition of derivative liability   1,282,329 
Conversion of derivative instruments to Common Stock   (1,044,930)
(Gain) loss on derivative liability valuation   3,952,365 
(Gain) loss on settlement of debt   (1,818,489)
Balance, end of period  $5,316,130 

35

 

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2017:

 

   Commitment date    Valuation date
Expected dividends  0%  0%
Expected volatility  350.16%-988.84%  184.75%-1,374.41%
Expected term  .5 - 1 year  .12 – 1.44 years
Risk free interest  .61% -.90%  .23%-.99%

 

Warrants

 

On October 20, 2017, the Company executed a Common Stock Purchase Warrant for 52,840,909 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on October 20, 2022.

 

On November 6, 2017, the Company executed a Common Stock Purchase Warrant for 15,338,160 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on November 6, 2022.

 

On November 30, 2017, the Company executed a Common Stock Purchase Warrant for 10,225,440 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on November 30, 2022.

 

On January 11, 2018, the Company executed a Common Stock Purchase Warrant for 8,521,200 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on January 11, 2023.

 

The Company evaluated all outstanding warrants to determine whether these instruments may be tainted. All warrants outstanding were considered tainted. The Company valued the embedded derivatives within the warrants based on the Monte Carlo simulation.

 

The fair value at the inception date for the warrants and the revaluation dates were based upon the following management assumptions:

 

   Commitment date    Valuation date
Expected dividends  0%  0%
Expected volatility  105.3%-106.8%  105.3%-106.8%
Expected term  5 years  4.56 - 5 years
Risk free interest  1.99%-2.32%  2.14%-2.56%
       
   Commitment date  Valuation date
Expected dividends  0%  0%
Expected volatility  350.16%-988.84%  184.75%-1,374.41%
Expected term  .5 - 1 year  .25 - 1 year
Risk free interest  .61% -.90%  .23%-.99%

 

Stock Payable

 

During the year ended March 31, 2018, the Company reclassified stock payables due to related parties of $2,791,250 to derivative liabilities, due to the company having a tainted equity environment. The payables to be issued in stock are at 100% of the lowest closing market price with a 15 day look back. The effective discount to the stock at March 31, 2018 due to the 100% of the lowest closing market price of the previous 15 days using a 6-month average was $0, and therefore the value is equal to the face amount.

36

 

7.RELATED PARTY TRANSACTIONS

 

In conjunction with the reverse recapitalization transaction on March 9, 2016, the Company recorded amounts due to related parties of $6,250,000, which represented shares that were owed to members of management. During the year ended March 31, 2017 the Company issued 698,324 Series A Preferred shares and 265,909 common shares to reduce the liability by $3,458,750, resulting in a remaining liability of $2,791,250 as of March 31, 2017.

 

On June 1, 2017, the Company issued 536,351 Series A Preferred shares valued at $960,068 to Gary Tilden, a former officer and director, which reduced liabilities owed to him of $819,460, and recorded a loss on conversion of $140,608. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued to Donna Murtaugh.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

As of March 31, 2018, former President Gary Tilden has been paid all outstanding related party and derivative liabilities. The other parties have a remaining derivative liability of $2,152,500, to be issued in common stock, and is recorded as a derivative liability on the Company’s Balance Sheet.

 

During the year ended March 31, 2018, the Company reclassified stock payables due to related parties of $2,791,250 to derivative liabilities, due to the company having a tainted equity environment.

 

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. As of March 31, 2018 and 2017 the Company owed related parties $126,494 and $50,262, respectively. During the year ended March 31, 2018, the Company recorded imputed interest of $13,257 to the statement of operations with a corresponding increase to additional paid in capital.

 

8.PREFERRED STOCK

 

On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create two classes of Preferred Stock, Series A and Series B, with a par value of $0.001. Each class has 10,000,000 shares authorized.

 

On July 1, 2015, the Company’s Board of Directors authorized the creation of shares of Series B Voting Preferred Stock and on July 27, 2015 a Certificate of Designation was filed with the Nevada Secretary of State. The holder of the shares of the Series B Voting Preferred Stock has the right to vote those shares of the Series B Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series B Voting Preferred Stock is equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.

 

On January 3, 2017, the Company filed an Amendment to Certificate of Designation with the Nevada Secretary of State defining the rights and preferences of the Series A Preferred shares. Series A Preferred stock shall be convertible into common shares at the rate of the closing market price on the day of the conversion notice equal to the dollar amount of the value of the Series A shares, and holders shall have no voting rights on corporate matters, unless and until they convert their Series A shares into Common Shares, at which time they will have the same voting rights as all Common Shareholders have; their consent shall not be required for taking any corporate action.

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On June 1, 2017, the Company issued 536,351 Series A Preferred shares valued at $960,068 to Gary Tilden, a former officer and director, which reduced liabilities owed to him of $819,460, and recorded a loss on conversion of $140,608. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On February 7, 2018, the Company issued 5,587 Series A Preferred stock at $1.79 per share, pursuant to a debt settlement agreement with a convertible note holder. The note holder agreed to extinguish the principal balance of $348,000 and accrued interest of $217,133 for $10,000 to be issued in Series A Preferred stock. The Company recorded a gain of $555,633 on settlement of debt, a gain on derivative liability of $501,506, and reclassed $161,343 in derivative liabilities to additional paid in capital. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

During the year ended March 31, 2018, the Company also retired 250 Series B Voting Preferred shares issued to Donna Murtaugh. Ms. Murtaugh also sold 174,581 Series A Preferred shares to a new shareholder, of which 12,788 Series A Preferred shares were converted into 127,888 common shares. Both resulted in $0 due to the value being within the terms of the agreement at $0 per share.

 

As of March 31, 2018, 10,000,000 Series A Preferred shares and 10,000,000 Series B Preferred shares were authorized, of which 3,489,610 Series A shares were issued and outstanding, (2,213,154 shares as of March 31, 2017) and 500 Series B shares were issued and outstanding (1,000 shares as of March 31, 2017).

 

9.COMMON STOCK

 

On June 15, 2016, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Company’s outstanding shares of common stock, which was effective on July 22, 2016. The financial statements have been retroactively adjusted to take this into account for all periods presented.

 

On August 29, 2016, the Company filed a Certificate of Amendment to reduce the amount of authorized common shares to 163,000,000 shares, par value of $0.00001.

 

On November 14, 2016, the Company filed a Certificate of Amendment to increase the number of authorized common shares to 1,500,000,000 with a par value of $0.00001.

 

On December 8, 2016, the Company filed a Certificate of Amendment to increase the number of authorized common shares to 3,000,000,000 with a par value of $0.00001.

 

On January 26, 2017, the Company filed a Certificate of Amendment with the State of Nevada in order to increase the number of authorized shares of Common Stock. The number of authorized common stock the Company shall have the authority to issue is 7,000,000,000; par value $0.00001 per share.

 

On August 3, 2016, pursuant to the Asset Purchase Agreement dated March 9, 2016, the Company issued 90,909 shares of common stock in equal amounts of 22,727 shares each to Robert Stillwaugh, Mike Schatz, Gary Tilden and Donna Marie Murtaugh, which resulted in a reduction of $1,500,000 to derivative liabilities. The shares were valued at $2,045,455 based on the market price of the Company’s common stock on the date of issuance and $545,455 was recorded as a loss on settlement of debt.

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On November 16, 2016, pursuant to the Asset Purchase Agreement dated March 9, 2016, the Company issued 233,333 shares of common stock in equal amounts of 58,333 shares each to Robert Stillwaugh, Mike Schatz, Gary Tilden and Donna Marie Murtaugh, which resulted in a reduction of $945,000. On December 5, 2016, Donna Murtaugh entered into a Cancellation of Issued Shares Agreement with the Company, whereby she has agreed to the cancellation of her 58,333 shares and to defer payment to her under the Asset Purchase Agreement and the Amended Asset Purchase Agreement. The stock issued and not cancelled were valued at $918,750 based on the market price of the Company’s common stock on the date of issuance and resulted in a reduction of derivative liabilities of $708,750 and a loss on settlement of debt of $210,000.

 

On March 20, 2017, 27,867 common shares were issued in exchange for 4,670 shares of Series A Preferred shares.

 

During the year ended March 31, 2017 the Company issued 45,733 shares of common stock for services valued at $51,720, based on the market price of the Company’s common stock on the date of agreement.

 

During the year ended March 31, 2017, the holders of convertible notes converted a total of $414,883 of principal and interest into 392,473 shares of common stock. The common stock was valued at $1,241,752 based on the market price of the Company’s stock on the date of conversion. The issuance extinguished $1,044,930 worth of derivative liabilities, $19,063 of debt discount, and $198,998 was recorded as a gain on settlement of debt.

 

On April 27, 2017, the Company issued 53,333 shares of common stock for services valued $24,000, based on the market price of the Company’s common stock on the date of agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On October 31, 2017, the Company approved the authorization of a 1 for 1,500 reverse stock split of the Company’s outstanding shares of common stock. The Company’s financial statements have been retroactively adjusted for this stock split for all periods presented.

 

On November 1, 2017, the Company filed a Certificate of Amendment with the Secretary of State in Nevada, to amendment its Articles of Incorporation pursuant to the reverse split and to reduce the number of authorized common shares to 900,000,000 having a par value of $0.00001. Any fractional shares which results from that reverse stock split will be rounded up to the next whole share. All common share amounts and per share amounts in the financial statements reflect the one-for-fifteen hundred reverse stock split.

 

During the year ended March 31, 2018, 127,888 common shares were issued in exchange for 12,788 shares of Series A Preferred shares. No gain or loss was recorded due to the conversion occurring within the terms of the agreement.

 

During the year ended March 31, 2018, the holders of convertible notes converted a total of $161,336 of principal into 2,081,577 shares of common stock. The issuance extinguished $722,055 worth of derivative liabilities and $201,809 was recorded as a loss on settlement of debt.

 

As of March 31, 2018, 900,000,000 common shares, par value $0.00001, were authorized, of which 2,914,797 shares were issued and outstanding (733,059 shares as of March 31, 2017).

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10.INCOME TAXES

 

Deferred taxes are provided on a liability method, whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net deferred tax liabilities consist of the following components as of March 31 ,2018 and 2017:

 

   2018   2017 
Deferred tax assets:          
NOL Carryover  $1,050,050   $712,800 
Inventory Allowance       48,900 
Accrued Payroll       256,000 
Deferred tax liabilities          
Valuation allowance   (1,050,050)   (1,017,700)
Net deferred tax asset  $   $ 

 

The income tax provision differs from the amount of income tax determined by applying the US federal income tax rate to pretax income from continuing operations for the years ended March 31, 2018 and 2017 due to the following:

 

   2018   2017 
Book Income  $(923,695)  $(2,333,700)
Interest Expense (for derivative)   89,254    485,700 
Imputed Interest   2,784     
Gain/Loss on Derivative   (92,937)   1,541,400 
Gain/Loss on Settlement of Debt   (116,683)   (507,900)
Loss on CEO Settlement   307,850     
Penalties   19,839     
Loss on Conversion   42,380     
Stock Compensation   5,040     
Inventory Allowance       (200)
Accrued Payroll       186,000 
Meals & Entertainment       600 
Valuation allowance   666,168    628,100 
   $   $ 

 

At March 31, 2018, the Company had net operating loss carryforwards of approximately $5,000,238 that may be offset against future taxable income from the year 2018 through 2038. No tax benefit has been reported in the March 31, 2018 financial statements since the potential benefit is offset by a valuation of allowance of the same amount.

 

Due to the change in ownership provision of the Tax Reform Act of 1986, net operating loss carryforwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

 

As of the date of this filing, the Company is delinquent in filing their tax returns, and there is uncertainty regarding potential penalties and interest. The last return filed by the Company was March 31, 2012, and the Company has not accrued for any potential penalties or interest from that period forward. The Company will need to file returns for the years ending March 31, 2013, 2014, 2015, 2016 and 2017, which are still open for examination.

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11.COMMITMENTS AND CONTINGENCIES

 

On June 27, 2016, the Company entered into a Consulting Agreement with Axeman Capital LLC (formerly Channel Sales & Consulting, LLC). The Company has agreed to pay Axeman Capital (“Axeman”) $3,000 per month for the first two months, and $4,000 per month for a period of one year. Axeman will also be paid a 10% commission on all gross sales generated through a licensed dealer and 30% commission on non-licensed dealers. If within the first twelve months of the Agreement, Axeman generates gross sales above $2,000,000, the Company will pay an additional 5% commission on gross sales, either in cash or restricted common stock. On October 12, 2017, the Company accepted a letter from Axeman agreeing to not accept a bonus fee of $100,000 in restricted common shares of the Company.

 

On June 15, 2018, the Company entered into a Debt Settlement Agreement (“Agreement”) with Axeman regarding the original contract dated June 27, 2016. The Agreement settles all outstanding debt owed to Axeman as of May 30, 2018, which includes unpaid monthly retainers and commissions of $28,103 and a $100,000 bonus fee, which the Company agreed to reinstate pursuant to the terms of the Agreement. The Company has agreed to settle this debt in full, in the amount of $140,000. The company has agreed to issue 78,212 Series A shares in value of $1.79 per share for the total value of $140,000 and this amount was accrued as of March 31, 2018. All contracts have been canceled with Axeman, and the Company has authorized the Transfer Agent to issue said shares in the name of Axeman Capital, LLC.

 

On February 1, 2017, the Company entered into a standard office lease for approximately 1,700 square feet of office space at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. The lease has a term of 1 year, from February 1, 2017 through January 31, 2018, with a monthly rent of $1,400. On February 1, 2018, the Company entered into a month-to-month lease with a monthly rent of $1,400. Rental expenses incurred for this operating lease during the years ended March 31, 2018 and 2017 were $16,800 and $16,800 respectively.

 

12.SUBSEQUENT EVENTS

 

On May 12, 2018, the Company entered into a Debt Settlement Agreement with Asher Enterprises, Inc. to settle the outstanding debt of $13,000 in exchange for a cash payment of $26,000, resulting in a loss on settlement of debt of $13,000. As of May 15, 2018, the note has a balance of $0.

 

On June 15, 2018, the Company entered into a Debt Settlement Agreement (“Agreement”) with Axeman regarding the original contract dated June 27, 2016. The Agreement settles all outstanding debt owed to Axeman as of May 30, 2018, which includes unpaid monthly retainers and commissions of $28,103 and a $100,000 bonus fee, which the Company agreed to reinstate pursuant to the terms of the Agreement. The Company has agreed to settle this debt in full, in the amount of $140,000. The company has agreed to issue 78,212 Series A shares in value of $1.79 per share for the total value of $140,000. All contracts have been canceled with Axeman, and the Company has authorized the Transfer Agent to issue said shares in the name of Axeman Capital, LLC.

 

The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

 

The Company entered into an engagement agreement with a new PCAOB auditor, M&K CPAS, PLLC.

 

(a)Previous independent registered public accounting firm

 

  (i) On January 23, 2017, the Registrant engaged MAC ACCOUNTING GROUP, LLP as its independent registered public accounting firm (“MAC ACCOUNTING GROUP, LLP”).

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  (ii) There have been no disagreements between the Registrant and MAC ACCOUNTING GROUP, LLP regarding any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s) if not resolved to the satisfaction of MAC ACCOUNTING GROUP, LLP, would have caused MAC ACCOUNTING GROUP, LLP to make reference to the subject matter of the disagreement(s) in connections with its reports; and no reportable events with the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
     
  (iii) The Company provided MAC ACCOUNTING GROUP, LLP with a copy of the disclosure in the preceding two paragraphs and requested in writing that it furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with such disclosures. MAC ACCOUNTING GROUP, LLP, provided a letter, dated June 18, 2018, stating its agreement with such statements as related to MAC ACCOUNTING GROUP, LLP.

 

(b)New independent registered public accounting firm

 

  (i) On June 18, 2018, the Registrant engaged M&K CPAS PLLC as its independent registered public accounting firm (“M&K CPAS PLLC”).
     
  (ii) During the Registrant’s two most recent fiscal years and through the date of this report, the Registrant did not consult with M&K CPAS PLLC regarding (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered regarding the Registrant’s financial statements, and no written or oral advice was provided by M&K CPAS PLLC that was an important factor considered by the Registrant in making a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of any disagreement or event, as set forth in Item 304 (a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K.
     

ITEM 9A. CONTROLS AND PROCEDURES.

 

Management’s Report on Internal Control over Financial Reporting

 

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 9A includes information concerning the controls and control evaluations referred to in those certifications.

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Under the supervision and with the participation of management, including the Chief Executive Officer and C Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of March 31, 2018, using the criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2018, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

 

  1. There is a lack of accounting resources – The Company has insufficient resources for data entry, reviews, and/or oversight from a financial expert with the appropriate level of knowledge and experience to accurately capture transactions in accordance with US GAAP and SEC rules and regulations. This lack of resources further results in inadequate segregation of duties. Additionally, the Company lacks an audit committee as well as a financial expert.
   
  2. The Company lacks processes and procedures to ensure transactional evidence is properly retained – The Company needs to implement processes that ensure they are aware of, and maintain, evidence necessary to substantiate recorded transactions. The Company needs to retain formal executed documents and adequate support, as they are essential to accurate financial reporting.
     
3.Due to the Company not having formal Control procedures related to the approval of related party transactions.

 

Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

 

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2018, based on criteria established in “Internal Control - Integrated Framework (2013)” issued by COSO.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of March 31, 2018, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION.

 

None.

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PART III

 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.

 

Identification of Directors and Executive Officers

 

The following table sets forth the names and ages of our current directors and executive officers:

 

Name  Age  Position with the Company  Position Held Since
Robert Stillwaugh  86  President, Chief Executive Officer  May 24, 2017
Mike Schatz  73  Secretary  May 24, 2017
Gary Tilden  62  Former President, Chief Executive Officer, Secretary  May 24, 2017

 

The Board of Directors has no nominating, audit or compensation committee at this time.

 

Term of Office

 

Each director is elected by the Board of Directors and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.

 

Background and Business Experience

 

The business experience during the past five years of the person presently listed above as an Officer or Director of the Company is as follows:

 

Robert (Bob) Stillwaugh: Mr. Stillwaugh served in the US Army immediately after the Korean War conflict from 1954 – 1957 and continued his education at the University of Cincinnati where he earned his Bachelor of Arts degree in Radio-Television Broadcasting. Then followed a 50-plus year history that includes extensive experience in television station operations and management, plus project design and implementation. Bob served 24 years with Grass Valley Group, a widely-known brand in the industry, in Northern California’s Tech Arena. He specialized in engineering development / systems engineering and managed the customs products group. Grass Valley, formerly known as Grass Valley Group, a Nevada City LLC specializing in TV-broadcast equipment, was purchased by Belden, an international investment firm specializing in the broadcast market, for $220 million. Bob retired from Grass Valley Group and co-founded The ISIS Group Inc. where he spent the next 17 years as founder, VP of Engineering and President. Bob’s motto is “There is nothing like the feeling of accomplishment upon completion of a project to the satisfaction of the customer and myself. I enjoy being able to find a solution to a problem that the customer didn’t think could be solved - bringing extra value to the relationship.”

 

Mike Schatz: Mr. Schatz has an extensive career in business. After serving 4 years in the U.S. Air Force, he went to work for General Electric Nuclear Power Division in their information systems section where he modified flow charts, operated main frame computer systems and designed control room consoles and PC boards. He then spent 17 years working for Hewlett-Packard designing PC boards, provided CAD system management on Gerber design systems and instructed R&D personnel in CAD design concepts and practices. While at HP he held a number of management positions and gained an in-depth knowledge and understanding of printed circuit photo lab, fabrication and assembly techniques, and procedures. He designed and modified complex, precise digital and analog printed circuit boards requiring special engineering/designer coordination while providing design support for photolithography masks. After HP, Mike worked for Crucial Technology, a division of Micron Technology, as a Mentor Graphics Librarian; created symbols, geometries, catalogs and mapping files for use in the design of PCB’s. Mike was then introduced to Bob Stillwaugh and worked with him at The Isis Group, a manufacturer of broadcast video equipment. Isis went on to acquire Graham-Patten Systems, a manufacturer of broadcast audio equipment.

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Gary Tilden: Mr. Tilden has 35 years of experience building and operating private and public companies. His area of expertise is executive management. He has served on the Board of Directors for several Public Companies where he provided expertise in working with the SEC, OTC Markets & other critical areas within the public side of management. He operated his own businesses for 20 years, designing and manufacturing products for the home building industry; and has several certifications in various fabrications. Gary has owned an automated machinery sales representative business since 1993, working with upper level management and the owners of many of the largest manufacturers in the United States. He has assisted with the implementation of various cutting-edge automation assembly systems. Mr. Tilden has spent most of his career in southern California where he has attended California based Orange Coast College and Santa Ana College to study Business Management, Business Law and Accounting.

 

Identification of Significant Employees

 

We have no significant employees.

 

Family Relationship

 

We currently do not have any officers or directors of our Company who are related to each other.

 

Involvement in Certain Legal Proceedings

 

During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:

 

(1)A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

 

(2)Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

(3)Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

 

i.Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

 

ii.Engaging in any type of business practice; or

 

iii.Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

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(4)Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

 

(5)Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

 

(6)Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

 

(7)Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

 

i.Any Federal or State securities or commodities law or regulation; or

 

ii.Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

 

iii.Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

(8)Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Audit Committee and Audit Committee Financial Expert

 

As of March 31, 2018, the Company did not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. All current members of the Board of Directors lack sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.

 

Code of Ethics

 

As of March 31, 2018, the board of directors had not adopted a code of ethics due to Company’s limited number of executive officers and employees that would be covered by such a code and the Company’s limited financial resources. We anticipate that we will adopt a code of ethics when we increase either the number of our directors and officers or the number of our employees.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during the year ending March 31, 2018.

46

 

ITEM 11. EXECUTIVE COMPENSATION

 

The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our officers and directors for the fiscal years ended March 31, 2018 and March 31, 2017. Our Board of Directors may adopt an incentive stock option plan for our executive officers that would result in additional compensation.

 

Summary Compensation Table

 

                     Nonqualified      
                  Non-Equity  Deferred      
            Stock  Option  Incentive Plan  Compensation  All Other   
Name and     Salary  Bonus  Awards  Awards  Compensation  Earnings  Compensation  Total
principal position  Year  ($)  ($)  ($)  ($)  ($)  ($)  ($)  ($)
Robert Stillwaugh, President,  2018   125,000             22,294  147,294
Chief Executive Officer  2017   125,000             7,294  132,294
                            
Mike Schatz, Secretary  2018   125,000             22,294  147,294
   2017   125,000             7,294  132,294
                            
Gary Tilden, Former  2018   20,833             3,310  24,143
President, Chief Executive Officer, Secretary  2017   125,000             7,381  132,381

 

Narrative Disclosure to Summary Compensation Table

 

On January 20, 2016, the Company executed a Consulting Agreement with Gary Tilden whereby Mr. Tilden was to be paid fees of $75,000 per year. Any unpaid fees were to accrue interest at 12% per annum. On March 9, 2016, Gary Tilden was appointed as the Company’s President, Chief Executive Officer, Secretary, and Director. On April 1, 2016, the Company executed an Employee Agreement (“Tilden Agreement”) with Mr. Tilden that superseded the January 2016 Consulting Agreement. Pursuant to the terms of the Tilden Agreement, Mr. Tilden was to receive an annual salary of $125,000 to be paid on a monthly basis at $10,417 per month commencing on April 1, 2016. Any unpaid amounts were to accrue interest at 12% per year. The Tilden Agreement was for a term of five (5) years and was renewable upon mutual consent. On May 24, 2017, Mr. Gary Tilden tendered his resignation as President, Chief Executive Officer and Secretary of the Company, effective June 1, 2017. The resignation did not involve any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Tilden will continue assisting the Company pursuant to a Consulting Agreement effective June 1, 2017. During the years ended March 31, 2018 and 2017, the Company recorded $24,143 and $132,381, respectively, in accrued wages and interest. During the year ended March 31, 2018, in accordance with his resignation agreement, Mr. Tilden converted his outstanding salary and interest in the amount of $160,808, to Preferred Series A stock.

 

On July 1, 2014, the Company executed an Employment Agreement with Mike Schatz whereby Mr. Schatz would be paid fees of $125,000 per year. Any unpaid fees accrued interest at 12% per annum. This Employment Agreement was superseded on March 10, 2016 when the Company executed a Consulting Agreement whereby Mr. Schatz was appointed as the Company’s Chief Financial Officer, Treasurer, and Director would be paid fees of $125,000 per year. Any unpaid fees accrued interest at 6% per annum. On April 1, 2016, the Company executed another Employee Agreement (“Schatz Agreement”) with Mr. Schatz that superseded the March 10, 2016 Consulting Agreement. Pursuant to the terms of the Schatz Agreement, Mr. Schatz would receive an annual salary of $125,000, to be paid on a monthly basis at $10,417 per month commencing on April 1, 2016. Any unpaid amounts will accrue interest at 12% per year. The Schatz Agreement is for a term of five (5) years and is renewable upon mutual consent. On May 24, 2017, Mr. Schatz was appointed the position as Secretary of the Company, effective June 1, 2017. Mr. Schatz will be compensated under his Employment Agreement entered into on April 1, 2016 and will receive no additional compensation pursuant to his appointment. During the years ended March 31, 2018 and 2017, the Company recorded $147,294 and $132,294, respectively, in accrued wages and interest.

 

On July 1, 2014, the Company executed an Employment Agreement with Robert Stillwaugh whereby Mr. Stillwaugh would be paid fees of $125,000 per year. Any unpaid fees accrued interest at 12% per annum. This Employment Agreement was superseded on March 10, 2016 when the Company executed a Consulting Agreement whereby Mr. Stillwaugh was appointed as the Company’s Chairman of the Board and would be paid fees of $125,000 per year. Any unpaid fees accrued interest at 6% per annum. On April 1, 2016, the Company executed another Employee Agreement (“Stillwaugh Agreement”) with Mr. Stillwaugh that superseded the March 10, 2016 Consulting Agreement. Pursuant to the terms of the Stillwaugh Agreement, Mr. Stillwaugh would receive an annual salary of $125,000, to be paid on a monthly basis at $10,417 per month commencing on April 1, 2016. Any unpaid amounts will accrue interest at 12% per year. The Stillwaugh Agreement is for a term of five (5) years and is renewable upon mutual consent. On May 24, 2017, Mr. Robert Stillwaugh was appointed the position of President, and Chief Executive Officer of the Company, effective June 1, 2017. Mr. Stillwaugh will be compensated under his Employment Agreement entered into on April 1, 2016 and will receive no additional compensation pursuant to his appointment. During the years ended March 31, 2018 and 2017, the Company recorded $147,294 and $132,294, respectively, in accrued wages and interest.

47

 

The accumulative amount the Company is indebted to its current and former officers is as follows:

 

   March 31, 
   2018   2017 
Gary Tilden  $   $137,274 
Mike Schatz   287,311    140,017 
Robert Stillwaugh   287,311    140,017 
James Powell       150,875 
   $574,622   $568,183 

 

The amounts consist of unpaid salary and advances made on behalf of the Company. The amounts are unsecured, are due on demand and have no maturity.

 

Outstanding Equity Awards at Fiscal Year-End

 

No executive officer received any equity awards, or holds exercisable or exercisable options, as of the year ended March 31, 2018.

 

Long-Term Incentive Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.

 

Compensation Committee

 

We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

 

Compensation of Directors

 

Our directors receive no extra compensation for their service on our Board of Directors.

48

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

Security Ownership of Management

 

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 31, 2018, by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.

 

      Amount and    
      Nature of    
Name and Address of Beneficial Title of   Beneficial   % of Common
Owners of Common Stock Class   Ownership (1)   Stock (2)
Mike Schatz Common    81,061   2.78%
175 Joerschke Dr, Ste A Stock        
Grass Valley, CA 95945          
Robert Stillwaugh Common    81,061   2.78%
175 Joerschke Dr, Ste A Stock        
Grass Valley, CA 95945          
Total Officers and Directors      162,122   5.56%
           
5% Shareholders Common        
0 Stock        

 

1.

The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.

   
2. The percentage shown is based on denominator of 2,914,797 shares of common stock issued and outstanding for the company as of March 31, 2018.

 

Changes in Control

 

There are no present arrangements or pledges of the Company’s securities, which may result in a change in control of the Company.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Related Party Transactions

 

None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.

49

 

With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:

 

Disclosing such transactions in reports where required;

 

Disclosing in any and all filings with the SEC, where required;

 

Obtaining disinterested directors consent; and

 

Obtaining shareholder consent where required.

 

In conjunction with the reverse recapitalization transaction on March 9, 2016, the Company recorded amounts due to related parties of $6,250,000, which represented shares that were owed to members of management. During the year ended March 31, 2017 the Company issued 698,324 Series A Preferred shares and 265,909 common shares to reduce the liability by $3,458,750, resulting in a remaining liability of $2,791,250 as of March 31, 2017.

 

On June 1, 2017, the Company issued 536,351 Series A Preferred shares valued at $960,068 to Gary Tilden, a former officer and director, which reduced liabilities owed to him of $819,460, and recorded a loss on conversion of $140,608. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued to Donna Murtaugh.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

As of March 31, 2018, former President Gary Tilden has been paid all outstanding related party and derivative liabilities. The other parties have a remaining derivative liability of $2,152,500, to be issued in common stock, and is recorded as a derivative liability on the Company’s Balance Sheet.

 

During the year ended March 31, 2018, the Company reclassified stock payables due to related parties of $2,791,250 to derivative liabilities, due to the company having a tainted equity environment.

 

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. As of March 31, 2018 and 2017 the Company owed related parties $126,494 and $50,262, respectively. During the year ended March 31, 2018, the Company recorded imputed interest of $13,257 to the statement of operations with a corresponding increase to additional paid in capital.

 

Director Independence

 

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship, which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. According to the NASDAQ definition, we have no independent directors.

 

Review, Approval or Ratification of Transactions with Related Persons

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

50

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following table shows the fees that were billed for the audit and other services provided by our auditors for the years ended March 31, 2018 and March 31, 2017:

 

   2018   2017 
 Audit Fees  $35,500   $21,500 
 Audit-Related Fees        
 Tax Fees        
 All Other Fees        
 Total  $35,500   $21,500 

 

Audit Fees

 

We incurred approximately $35,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for fiscal year ended March 31, 2018.

 

We incurred approximately $21,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and reviews of our financial statements for fiscal year ended March 31, 2017.

 

Audit-Related Fees

 

The aggregate fees billed during the fiscal years ended March 31, 2018 and 2017 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A was $0 and $0, respectively.

 

Tax Fees

 

The aggregate fees billed during the fiscal years ended March 31, 2018 and 2017 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning were $0 and $0, respectively.

 

All Other Fees

 

The aggregate fees billed during the fiscal years ended March 31, 2018 and 2017 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A) was $0 and $0, respectively.

51

 

PART IV

 

ITEM 15. EXHIBITS.

 

Exhibit Number  Description of Exhibit  Filing
3.1  Articles of Incorporation  Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
3.1a  Amended Articles of Incorporation  Filed with the SEC on November 11, 2009, on our Current Report on Form 8-K.
3.2  Bylaws  Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
10.45  Asset Purchase Agreement, by and between the Company and RJM and Associates, dated March 9, 2016  Filed with the SEC on March 10, 2016 as part of our Current Report on Form 8-K.
31.01  Certification of Principal Executive Officer Pursuant to Rule 13a-14  Filed herewith.
31.02  Certification of Principal Financial Officer Pursuant to Rule 13a-14  Filed herewith.
32.01  Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act  Filed herewith
101.INS  XBRL Instance Document  Furnished herewith.
101.SCH  XBRL Taxonomy Extension Schema Document  Furnished herewith.
101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document  Furnished herewith.
101.LAB  XBRL Taxonomy Extension Labels Linkbase Document  Furnished herewith.
101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document  Furnished herewith.
101.DEF  XBRL Taxonomy Extension Definition Linkbase Document  Furnished herewith.

 

*Filed Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

52

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

SIMLATUS CORPORATION

 

Dated: September 24, 2018

 

/s/ Robert Stillwaugh 

Robert Stillwaugh 

President, Chief Executive Officer and Principal Financial Officer

53

EX-31 2 ex31-1.htm CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13A-14
 

 

Exhibit 31.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

 

I, Robert Stillwaugh, certify that:

 

1. I have reviewed this Annual Report on Form 10-K of Simlatus Corp;

 

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 registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) 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 registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, 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 registrant’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 change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

 

  Date: September 24, 2018
  /s/ Robert Stillwaugh
  By: Robert Stillwaugh
  Its: Principal Executive Officer

 

EX-31 3 ex31-2.htm CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13A-14
 

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

 

I, Robert Stillwaugh, certify that:

 

1. I have reviewed this Annual Report on Form 10-K of Simlatus Corp;

 

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 registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) 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 registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, 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 registrant’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 change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

 

  Date: September 24, 2018
  /s/ Robert Stillwaugh
  By: Robert Stillwaugh
  Its: Principal Financial Officer

 

EX-32 4 ex32-1.htm CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
 

 

Exhibit 32.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
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 Annual Report of Simlatus Corp. (the “Company”) on Form 10-K for the period ending March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Stillwaugh, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my 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/ Robert Stillwaugh
By: Robert Stillwaugh
Principal Executive Officer and Principal Financial Officer
Dated: September 24, 2018

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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Document and Entity Information - USD ($)
12 Months Ended
Mar. 31, 2018
Sep. 13, 2018
Sep. 29, 2017
Document and Entity Information [Abstract]      
Entity Registrant Name Simlatus Corp    
Entity Central Index Key 0001399306    
Amendment Flag true    
Trading Symbol SIML    
Current Fiscal Year End Date --03-31    
Document Type 10-K/A    
Document Period End Date Mar. 31, 2018    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2018    
Entity Filer Category Smaller Reporting Company    
Entity Common Stock, Shares Outstanding   2,914,797  
Entity Public Float     $ 22
Entity Current Reporting Status Yes    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Amendment Description

The sole purpose of this Amendment No. 1 to the Annual Report on Form 10-K (the "Form 10-K"), as filed with the Securities and Exchange Commission on September 24, 2018 is to furnish Exhibit 101 to the Form 10-K in accordance with Rule 405 of Regulation S-T. Exhibit 101 provides the financial statements and related notes from the Form 10-K formatted in XBRL (eXtensible Business Reporting Language). Exhibit 101 was not furnished with the Form 10-K previously and no other changes have been made to the Form 10-K.

 

This Amendment No. 1 to the Form 10-K does not reflect events that may have occurred subsequent to the original filing date of the Form 10-K and does not modify or update in any way disclosures made in the Form 10-K as originally filed.

 

Pursuant to Rule 406T of Regulation S-T, the interactive data files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

   

XML 15 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONDENSED BALANCE SHEETS - USD ($)
Mar. 31, 2018
Mar. 31, 2017
Current Assets    
Cash $ 2,431 $ 1,330
Accounts receivable 4,760
Inventory, net 1,435 68,629
Prepaid expenses 10,000
Total Current Assets 8,626 79,959
TOTAL ASSETS 8,626 79,959
Current Liabilities:    
Accounts payable 230,553 83,839
Accrued wages 751,754 656,326
Deferred revenue 3,528
Derivative liabilities 6,627,023 5,316,130
Convertible notes payable in default, net of discount 511,923 497,280
Convertible notes payable, net of discount 262,910 279,497
Convertible notes payable, interest 3,289,044 1,215,519
Related party liabilities 126,494 2,841,512
Total Current Liabilities 11,803,229 10,890,103
Long term notes payable 61,000
Total Liabilities 11,864,229 10,890,103
Commitments and contingencies
SHAREHOLDERS' EQUITY    
Common stock, $0.00001 par value 900,000,000 authorized 2,914,797 shares issued and outstanding at March 31, 2018 733,059 shares issued and outstanding at March 31, 2017 29 7
Additional paid in capital (954,735) (4,306,526)
Accumulated deficit (10,904,388) (6,505,839)
Total Shareholders' Equity (11,855,603) (10,810,144)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 8,626 79,959
Series A Preferred Stock [Member]    
SHAREHOLDERS' EQUITY    
Preferred stock, $0.001 par value 20,000,000 shares authorized; Series A: 10,000,000 shares authorized 3,489,510 shares issued and outstanding at March 31, 2018 2,213,154 shares issued and outstanding at March 31, 2017; Series B: 10,000,000 shares authorized 500 shares issued and outstanding at March 31, 2018 1,000 shares issued and outstanding at March 31, 2017 3,490 2,213
Series B Preferred Stock [Member]    
SHAREHOLDERS' EQUITY    
Preferred stock, $0.001 par value 20,000,000 shares authorized; Series A: 10,000,000 shares authorized 3,489,510 shares issued and outstanding at March 31, 2018 2,213,154 shares issued and outstanding at March 31, 2017; Series B: 10,000,000 shares authorized 500 shares issued and outstanding at March 31, 2018 1,000 shares issued and outstanding at March 31, 2017 $ 1 $ 1
XML 16 R3.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 31, 2018
Nov. 01, 2017
Mar. 31, 2017
Preferred stock, par value $ 0.001   $ 0.001
Preferred stock, shares authorized 20,000,000   20,000,000
Common stock, par value $ 0.00001 $ 0.00001 $ 0.00001
Common stock, shares authorized 900,000,000 900,000,000 900,000,000
Common stock, shares issued 2,914,797   733,059
Common stock, shares outstanding 2,914,797   733,059
Series A Preferred Stock [Member]      
Preferred stock, shares authorized 10,000,000   10,000,000
Preferred stock, shares issued 3,489,510   2,213,154
Preferred stock, shares outstanding 3,489,510   2,213,154
Series B Preferred Stock [Member]      
Preferred stock, shares authorized 10,000,000   10,000,000
Preferred stock, shares issued 500   1,000
Preferred stock, shares outstanding 500   1,000
XML 17 R4.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONDENSED STATEMENT OF OPERATIONS - USD ($)
12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Sales $ 23,405 $ 68,955
Cost of materials 89,263 52,203
Gross profit (loss) (65,858) 16,752
Operating expenses:    
G&A expenses 337,739 193,410
Professional fees 178,955 183,767
Salaries and wages 345,833 449,999
Total Operating expenses 862,527 827,176
Loss from operations (928,385) (810,424)
Other income (expense):    
Gain (loss) on settlement of debt 555,633 1,302,334
Change in fair value of derivative liability 442,559 (3,952,365)
Loss on former CEO settlement (1,465,948)
Interest expenses (2,800,599) (2,523,389)
Loss on conversion of debt (201,809)
Other income 12
Total other income (expense) (3,470,164) (5,173,408)
Net income (loss) before income taxes (4,398,549) (5,983,832)
Income tax expense
Net income (loss) $ (4,398,549) $ (5,983,832)
Per share information    
Weighted number of common shares outstanding, basic and diluted 2,543,411 198,978
Net income (loss) per common share $ (1.73) $ (30.07)
XML 18 R5.htm IDEA: XBRL DOCUMENT v3.10.0.1
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($)
Series A Preferred Stock [Member]
Series B Preferred Stock [Member]
Common Stock [Member]
Additional Paid-In Capital
Accumulated Deficit
Total
Beginning Balance at Mar. 31, 2016 $ 1,520 $ 1 $ (9,813,504) $ (522,007) $ (10,333,990)
Beginning Balance, Shares at Mar. 31, 2016 1,519,500 1,000 1,077      
Conversion of promissory notes to stock $ 4 1,241,750 1,241,754
Conversion of promissory notes to stock, Shares     392,473      
Preferred shares issued for liabilities pursuant to agreement $ 698 1,249,302 1,250,000
Preferred shares issued for liabilities pursuant to agreement, Shares 698,324          
Shares issued for liabilities pursuant to agreement $ 3 2,964,202 2,964,205
Shares issued for liabilities pursuant to agreement, Shares     265,909      
Shares issued for services pursuant to agreement 51,720 51,720
Shares issued for services pursuant to agreement, Shares     45,733      
Preferred Series A stock converted to common stock $ (5) 4 (1)
Preferred Series A stock converted to common stock, Shares (4,670)   27,867      
Net loss (5,983,832) (5,983,832)
Ending balance at Mar. 31, 2017 $ 2,213 $ 1 $ 7 (4,306,526) (6,505,839) (10,810,144)
Ending balance, Shares at Mar. 31, 2017 2,213,154 1,000 733,059      
Preferred Series A stock converted to common stock $ (12) $ 1 11
Preferred Series A stock converted to common stock, Shares (12,788)   127,888      
Conversion of debt to common stock $ 21 1,020,404 1,020,425
Conversion of debt to common stock, Shares     2,081,578      
Shares issued for settlement with former CEO $ 536 $ 959,532 $ 960,068
Shares issued for settlement with former CEO, Shares 536,351 (250)        
Shares issued for debt settlement 6 9,994 10,000
Shares issued for services $ 1 $ 23,999 $ 24,000
Shares issued for services, Shares 5,587   53,333     53,333
Common stock exchanged for Preferred Series A stock $ 747 $ (1) 1,324,594 $ 1,325,340
Common stock exchanged for Preferred Series A stock, Shares 747,206 (250) (81,061)      
Preferred Series B stock returned to treasury
Imputed interest 13,257 13,257
Net loss (4,398,549) (4,398,549)
Ending balance at Mar. 31, 2018 $ 3,490 $ 1 $ 29 $ (954,735) $ (10,904,388) $ (11,855,603)
Ending balance, Shares at Mar. 31, 2018 3,489,510 500 2,914,797      
XML 19 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONDENSED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net loss $ (4,398,549) $ (5,983,832)
Adjustments to reconcile net income to net cash provided by operating activities:    
Amortization of convertible debt discount 425,018 525,079
Inventory impairment 61,188
Imputed interest 13,257  
Loss on former CEO settlement (1,465,948)
Penalties on convertible debt 94,471
New derivatives recorded as loan fees 688,844
Common stock issued for services 24,000 51,720
Change in fair value of derivative liability (442,559) 3,952,365
Gain on settlement of debt (555,633) (1,302,334)
Loss on conversion of debt 201,809
Decrease (increase) in operating assets    
Accounts receivable (4,760) 1,695
Inventory 6,006 (8,692)
Prepaid expenses 0 (10,000)
Increase (decrease) in operating liabilities    
Accounts payable 86,186 162,151
Accrued wages 410,639 476,957
Accrued interest 2,290,658 1,237,449
Advances from related parties 76,232
Net cash used in operating activities (236,089) (208,598)
Cash flows from investing activities
Cash flows from financing activities:    
Proceeds from notes payable 15,000
Payments on notes payable (5,687)
Proceeds from convertible notes payable 237,190 146,000
Proceeds from (payments to) related parties, net 50,262
Net cash provided by financing activities 237,190 205,575
Net increase (decrease) in cash 1,101 (3,023)
Cash, beginning of period 1,330 4,353
Cash, end of period 2,431 1,330
Supplemental disclosures of cash flow information:    
Cash paid for income taxes
Cash paid for interest
Schedule of non-cash investing & financing activities:    
Accrued expenses converted to convertible note payable 150,875
Settlement with former CEO 819,460
Shares issued for liabilities 3,458,750
Derivative debt discount 323,007 539,485
Derivative settlements 722,055
Common stock converted to Series A preferred stock 747
Preferred Series B stock converted to common stock 12
Accrued interest converted to convertible notes payable 198,640
Accounts payable converted to convertible notes payable 127,534
Convertible notes payable converted to long term notes payable 161,336 395,821
Note payable converted to convertible notes payable 35,859
Related party liabilities to derivative liabilities $ 2,791,250
XML 20 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

 

Simlatus Corporation (“SIML” or “Company”) was incorporated in the State of Nevada under the name Sunberta Resources Inc. on November 15, 2006, as a mining and exploration of mineral claims business.  On November 18, 2009, the Company changed its name to Grid Petroleum Corp. and continued with the mining and exploration of mineral claims operations, exploring mining claims in Alberta, Canada, Vancouver Island, British Columbia, England and the United States.

 

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”) whereby RJM’s owners became the directors of the Company and were to be issued $6,250,000 worth of the Company’s stock; $5,000,000 of Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company’s Preferred Stock (the “Acquisition”). On the same date, the entire management of RJM became the entire management of the Company. The Company’s transaction with RJM has been treated as a reverse recapitalization of the Company, with the Company (the legal acquirer of RJM) considered the accounting acquiree and RJM, whose management took control of the Company (the legal acquiree of the Company), considered the accounting acquirer. The historical financial statements include the operations of the accounting acquirer (RJM) for all periods presented.

 

RJM was incorporated in the State of California on June 11, 2014, for the purpose of operating a broadcast equipment production business.

 

On March 25, 2016, the Company approved a name change to Simlatus Corporation, stock symbol SIML, which was executed on April 4, 2016. The new name change better describes the Company’s new business and new revenues in selling commercial broadcast equipment on a global basis. Simlatus Corporation develops, manufactures, markets and owns proprietary advanced broadcast equipment and software and sells this audio and video broadcast equipment worldwide. These systems have been sold worldwide over the past 15 years including some of the major broadcast companies.   

 

The Company currently sells approximately 55 different audio/video products and is preparing to market its newest audio/video product referred to as SyncPal™. In addition to the Company’s traditional line of audio/video products, it has commenced the research & development of its Immersive Broadcast System, referred to as the Simlatus-IBS™. The Simlatus-IBS™ will include commercial augmented reality and virtual reality applications for studio engineers. These applications, both hardware and software, will allow the customer to control and manage the studio audio/video systems from anywhere in the world. These products are being developed to serve a market segment that is presently being strongly embraced by consumers and is forecasted, by some of the most widely recognized tech companies in the world, as becoming a multi-billion-dollar market in the very near future. The Market Analysis and IP Portfolio will include new patents specifically developed for these products and owned by the Company.

 

Financial Statement Presentation 

 

The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Fiscal Year End 

 

The Company has selected March 31 as its fiscal year end.

 

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

 

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.

 

Revenue recognition and Related Allowances

 

The Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) as amended, as of April 1, 2018 with no material impact. The Company primarily generates net revenue through product sales to distributors and to retail customers on its website. Revenue is recognized upon transfer of control of promised products to customers which is generally upon shipment in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at March 31, 2018 and March 31, 2017 is $0.

 

Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the fiscal year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

 

Loss Per Share

 

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on November 1, 2017 (see Note 10). Diluted earnings (loss) per share is equal to the basic per share for the years ended March 31, 2018 and 2017. Common stock equivalents are not included in the loss per share since they are anti-dilutive. All per share amounts have been adjusted for the reverse stock split.

 

Inventories

 

Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. During the year ended March 31, 2018, the Company recorded an impairment to inventory of $61,188. During the year ended March 31, 2017, the Company recorded an allowance for obsolete inventory of $125,329. As of March 31, 2018 and March 31, 2017, the Company’s inventories consist primarily of raw materials and supplies rather than finished goods and are presented net of an allowance for obsolete inventory of $1,435 and $68,629, respectively.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

 

These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2018 and 2017 for each fair value hierarchy level:

 

March 31, 2018   Derivative Liabilities     Total  
Level 1   $     $  
Level 2   $     $  
Level 3   $ 6,627,023     $ 6,627,023  
                 
March 31, 2017   Derivative Liabilities     Total  
Level 1   $     $  
Level 2   $     $  
Level 3   $ 5,316,130     $ 5,316,130  

 

In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of March 31, 2018 and 2017, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

 

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. 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 of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

As of the date of this filing, the Company is delinquent in filing their tax returns, and there is uncertainty regarding potential penalties and interest.  The last return filed by the Company was March 31, 2012, and the Company has not accrued any potential penalties or interest from that period forward.  The Company will need to file returns for the years ending March 31, 2013, 2014, 2015, 2016 and 2017, which are still open for examination.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the standard on April 1, 2018, using a modified retrospective approach, with the cumulative effect of initially applying the standard recognized in retained earnings at the date of adoption.

 

While the Company does not expect the adoption of this standard to have a material impact on the Company’s net Revenues in the Statements of Income, the Company anticipates revenues for certain wholesale transactions and substantially all digital commerce sales will be recognized upon shipment rather than upon delivery to the customer.

 

Additionally, provisions for post-invoice sales discounts, returns and miscellaneous claims will be recognized as accrued liabilities rather than as reductions to Accounts receivable, net; and the estimated cost of inventory associated with the provision for sales returns will be recorded within Prepaid expenses and other current assets on the Balance Sheets. The Company continues to evaluate the impact of this new standard, including on accounting policies, disclosures, internal control over financial reporting and its contracts with customers.

 

In February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). Among other provisions, this ASU requires that when determining whether certain financial instruments should be classified as liabilities or equity instruments, an entity should not consider the down round feature. The ASU also recharacterizes as a scope exception the indefinite deferral available to private companies with mandatorily redeemable financial instrument and certain noncontrolling interests, which does not have an accounting effect but addresses navigational concerns within the FASB Accounting Standards Codification. The provisions of the ASU related to down rounds are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

XML 21 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
GOING CONCERN
12 Months Ended
Mar. 31, 2018
Going Concern [Abstract]  
GOING CONCERN
2. GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2018, the Company has an accumulated deficit of $10,904,388 since its inception and working capital deficit of $11,794,603, negative cash flows from operations, and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

 

The Company does not have sufficient cash to fund its desired research and development objectives for its augmented/virtual reality product development for the next 12 months. The Company has arranged financing and intends to utilize the cash received to fund the research and development project. This financing may be insufficient to fund expenditures or other cash requirements required to complete the product design for the augmented/virtual reality markets. There can be no assurance the Company will be successful in completing any new product development. The Company plans to seek additional financing if necessary in private or public equity offering(s) to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

 

These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

XML 22 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
PREPAID EXPENSES
12 Months Ended
Mar. 31, 2018
Prepaid Expenses  
PREPAID EXPENSES
3. PREPAID EXPENSES

 

    March 31,     March 31,  
    2018     2017  
Prepaid expenses   $     $ 10,000  

 

Prepaid fees represent amounts paid in advance for future contractual benefits to be received. Contracting expenses paid in advance are recorded as a prepaid asset and then amortized to the statements of operations when services are rendered, or over the life of the contract using the straight-line method.

 

During the years ended March 31, 2018 and 2017, the Company amortized prepaid expenses of $0 and $10,000, respectively, for legal fees billed and paid in advance for April through August 2017, at $2,000 per month.

XML 23 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONVERTIBLE NOTES PAYABLE
12 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
CONVERTIBLE NOTES PAYABLE
4. CONVERTIBLE NOTES PAYABLE

 

As of March 31, 2018, and March 31, 2017, notes payable were comprised of the following:

 

    Original   Due   Interest   Conversion   March 31,     March 31,  
    Note Date   Date   Rate   Rate   2018     2017  
ARC Capital Ltd   10/1/2015   4/2/2016   24%   Variable   $ 2,625     $ 11,625  
Asher Enterprises #4   9/16/2011   6/20/2012   22%   Variable     13,000       13,000  
Auctus Fund #1   12/16/2016   9/16/2017   24%   Variable     46,750       46,750  
Auctus Fund #2   8/9/2017   5/9/2017   24%   Variable     46,750        
Blackbridge Capital #2   5/3/2016   5/3/2017   5%   Variable     80,400       80,400  
Carl Ambrose   3/23/2017   9/1/2018   3%   Variable           20,914  
Direct Capital #26   4/7/2016   10/7/2016   8%   Variable           25,000  
Direct Capital #27   5/17/2016   11/17/2016   8%   Variable           36,000  
EMA Financial   11/9/2016   11/9/2017   24%   Variable     272,576       35,000  
Emunah Funding #1   10/18/2017   10/18/2018   0%   Variable     110,000        
Emunah Funding #2   10/18/2017   10/18/2018   0%   Variable     20,000        
Emunah Funding #3   10/18/2017   10/18/2018   0%   Variable     30,000        
Emunah Funding #4   10/20/2018   7/20/2018   8%   Variable     55,440        
Frank Trapp   3/23/2017   12/31/2017   5%   Variable           14,945  
GHS Investment #3   2/7/2017   Demand   0%   Variable           98,800  
GW Holdings   10/13/2015   4/1/2015   24%   Variable     42,500       42,500  
James Powell   9/7/2015   Demand   8%   Variable     150,875        
Rockwell Capital #5   2/28/2017   Demand   0%   Variable           19,782  
Southridge Partners   10/27/2015   3/1/2014   22%   Variable           15,655  
Syndication Capital #1   12/31/2012   10/10/2011   22%   0.01     5,000       5,000  
Tide Pool   1/1/2015   7/1/2015   22%   Variable           348,500  
Tri-Bridge Ventures #1   1/19/2017   10/19/2017   8%   Variable     9,000       25,000  
Tri-Bridge Ventures #2   1/19/2017   10/19/2017   8%   Variable           150,000  
V2IP #2   5/13/2016   Demand   12%   Variable     10,000       10,000  
                      894,916       998,871  
Less debt discount             (120,083 )     (222,094 )
Notes payable, net of discount*           $ 774,833     $ 776,777  

 

  * During the years ended March 31, 2018 and March 31, 2017, the balance of notes payable, net of discount that are in default is $511,923 and $497,280, respectively.

 

ARC Capital Ltd

 

On October 1, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby ARC Capital Ltd acquired $16,000 in principal and $5,625 of interest of a Direct Capital Group, Inc. convertible note in exchange for $21,625. The note bears interest at 8% per annum (increases to 24% per annum upon an event of default), matured on April 2, 2016, and is convertible into common stock at 50% of the lowest closing market price of the prior 15 trading days including the day upon which the notice of conversion is received by the Company. The Company recorded a debt discount from the derivative equal to $21,625 due to this conversion feature. The note had accrued interest of $8,260 as of March 31, 2018 and $5,470 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $9,000 and $10,000, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $2,625 and $11,625, respectively. This note is currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Asher Enterprises, Inc.

 

On September 16, 2011, the Company accepted and agreed to a Debt Purchase Agreement, whereby Asher Enterprises, Inc. acquired $40,000 of a Special Situations Fund One convertible note in exchange for $40,000. The note bears interest at 8% per annum (increases to 22% per annum upon an event of default), matured on June 20, 2012, and is convertible into common stock at 50% multiplied by the average of the 3 lowest closing market prices of the 10 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $40,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $21,038 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $13,000 and $13,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Auctus Fund LLC

 

On August 9, 2017, the Company issued a convertible note to Auctus Fund LLC for $46,750, of which $40,000 was received in cash $6,750 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matured on August 22, 2017, and is convertible into the lower of 1) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the date of the note, and 2) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $46,750 due to this conversion feature. Pursuant to the default terms of the note, the Company entered a penalty of $210,097 in interest during the year ended March 31, 2018. The note had accrued interest of $213,094 as of March 31, 2018 and $2,997 as of March 31,2017. The debt discounts had a balance of $6,679 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $40,071 and $0 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $46,750 and $46,750, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On December 16, 2016, the Company issued a convertible note to Auctus Fund LLC for $46,750, of which $40,000 was received in cash $6,750 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matured on September 16, 2017, and is convertible into the lower of 1) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the date of the note, and 2) 54% multiplied by the average of the two lowest trading prices during the 25 day trading period on the trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $46,750 due to this conversion feature. Pursuant to the default terms of the note, the Company entered a penalty of $191,562 in interest during the year ended March 31, 2018. The note had accrued interest of $204,127 as of March 31, 2018 and $1,345 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $28,835 as of March 31, 2017. The Company recorded debt discount amortization expense of $28,835 and $17,915 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $46,750 and $46,750, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Blackbridge Capital

 

On May 3, 2016, the Company accepted and agreed to a Debt Purchase Agreement, whereby Blackbridge Capital acquired $100,000 in principal of a Direct Capital Group, Inc. convertible note in exchange for $100,000. The note bears interest at 5% per annum, matured on May 3, 2017, and is convertible into common stock at 50% of the lowest market price of the 20 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $100,000 due to this conversion feature. The note had accrued interest of $7,703 as of March 31, 2018 and $3,683 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $7,269 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $0 and $19,600, respectively, were converted into shares. The Company recorded debt discount amortization expense of $7,269 during the year ended March 31, 2018 and $73,668 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $80,400 and $80,400, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Carl Ambrose

 

On March 23, 2017, the Company transferred a promissory note with Carl Ambrose into a convertible note for $20,914. The note bears interest at 3%, matures on September 1, 2018, and is convertible into convertible into common stock at 50% of the lowest trading price of the date of conversion. The Company recorded a debt discount from the derivative equal to $20,914 due to this conversion feature. On April 20, 2017, the note was acquired by Tri-Bridge Ventures LLC for $20,914. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $20,596 as of March 31, 2017. The Company recorded debt discount amortization expense of $20,596 and $317 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $0 and $20,914, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Direct Capital Group, Inc.

 

On April 7, 2016, the Company issued a convertible note to Direct Capital Group, Inc. for $25,000, for cash consideration. The note bears interest at 6% (increases to 8% per annum upon an event of default), matured on October 7, 2016, and is convertible into common stock at 68% multiplied by the average closing price for the 5 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $1,711 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $0 and $0 as of March 31, 2018 and 2017, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On May 17, 2016, the Company issued a convertible note to Direct Capital Group, Inc. for $36,000, for cash consideration. The note bears interest at 6% (increases to 8% per annum upon an event of default), matured on November 17, 2016, and is convertible into 68% multiplied by the average closing price for the 5 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $36,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $2,146 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $0 and $0 as of March 31, 2018 and 2017, respectively.

 

On October 1, 2017, the Company accepted the request from Direct Capital Group, Inc, to cancel the two convertible notes with a total principal amount of $61,000 and interest of $6,304 and exchange the notes for a promissory note (see Note #5).

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

EMA Financial, LLC

 

On November 9, 2016, the Company issued a convertible note to EMA Financial, LLC for $35,000, of which $30,000 was received in cash $5,000 was recorded as transaction fees. The note bears interest at 10% (increases to 24% per annum upon an event of default), matured on November 9, 2017, and is convertible into the lower of 1) the closing market price on the trading day immediately preceding the closing date of the note, and 2) 50% of the lowest trading price during the 25 trading days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $35,000 due to this conversion feature. Pursuant to the default terms of the note, the Company entered a penalty of $250,330 in principal and $23,143 in interest during the year ended March 31, 2018. The note had accrued interest of $26,415 as of March 31, 2018 and $1,362 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $21,384 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $12,754 and $0, respectively, were converted into shares. The Company recorded debt discount amortization expense of $21,384 and $13,616 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $272,576 and $35,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Emunah Funding LLC

 

On October 18, 2017, the Company issued a convertible note to Emunah Funding LLC in consideration of liquidated damages in the amount of $110,000. The note bears no interest, matures on October 18, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $110,000 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $60,575 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $49,425 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $110,000 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On October 18, 2017, the Company accepted and agreed to a Debt Purchase Agreement, whereby Emunah Funding LLC acquired $20,000 of debt from a Tri-Bridge Ventures LLC convertible note in exchange for $25,000. The note bears no interest, matures on October 18, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $13,767 and $0 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $5,000 and $0, respectively, were converted into shares. The Company recorded debt discount amortization expense of $11,233 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $20,000 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On October 18, 2017, the Company accepted and agreed to a Debt Purchase Agreement, whereby Emunah Funding LLC acquired $35,817 of debt from a Tri-Bridge Ventures LLC convertible note in exchange for $30,000. The note bears no interest, matures on October 18, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $30,000 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $16,521 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $13,479 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $30,000 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On October 20, 2017, the Company issued a convertible note to Emunah Funding LLC for $33,840, which includes $26,741 to settle outstanding accounts payable, transaction costs of $4,065, OID interest of $2,840, and cash consideration of $194. On November 6, 2017, the Company issued an Allonge to the convertible debt in the amount of $9,720. The Company received $7,960 in cash and recorded transaction fees of $1,000 and OID interest of $760. On November 30, 2017, the Company issued an Allonge to the convertible debt in the amount of $6,480. The Company received $5,000 in cash and recorded transaction fees of $1,000 and OID interest of $480. On January 11, 2018, the Company issued an Allonge to the convertible debt in the amount of $5,400. The Company received $5,000 in cash and recorded OID interest of $480. The note bears interest of 8% (increases to 24% per annum upon an event of default), matures on July 20, 2018, and is convertible into common stock at 57.5% of the lowest trading price of the 20 trading day period ending on the latest complete day prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $55,440 due to this conversion feature. The debt discounts had a balance at March 31, 2018 of $22,542 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $32,898 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $55,440 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Frank Trapp

 

On March 23, 2017, the Company transferred a promissory note with Frank Trapp into a convertible note for $14,945. The note bears interest at 5%, matured on December 31, 2017, and is convertible into convertible into common stock at 50% of the lowest trading price of the date of conversion. The Company recorded a debt discount from the derivative equal to $14,945 due to this conversion feature. On April 20, 2017, the note was acquired by Tri-Bridge Ventures LLC for $14,945. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $14,523 as of March 31, 2017. The Company recorded debt discount amortization expense of $14,523 and $422 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $0 and $14,945, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

GHS Investments, LLC

 

On February 7, 2017, the Company entered into a Settlement and Release Agreement, as well as an Exchange Convertible Promissory Note (collectively “Settlement Documents”), with GHS Investments, LLC (“GHS”).

 

On April 28, 2016, GHS entered into a Debt Assignment Agreement and a Convertible Promissory Note (collectively “Debt Assignment”) with Direct Capital Group, Inc., wherein, GHS purchased Fifteen Thousand Eight Hundred Eighty Six Dollars ($15,886) of interest that had accumulated on a Two Hundred Forty Thousand Dollars ($240,000) Note between Direct Capital Group, Inc. and Grid Petroleum Corporation, dating back to June 30, 2015, for consulting services provided by Direct Capital to Grid Petroleum.  GHS paid John Fullenkamp, the sole officer of Direct Capital Group, Inc., the purchase price of $15,886.

 

The Company did not receive any proceeds or compensation from the assignment of the $15,886 to GHS.  A Replacement Note (GHS Note #2) was entered between the Company and GHS; a conversion notice was presented to the Company on May 5, 2016, and GHS converted Nine Thousand Seven Hundred Forty Dollars ($9,740) into unrestricted common shares.  The share price on May 4, 2016, closed at $0.0002; the lowest intra-day trade during the time period set forth in the Replacement Note was $0.0001; and the shares were converted at the price of $0.00005 per share.  The remaining principal balance of the GHS Note #2 on May 5, 2016 was $6,146.

 

The next conversion request of Three Thousand Seven Hundred Dollars ($3,700) by GHS was denied by the Company; on August 7, 2016, the stock price was $0.12, there was an intra-day trade of $0.001 during the time period allowed under the terms of the GHS Note #2, and the request to convert shares at $0.0005.  The Company disputed the conversion, and interest and penalties were applied to the GHS Note #2, increasing the remaining $6,146 of the $15,886 GHS Note #2 to over $500,000. Following several months of negotiating, the Company and GHS agreed to reduce the GHS Note #2 to $150,000. GHS is prohibited from converting more than $14,000 per week and from selling more than $2,800 per day.

 

The note bears no interest, matured on April 1, 2015, and is convertible into common stock at 50% multiplied but the average of the 3 lowest closing market prices for the 10 days prior to the conversion date. The Company recorded a debt discount from the derivative equal to $150,000 due to this conversion feature. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $98,800 and $51,200, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 and $119,092 as of March 31, 2018 and 2017, respectively. As of March 31, 2018, the entire balance of the note has been converted to stock.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

GW Holdings Group, LLC

 

On October 13, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby GW Holdings Group, LLC acquired $50,000 in principal and $10,411 of interest of a New Venture Attorneys convertible note in exchange for $60,411. The note bears interest at 8% per annum (increases to 24% per annum upon an event of default), matured on April 1, 2015, and is convertible into common stock at 50% multiplied by the average of the 3 lowest closing prices of the 10 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $60,411 due to this conversion feature. On April 27, 2016 and May 23, 2016, GW Holdings requested conversions which were not honored. Pursuant to the terms of the note, penalties of $2,000 per day per conversion were accrued as interest. The note had accrued interest of $2,770,200 as of March 31, 2018 and $996,814 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. During the years ended March 31, 2018 and 2017, the principal and interest amounts of $0 and $4,153, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $42,500 and $42,500, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

James Powell

 

On September 7, 2015, the Company issued a convertible note with the Company’s former President, James Powell for non-cash consideration for accrued fees of $150,875. The note bears interest at 8%, is due on demand, and is convertible into convertible into common stock at 50% of the lowest trading price for the 15 days prior to the date of conversion. The note had accrued interest of $30,952 as of March 31, 2018 and $0 as of March 31,2017. The principal balance as of March 31, 2018 and 2017, was $150,875 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Rockwell Capital Partners

 

On February 28, 2017, the Company entered into a Settlement Agreement with Rockwell Capital Partners, wherein Rockwell agreed to purchase a number of outstanding debts, in the total amount of $81,163, pursuant to a Claims Purchase Agreement and an order of the Court, following a Fairness Hearing under Section 3(a)(10) of the Securities Act of 1933 (the “Act”). Pursuant to the Order of the Court, shares of common stock shall be issued to Rockwell in exchange of the debt, and pursuant to the Order.

 

On March 1, 2017, an Order was entered by the Twelfth Judicial Circuit Court in and for Sarasota County, Florida, approving the Settlement Agreement and Stipulation regarding the sale of Shares under Section 3(a)(1) of the Act. As of March 31, 2017, Rockwell purchased $40,582 in outstanding debts, and the remaining settlement amount of $40,581 was cancelled.

 

The note bears no interest, is due on demand, and is convertible into convertible into common stock at 50% of the lowest closing price for the 15 days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $40,582 due to this conversion feature. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amount of $19,782 and $20,800, respectively, were converted into shares. The Company recorded debt discount amortization expense of $0 and $40,582 as of March 31, 2018 and 2017, respectively. As of March 31, 2018, the entire balance of the note has been converted to stock.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Southridge Partners LP

 

On October 27, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby Southridge Partners LP acquired $22,000 in principal and $8,730 of interest of two Direct Capital Group, Inc’s convertible notes in exchange for $30,730 to be paid in two tranches of $15,655 each. The second tranche was not paid, and during the year ended March 31, 2018 the note principal balance was reduced to $15,655 and interest by $3,282. The note bears interest at 8% per annum (increases to 22% per annum upon an event of default), matured on March 1, 2014, and is convertible into common stock at 50% of the lowest closing market price of the 15 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $15,655 due to this conversion feature. The note had accrued interest of $285 as of March 31, 2018 and $3,567 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $0 and $15,655, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Syndication Capital, LLC

 

On December 31, 2012, the Company issued a convertible note with Syndication Capital, LLC, Inc. for non-cash consideration for unpaid consulting fees of $105,000. The note bears interest of 22%, matured on October 10, 2011 and is convertible into convertible into common stock at a fixed rate of $.0001. On August 4, 2013, Gel Properties, LLC acquired $100,000 of the note. The note had accrued interest of $18,853 as of March 31, 2018 and $17,753 as of March 31,2017. The principal balance as of March 31, 2018 and 2017, was $5,000 and $5,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Tide Pool Ventures

 

On January 1, 2015, the Company accepted and agreed to a Debt Purchase Agreement, whereby Tide Pool Ventures Corporation acquired $360,000 in principal from a Direct Capital Group, Inc convertible note in exchange for $20,000. The note bears interest at 8% per annum (increases to 22% per annum upon an event of default), matured on March 1, 2014, and is convertible into common stock at 50% of the lowest trading price of the 15 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $360,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $152,436 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. On February 7, 2018, the Company entered into a Settlement and Release Agreement with Tide Pool, whereby Tide Pool agreed to extinguish the principal balance of $348,000 and accrued interest of $217,133 for $10,000, to be issued in Series A preferred stock. The Company issued 5,587 Series A preferred stock at $1.79 per share, pursuant to the agreement, and recorded a gain of $555,633 on settlement of debt. The principal balance as of March 31, 2018 and 2017, was $0 and $348,500, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

Tri-Bridge Ventures LLC

 

On January 19, 2017, the Company issued a convertible note to Tri-Bridge Ventures LLC for $25,000 for cash consideration. The note bears interest at 8%, matured on October 19, 2017, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $25,000 due to this conversion feature. The note had accrued interest of $1,306 as of March 31, 2018 and $389 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $18,498 as of March 31, 2017. During the years ended March 31, 2018 and 2017, the principal amounts of $16,000 and $0, respectively, were converted into shares. The Company recorded debt discount amortization expense of $18,498 and $6,502 as of March 31, 2018 and 2017, respectively. The principal balance as of March 31, 2018 and 2017, was $9,000 and $25,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On January 19, 2017, the Company issued a convertible note to Tri-Bridge Ventures LLC for $150,000 for non-cash consideration for an S-1 registration. The note bears interest at 8%, matured on October 19, 2017, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $150,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $2,334 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $110,989 as of March 31, 2017. The Company recorded debt discount amortization expense of $110,989 and $39,011 as of March 31, 2018 and 2017, respectively. On December 1, 2017, the Company and Tri-Bridge Ventures entered into a Settlement and Release Agreement and the principal balance of $150,000 and accrued interest of $10,389 was extinguished due to the terms of the agreement not materializing. The principal balance as of March 31, 2018 and 2017, was $0 and $150,000, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On April 21, 2017, the Company issued a convertible note to Tri-Bridge Ventures LLC for $20,000 for cash consideration. The note bears interest at 8%, matured on January 21, 2018, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance of $0 as of March 31, 2018 and $0 as of March 31, 2017. The Company recorded debt discount amortization expense of $20,000 and $0 as of March 31, 2018 and March 31, 2017, respectively. On October 18, 2017, the principal balance of $20,000 was reassigned to Emunah Funding LLC pursuant to a Debt Purchase Agreement in exchange for $25,000. The principal balance as of March 31, 2018 and March 31, 2017, was $0 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

On April 20, 2017, the Company accepted and agreed to a Debt Purchase Agreement, whereby Tri-Bridge Ventures Corporation acquired $20,914 of the Carl Ambrose note and $14,945 of the Frank Trapp note in exchange for $35,817. The note bears interest at 8% per annum, matured on April 20, 2018, and is convertible into common stock at 57.5% of the volume weighted average price of the daily trading prices during the 20 day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount from the derivative equal to $35,817 due to this conversion feature. The note had accrued interest of $0 as of March 31, 2018 and $0 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $35,817 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. On October 18, 2017, the principal balance of $35,817 was reassigned to Emunah Funding LLC pursuant to a Debt Purchase Agreement in exchange for $30,000, and the Company recorded a gain on settlement of debt of $5,859. The principal balance as of March 31, 2018 and 2017, was $0 and $0, respectively.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

V2IP, LLC

 

On May 31, 2016, the Company accepted and agreed to a Debt Purchase Agreement, whereby V2IP, LLC acquired $20,000 in accrued interest from a Direct Capital Group, Inc convertible note in exchange for $20,000. The note bears interest at 6% per annum (increases to 12% per annum upon an event of default), is due on demand, and is convertible into common stock at 50% of the lowest trading price of the 10 trading days prior to the date of conversion. The Company recorded a debt discount from the derivative equal to $20,000 due to this conversion feature. The note had accrued interest of $1,129 as of March 31, 2018 and $529 as of March 31,2017. The debt discounts had a balance at March 31, 2018 of $0 and $0 at March 31, 2017. The Company recorded debt discount amortization expense of $0 during the year ended March 31, 2018 and $0 during the year ended March 31, 2017. The principal balance as of March 31, 2018 and 2017, was $10,000 and $10,000, respectively. This note currently in default.

 

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were indeterminate due to the lack on conversion price floor and, as such, does constitute a derivative liability as the Company has insufficient authorized shares.

 

As of March 31, 2018, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities.

 

Convertible Note Conversions   

 

During the year ended March 31, 2018, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

 

    Principal     Note Fee     Total     Conversion     Shares Issued     Shares Issued      
Date   Conversion     Conversion     Conversion     Price     Pre-Split     Post-Split     Issued to
4/5/2017   $ 4,800     $     $ 4,800     $ 0.0160       48,000,000       32,000     Rockwell
4/11/2017     9,500.00             9,500       0.0154       44,186,047       29,457     GHS
4/12/2017     5,000.00             5,000       0.0128       50,000,000       33,333     Rockwell
4/17/2017     5,200.00             5,200       0.0129       52,000,000       34,667     Rockwell
4/18/2017     14,000.00             14,000       0.0138       61,135,372       40,757     GHS
4/24/2017     4,781.62             4,782       0.0136       47,816,200       31,877     Rockwell
5/1/2017     14,000.00             14,000       0.0129       68,292,683       45,528     GHS
5/10/2017     12,000.00             12,000       0.0128       69,364,162       46,243     GHS
5/12/2017     2,600.00             2,600       0.0097       130,000,000       86,667     Tri-Bridge
5/17/2017     4,440.00       900       5,340       0.0080       89,000,000       59,333     EMA
5/22/2017     9,000.00             9,000       0.0075       180,000,000       120,000     ARC
5/22/2017     3,600.00             3,600       0.0056       180,000,000       120,000     Tri-Bridge
5/23/2017     14,000.00             14,000       0.0055       93,959,732       62,640     GHS
5/30/2017     4,600.00             4,600       0.0056       230,000,000       153,333     Tri-Bridge
5/31/2017     2,700.00       900       3,600       0.0055       120,000,000       80,000     EMA
6/2/2017     5,200.00             5,200       0.0056       260,000,000       173,333     Tri-Bridge
6/5/2017     480.00       900       1,380       0.0058       138,000,000       92,000     EMA
6/5/2017     10,000.00             10,000       0.0056       97,087,379       64,725     GHS
6/14/2017     2,245.00             2,245       0.0056       314,500,000       209,667     EMA
6/16/2017     12,800.00             12,800       0.0056       182,857,143       121,905     GHS
6/22/2017     2,889.00       900       3,789       0.0058       378,900,000       252,600     EMA
6/23/2017     12,500.00             12,500       0.0059       178,571,429       119,048     GHS
11/13/2017     5,000.00       1,250       6,250       0.0001       108,695,652       72,464     Emunah
    $ 161,336     $ 4,850     $ 166,186               3,122,365,799       194,559,520      

 

During the year ended March 31, 2017, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

 

    Principal     Interest     Total     Conversion     Shares Issued     Shares Issued      
Date   Conversion     Conversion     Conversion     Price     Pre-Split     Post-Split     Issued to
4/5/2016   $ 7,800     $     $ 7,800     $ 0       156,000       104     Direct Capital
4/5/2016     4,180             4,180       0.0500       83,600       56     Microcap
4/8/2016     4,404             4,404       0.0500       88,078       59     GHS
4/6/2016     4,000       153       4,153       0.0500       83,051       55     GW Holdings
4/12/2016           3,072       3,072       0.0500       61,440       41     Microcap
4/12/2016     4,000             4,000       0.0500       80,000       53     V2IP
4/13/2016     2,114             2,114       0.0500       42,282       28     Coventry
4/21/2016     5,090             5,090       0.0500       101,800       68     GHS
4/25/2016     2,000       142       2,142       0.0107       200,000       133     Blackbridge
4/27/2016     3,254       588       3,842       0.0500       76,832       51     GHS
4/26/2016     6,000             6,000       0.0500       120,000       80     Tide Pool
4/28/2016     4,800             4,800       0.0500       96,000       64     Rockwell
5/2/2016     2,510             2,510       0.0500       50,200       33     A Super
4/29/2016     10,850             10,850       0.0500       217,000       145     Direct Capital
4/7/2016     2,900       485       3,385       0.0500       67,700       45     LG
5/3/2016     6,975             6,975       0.0500       139,500       93     Rockwell
4/28/2016     6,000             6,000       0.0500       120,000       80     V2IP
5/5/2016     9,740             9,740       0.0500       194,800       130     GHS
5/4/2016     7,500             7,500       0.0500       150,000       100     Rockwell
5/6/2016     4,275             4,275       0.0500       85,500       57     Rockwell
5/6/2016     19,600             19,600       0.0490       400,000       267     Blackbridge
5/13/2016     10,000             10,000       0.0500       200,000       133     V2IP
8/4/2016     15,000             15,000       0.0150       1,000,000       667     A Super
8/4/2016     68,500             68,500       0.0050       13,700,000       9,133     Direct Capital
8/3/2016     35,000             35,000       0.0050       7,000,000       4,667     N600PG
11/30/2016     8,000             8,000       0.0008       10,000,000       6,667     Rockwell
12/7/2016     6,000             6,000       0.0006       10,000,000       6,667     Rockwell
12/13/2016     4,800             4,800       0.0004       12,000,000       8,000     Rockwell
12/21/2016     6,000             6,000       0.0004       15,000,000       10,000     Rockwell
12/27/2016     6,000             6,000       0.0004       15,000,000       10,000     Rockwell
1/3/2017     7,000             7,000       0.0004       20,000,000       13,333     Rockwell
12/30/2016     10,000             10,000       0.0004       25,000,000       16,667     ARC
1/5/2017     7,500             7,500       0.0003       25,000,000       16,667     Rockwell
1/9/2017     6,250             6,250       0.0003       25,000,000       16,667     Rockwell
1/18/2017     6,250             6,250       0.0003       25,000,000       16,667     Rockwell
1/25/2017     7,000             7,000       0.0003       28,000,000       18,667     Rockwell
1/27/2017     8,000             8,000       0.0003       32,000,000       21,333     Rockwell
1/31/2017     8,250             8,250       0.0003       33,000,000       22,000     Rockwell
2/9/2017     14,000             14,000       0.0005       27,027,028       18,018     GHS
3/3/2017     14,000             14,000       0.0005       29,411,765       19,608     GHS
3/6/2017     6,600             6,600       0.0002       33,000,000       22,000     Rockwell
3/9/2017     6,000             6,000       0.0002       40,000,000       26,667     Rockwell
3/14/2017     14,000             14,000       0.0004       33,333,334       22,222     GHS
3/15/2017     902             902       0.0001       9,021,300       6,014     Rockwell
3/15/2017     3,600             3,600       0.0001       36,000,000       24,000     Rockwell
3/23/2017     4,600             4,600       0.0001       46,000,000       30,667     Rockwell
3/28/2017     9,200             9,200       0.0003       35,249,043       23,499     GHS
    $ 410,444     $ 4,440     $ 414,883               588,556,252       392,371      
XML 24 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
LONG TERM NOTE PAYABLE
12 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
LONG TERM NOTE PAYABLE
5. LONG TERM NOTE PAYABLE

 

On October 1, 2017, Direct Capital Group, Inc. agreed to cancel two convertible notes in the principal amounts of $25,000 and $36,000, and $6,304 in accrued interest, in exchange for a Promissory Note in the amount of $61,000. The note bears no interest and is due on or before October 1, 2020. The Company recorded a gain of $6,304 in accrued interest and the derivative liability of $87,505 was revalued and settled to additional paid in capital.

XML 25 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVE LIABILITIES
12 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE LIABILITIES
6. DERIVATIVE LIABILITIES

 

During the year ended March 31, 2018, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at March 31, 2018 based on the Monte Carlo simulation method consistent with the terms of the related debt.

 

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2018:

 

    Notes     Warrants     Stock Payable     Total  
Balance, beginning of period   $ 5,316,130     $     $     $ 5,316,130  
Initial recognition of derivative liability     315,167       8,117             323,284  
Derivatives to stock payable                 2,791,250       2,791,250  
Conversion of derivative instruments to Common Stock     (722,055 )           (638,750 )     (1,360,805 )
(Gain) loss on derivative liability valuation     (889,953 )     (5,986 )     453,103       (442,836 )
Balance, end of period   $ 4,019,289     $ 2,131     $ 2,605,603     $ 6,627,023  

 

Convertible Notes

 

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2018:

 

    Commitment date     Valuation date
Expected dividends   0%   0%
Expected volatility   338%-423%   91.6%-102%
Expected term   .5 – 2 years   .25 – 2 years
Risk free interest   .92%-1.41%   1.66%-2.12%

 

During the year ended March 31, 2017, the Company valued the embedded conversion feature of the convertible notes, warrants, certain accounts payable and certain related party liabilities. The fair value was calculated at March 31, 2017 using the Black-Scholes option pricing model to estimate fair value for those instruments convertible into common shares at inception, at conversion or extinguishment date, and at each reporting date.

 

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2017:

 

    March 31,  
    2017  
Balance, beginning of period   $ 2,944,855  
Initial recognition of derivative liability     1,282,329  
Conversion of derivative instruments to Common Stock     (1,044,930 )
(Gain) loss on derivative liability valuation     3,952,365  
(Gain) loss on settlement of debt     (1,818,489 )
Balance, end of period   $ 5,316,130  

 

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2017:

 

    Commitment date     Valuation date
Expected dividends   0%   0%
Expected volatility   350.16%-988.84%   184.75%-1,374.41%
Expected term   .5 - 1 year   .12 – 1.44 years
Risk free interest   .61% -.90%   .23%-.99%

 

Warrants

 

On October 20, 2017, the Company executed a Common Stock Purchase Warrant for 52,840,909 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on October 20, 2022.

 

On November 6, 2017, the Company executed a Common Stock Purchase Warrant for 15,338,160 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on November 6, 2022.

 

On November 30, 2017, the Company executed a Common Stock Purchase Warrant for 10,225,440 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on November 30, 2022.

 

On January 11, 2018, the Company executed a Common Stock Purchase Warrant for 8,521,200 shares. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price of $0.0005 per share and expire on January 11, 2023.

 

The Company evaluated all outstanding warrants to determine whether these instruments may be tainted. All warrants outstanding were considered tainted. The Company valued the embedded derivatives within the warrants based on the Monte Carlo simulation.

 

The fair value at the inception date for the warrants and the revaluation dates were based upon the following management assumptions:

 

    Commitment date     Valuation date
Expected dividends   0%   0%
Expected volatility   105.3%-106.8%   105.3%-106.8%
Expected term   5 years   4.56 - 5 years
Risk free interest   1.99%-2.32%   2.14%-2.56%
         
    Commitment date   Valuation date
Expected dividends   0%   0%
Expected volatility   350.16%-988.84%   184.75%-1,374.41%
Expected term   .5 - 1 year   .25 - 1 year
Risk free interest   .61% -.90%   .23%-.99%

 

Stock Payable

 

During the year ended March 31, 2018, the Company reclassified stock payables due to related parties of $2,791,250 to derivative liabilities, due to the company having a tainted equity environment. The payables to be issued in stock are at 100% of the lowest closing market price with a 15 day look back. The effective discount to the stock at March 31, 2018 due to the 100% of the lowest closing market price of the previous 15 days using a 6-month average was $0, and therefore the value is equal to the face amount.

XML 26 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
RELATED PARTY TRANSACTIONS
12 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS
7. RELATED PARTY TRANSACTIONS

 

In conjunction with the reverse recapitalization transaction on March 9, 2016, the Company recorded amounts due to related parties of $6,250,000, which represented shares that were owed to members of management. During the year ended March 31, 2017 the Company issued 698,324 Series A Preferred shares and 265,909 common shares to reduce the liability by $3,458,750, resulting in a remaining liability of $2,791,250 as of March 31, 2017.

 

On June 1, 2017, the Company issued 536,351 Series A Preferred shares valued at $960,068 to Gary Tilden, a former officer and director, which reduced liabilities owed to him of $819,460, and recorded a loss on conversion of $140,608. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued to Donna Murtaugh.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

As of March 31, 2018, former President Gary Tilden has been paid all outstanding related party and derivative liabilities. The other parties have a remaining derivative liability of $2,152,500, to be issued in common stock, and is recorded as a derivative liability on the Company’s Balance Sheet.

 

During the year ended March 31, 2018, the Company reclassified stock payables due to related parties of $2,791,250 to derivative liabilities, due to the company having a tainted equity environment.

 

The Company is periodically advanced noninterest bearing operating funds from related parties. The advances are due on demand and unsecured. As of March 31, 2018 and 2017 the Company owed related parties $126,494 and $50,262, respectively. During the year ended March 31, 2018, the Company recorded imputed interest of $13,257 to the statement of operations with a corresponding increase to additional paid in capital.

XML 27 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
PREFERRED STOCK
12 Months Ended
Mar. 31, 2018
Equity [Abstract]  
PREFERRED STOCK
8. PREFERRED STOCK

 

On January 25, 2011, the Company filed an amendment to its Nevada Certificate of Designation to create two classes of Preferred Stock, Series A and Series B, with a par value of $0.001. Each class has 10,000,000 shares authorized.

 

On July 1, 2015, the Company’s Board of Directors authorized the creation of shares of Series B Voting Preferred Stock and on July 27, 2015 a Certificate of Designation was filed with the Nevada Secretary of State. The holder of the shares of the Series B Voting Preferred Stock has the right to vote those shares of the Series B Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series B Voting Preferred Stock is equal to and counted as 4 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.

 

On January 3, 2017, the Company filed an Amendment to Certificate of Designation with the Nevada Secretary of State defining the rights and preferences of the Series A Preferred shares. Series A Preferred stock shall be convertible into common shares at the rate of the closing market price on the day of the conversion notice equal to the dollar amount of the value of the Series A shares, and holders shall have no voting rights on corporate matters, unless and until they convert their Series A shares into Common Shares, at which time they will have the same voting rights as all Common Shareholders have; their consent shall not be required for taking any corporate action.

 

On June 1, 2017, the Company issued 536,351 Series A Preferred shares valued at $960,068 to Gary Tilden, a former officer and director, which reduced liabilities owed to him of $819,460, and recorded a loss on conversion of $140,608. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares issued and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On February 7, 2018, the Company issued 5,587 Series A Preferred stock at $1.79 per share, pursuant to a debt settlement agreement with a convertible note holder. The note holder agreed to extinguish the principal balance of $348,000 and accrued interest of $217,133 for $10,000 to be issued in Series A Preferred stock. The Company recorded a gain of $555,633 on settlement of debt, a gain on derivative liability of $501,506, and reclassed $161,343 in derivative liabilities to additional paid in capital. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

During the year ended March 31, 2018, the Company also retired 250 Series B Voting Preferred shares issued to Donna Murtaugh. Ms. Murtaugh also sold 174,581 Series A Preferred shares to a new shareholder, of which 12,788 Series A Preferred shares were converted into 127,888 common shares. Both resulted in $0 due to the value being within the terms of the agreement at $0 per share.

 

As of March 31, 2018, 10,000,000 Series A Preferred shares and 10,000,000 Series B Preferred shares were authorized, of which 3,489,610 Series A shares were issued and outstanding, (2,213,154 shares as of March 31, 2017) and 500 Series B shares were issued and outstanding (1,000 shares as of March 31, 2017).

XML 28 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMON STOCK
12 Months Ended
Mar. 31, 2018
Equity [Abstract]  
COMMON STOCK
9. COMMON STOCK

 

On June 15, 2016, the Company approved the authorization of a 1 for 1,000 reverse stock split of the Company’s outstanding shares of common stock, which was effective on July 22, 2016. The financial statements have been retroactively adjusted to take this into account for all periods presented.

 

On August 29, 2016, the Company filed a Certificate of Amendment to reduce the amount of authorized common shares to 163,000,000 shares, par value of $0.00001.

 

On November 14, 2016, the Company filed a Certificate of Amendment to increase the number of authorized common shares to 1,500,000,000 with a par value of $0.00001.

 

On December 8, 2016, the Company filed a Certificate of Amendment to increase the number of authorized common shares to 3,000,000,000 with a par value of $0.00001.

 

On January 26, 2017, the Company filed a Certificate of Amendment with the State of Nevada in order to increase the number of authorized shares of Common Stock. The number of authorized common stock the Company shall have the authority to issue is 7,000,000,000; par value $0.00001 per share.

 

On August 3, 2016, pursuant to the Asset Purchase Agreement dated March 9, 2016, the Company issued 90,909 shares of common stock in equal amounts of 22,727 shares each to Robert Stillwaugh, Mike Schatz, Gary Tilden and Donna Marie Murtaugh, which resulted in a reduction of $1,500,000 to derivative liabilities. The shares were valued at $2,045,455 based on the market price of the Company’s common stock on the date of issuance and $545,455 was recorded as a loss on settlement of debt.

 

On November 16, 2016, pursuant to the Asset Purchase Agreement dated March 9, 2016, the Company issued 233,333 shares of common stock in equal amounts of 58,333 shares each to Robert Stillwaugh, Mike Schatz, Gary Tilden and Donna Marie Murtaugh, which resulted in a reduction of $945,000. On December 5, 2016, Donna Murtaugh entered into a Cancellation of Issued Shares Agreement with the Company, whereby she has agreed to the cancellation of her 58,333 shares and to defer payment to her under the Asset Purchase Agreement and the Amended Asset Purchase Agreement. The stock issued and not cancelled were valued at $918,750 based on the market price of the Company’s common stock on the date of issuance and resulted in a reduction of derivative liabilities of $708,750 and a loss on settlement of debt of $210,000.

 

On March 20, 2017, 27,867 common shares were issued in exchange for 4,670 shares of Series A Preferred shares.

 

During the year ended March 31, 2017 the Company issued 45,733 shares of common stock for services valued at $51,720, based on the market price of the Company’s common stock on the date of agreement.

 

During the year ended March 31, 2017, the holders of convertible notes converted a total of $414,883 of principal and interest into 392,473 shares of common stock. The common stock was valued at $1,241,752 based on the market price of the Company’s stock on the date of conversion. The issuance extinguished $1,044,930 worth of derivative liabilities, $19,063 of debt discount, and $198,998 was recorded as a gain on settlement of debt.

 

On April 27, 2017, the Company issued 53,333 shares of common stock for services valued $24,000, based on the market price of the Company’s common stock on the date of agreement.

 

On August 21, 2017, the Company retired 250 Series B Voting Preferred shares and 81,061 common shares issued to Gary Tilden, in accordance with his resignation arrangement. Additionally, the Company issued Mr. Tilden 747,208 Series A Preferred shares, with a value of $1,337,499, thereby recording a loss on conversion of $1,325,340. The value of the stock is based on the closing market price of the equivalent common stock conversion value on the date of the settlement agreement.

 

On October 31, 2017, the Company approved the authorization of a 1 for 1,500 reverse stock split of the Company’s outstanding shares of common stock. The Company’s financial statements have been retroactively adjusted for this stock split for all periods presented.

 

On November 1, 2017, the Company filed a Certificate of Amendment with the Secretary of State in Nevada, to amendment its Articles of Incorporation pursuant to the reverse split and to reduce the number of authorized common shares to 900,000,000 having a par value of $0.00001. Any fractional shares which results from that reverse stock split will be rounded up to the next whole share. All common share amounts and per share amounts in the financial statements reflect the one-for-fifteen hundred reverse stock split.

 

During the year ended March 31, 2018, 127,888 common shares were issued in exchange for 12,788 shares of Series A Preferred shares. No gain or loss was recorded due to the conversion occurring within the terms of the agreement.

 

During the year ended March 31, 2018, the holders of convertible notes converted a total of $161,336 of principal into 2,081,577 shares of common stock. The issuance extinguished $722,055 worth of derivative liabilities and $201,809 was recorded as a loss on settlement of debt.

 

As of March 31, 2018, 900,000,000 common shares, par value $0.00001, were authorized, of which 2,914,797 shares were issued and outstanding (733,059 shares as of March 31, 2017).

 

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INCOME TAXES
12 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
10. INCOME TAXES

 

Deferred taxes are provided on a liability method, whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net deferred tax liabilities consist of the following components as of March 31 ,2018 and 2017:

 

    2018     2017  
Deferred tax assets:                
NOL Carryover   $ 1,050,050     $ 712,800  
Inventory Allowance           48,900  
Accrued Payroll           256,000  
Deferred tax liabilities                
Valuation allowance     (1,050,050 )     (1,017,700 )
Net deferred tax asset   $     $  

 

The income tax provision differs from the amount of income tax determined by applying the US federal income tax rate to pretax income from continuing operations for the years ended March 31, 2018 and 2017 due to the following:

 

    2018     2017  
Book Income   $ (923,695 )   $ (2,333,700 )
Interest Expense (for derivative)     89,254       485,700  
Imputed Interest     2,784        
Gain/Loss on Derivative     (92,937 )     1,541,400  
Gain/Loss on Settlement of Debt     (116,683 )     (507,900 )
Loss on CEO Settlement     307,850        
Penalties     19,839        
Loss on Conversion     42,380        
Stock Compensation     5,040        
Inventory Allowance           (200 )
Accrued Payroll           186,000  
Meals & Entertainment           600  
Valuation allowance     666,168       628,100  
    $     $  

 

At March 31, 2018, the Company had net operating loss carryforwards of approximately $5,000,238 that may be offset against future taxable income from the year 2018 through 2038. No tax benefit has been reported in the March 31, 2018 financial statements since the potential benefit is offset by a valuation of allowance of the same amount.

 

Due to the change in ownership provision of the Tax Reform Act of 1986, net operating loss carryforwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

 

As of the date of this filing, the Company is delinquent in filing their tax returns, and there is uncertainty regarding potential penalties and interest. The last return filed by the Company was March 31, 2012, and the Company has not accrued for any potential penalties or interest from that period forward. The Company will need to file returns for the years ending March 31, 2013, 2014, 2015, 2016 and 2017, which are still open for examination.

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COMMITMENTS AND CONTINGENCIES
12 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES
11. COMMITMENTS AND CONTINGENCIES

 

On June 27, 2016, the Company entered into a Consulting Agreement with Axeman Capital LLC (formerly Channel Sales & Consulting, LLC). The Company has agreed to pay Axeman Capital (“Axeman”) $3,000 per month for the first two months, and $4,000 per month for a period of one year. Axeman will also be paid a 10% commission on all gross sales generated through a licensed dealer and 30% commission on non-licensed dealers. If within the first twelve months of the Agreement, Axeman generates gross sales above $2,000,000, the Company will pay an additional 5% commission on gross sales, either in cash or restricted common stock. On October 12, 2017, the Company accepted a letter from Axeman agreeing to not accept a bonus fee of $100,000 in restricted common shares of the Company.

 

On June 15, 2018, the Company entered into a Debt Settlement Agreement (“Agreement”) with Axeman regarding the original contract dated June 27, 2016. The Agreement settles all outstanding debt owed to Axeman as of May 30, 2018, which includes unpaid monthly retainers and commissions of $28,103 and a $100,000 bonus fee, which the Company agreed to reinstate pursuant to the terms of the Agreement. The Company has agreed to settle this debt in full, in the amount of $140,000. The company has agreed to issue 78,212 Series A shares in value of $1.79 per share for the total value of $140,000 and this amount was accrued as of March 31, 2018. All contracts have been canceled with Axeman, and the Company has authorized the Transfer Agent to issue said shares in the name of Axeman Capital, LLC.

 

On February 1, 2017, the Company entered into a standard office lease for approximately 1,700 square feet of office space at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. The lease has a term of 1 year, from February 1, 2017 through January 31, 2018, with a monthly rent of $1,400. On February 1, 2018, the Company entered into a month-to-month lease with a monthly rent of $1,400. Rental expenses incurred for this operating lease during the years ended March 31, 2018 and 2017 were $16,800 and $16,800 respectively.

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SUBSEQUENT EVENTS
12 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS
12. SUBSEQUENT EVENTS

 

On May 12, 2018, the Company entered into a Debt Settlement Agreement with Asher Enterprises, Inc. to settle the outstanding debt of $13,000 in exchange for a cash payment of $26,000, resulting in a loss on settlement of debt of $13,000. As of May 15, 2018, the note has a balance of $0.

 

On June 15, 2018, the Company entered into a Debt Settlement Agreement (“Agreement”) with Axeman regarding the original contract dated June 27, 2016. The Agreement settles all outstanding debt owed to Axeman as of May 30, 2018, which includes unpaid monthly retainers and commissions of $28,103 and a $100,000 bonus fee, which the Company agreed to reinstate pursuant to the terms of the Agreement. The Company has agreed to settle this debt in full, in the amount of $140,000. The company has agreed to issue 78,212 Series A shares in value of $1.79 per share for the total value of $140,000. All contracts have been canceled with Axeman, and the Company has authorized the Transfer Agent to issue said shares in the name of Axeman Capital, LLC.

 

The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business

Organization and Description of Business

 

Simlatus Corporation (“SIML” or “Company”) was incorporated in the State of Nevada under the name Sunberta Resources Inc. on November 15, 2006, as a mining and exploration of mineral claims business.  On November 18, 2009, the Company changed its name to Grid Petroleum Corp. and continued with the mining and exploration of mineral claims operations, exploring mining claims in Alberta, Canada, Vancouver Island, British Columbia, England and the United States.

 

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”) whereby RJM’s owners became the directors of the Company and were to be issued $6,250,000 worth of the Company’s stock; $5,000,000 of Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company’s Preferred Stock (the “Acquisition”). On the same date, the entire management of RJM became the entire management of the Company. The Company’s transaction with RJM has been treated as a reverse recapitalization of the Company, with the Company (the legal acquirer of RJM) considered the accounting acquiree and RJM, whose management took control of the Company (the legal acquiree of the Company), considered the accounting acquirer. The historical financial statements include the operations of the accounting acquirer (RJM) for all periods presented.

 

RJM was incorporated in the State of California on June 11, 2014, for the purpose of operating a broadcast equipment production business.

 

On March 25, 2016, the Company approved a name change to Simlatus Corporation, stock symbol SIML, which was executed on April 4, 2016. The new name change better describes the Company’s new business and new revenues in selling commercial broadcast equipment on a global basis. Simlatus Corporation develops, manufactures, markets and owns proprietary advanced broadcast equipment and software and sells this audio and video broadcast equipment worldwide. These systems have been sold worldwide over the past 15 years including some of the major broadcast companies.   

 

The Company currently sells approximately 55 different audio/video products and is preparing to market its newest audio/video product referred to as SyncPal™. In addition to the Company’s traditional line of audio/video products, it has commenced the research & development of its Immersive Broadcast System, referred to as the Simlatus-IBS™. The Simlatus-IBS™ will include commercial augmented reality and virtual reality applications for studio engineers. These applications, both hardware and software, will allow the customer to control and manage the studio audio/video systems from anywhere in the world. These products are being developed to serve a market segment that is presently being strongly embraced by consumers and is forecasted, by some of the most widely recognized tech companies in the world, as becoming a multi-billion-dollar market in the very near future. The Market Analysis and IP Portfolio will include new patents specifically developed for these products and owned by the Company.

Financial Statement Presentation

Financial Statement Presentation 

 

The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Fiscal Year End

Fiscal Year End 

 

The Company has selected March 31 as its fiscal year end.

Use of Estimates

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.

Revenue Recognition and Related Allowances

Revenue recognition and Related Allowances

 

The Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) as amended, as of April 1, 2018 with no material impact. The Company primarily generates net revenue through product sales to distributors and to retail customers on its website. Revenue is recognized upon transfer of control of promised products to customers which is generally upon shipment in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’s evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at March 31, 2018 and March 31, 2017 is $0.

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the fiscal year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

Loss Per Share

Loss Per Share

 

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on November 1, 2017 (see Note 10). Diluted earnings (loss) per share is equal to the basic per share for the years ended March 31, 2018 and 2017. Common stock equivalents are not included in the loss per share since they are anti-dilutive. All per share amounts have been adjusted for the reverse stock split.

Inventories

Inventories

 

Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. During the year ended March 31, 2018, the Company recorded an impairment to inventory of $61,188. During the year ended March 31, 2017, the Company recorded an allowance for obsolete inventory of $125,329. As of March 31, 2018 and March 31, 2017, the Company’s inventories consist primarily of raw materials and supplies rather than finished goods and are presented net of an allowance for obsolete inventory of $1,435 and $68,629, respectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

 

These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2018 and 2017 for each fair value hierarchy level:

 

March 31, 2018   Derivative Liabilities     Total  
Level 1   $     $  
Level 2   $     $  
Level 3   $ 6,627,023     $ 6,627,023  
                 
March 31, 2017   Derivative Liabilities     Total  
Level 1   $     $  
Level 2   $     $  
Level 3   $ 5,316,130     $ 5,316,130  

 

In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of March 31, 2018 and 2017, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

Income Taxes

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. 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 of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

As of the date of this filing, the Company is delinquent in filing their tax returns, and there is uncertainty regarding potential penalties and interest.  The last return filed by the Company was March 31, 2012, and the Company has not accrued any potential penalties or interest from that period forward.  The Company will need to file returns for the years ending March 31, 2013, 2014, 2015, 2016 and 2017, which are still open for examination.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces existing revenue recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the standard on April 1, 2018, using a modified retrospective approach, with the cumulative effect of initially applying the standard recognized in retained earnings at the date of adoption.

 

While the Company does not expect the adoption of this standard to have a material impact on the Company’s net Revenues in the Statements of Income, the Company anticipates revenues for certain wholesale transactions and substantially all digital commerce sales will be recognized upon shipment rather than upon delivery to the customer.

 

Additionally, provisions for post-invoice sales discounts, returns and miscellaneous claims will be recognized as accrued liabilities rather than as reductions to Accounts receivable, net; and the estimated cost of inventory associated with the provision for sales returns will be recorded within Prepaid expenses and other current assets on the Balance Sheets. The Company continues to evaluate the impact of this new standard, including on accounting policies, disclosures, internal control over financial reporting and its contracts with customers.

 

In February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). Among other provisions, this ASU requires that when determining whether certain financial instruments should be classified as liabilities or equity instruments, an entity should not consider the down round feature. The ASU also recharacterizes as a scope exception the indefinite deferral available to private companies with mandatorily redeemable financial instrument and certain noncontrolling interests, which does not have an accounting effect but addresses navigational concerns within the FASB Accounting Standards Codification. The provisions of the ASU related to down rounds are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements.

XML 33 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of financial assets and liabilities measured at fair value on a recurring basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2018 and 2017 for each fair value hierarchy level:

 

March 31, 2018   Derivative Liabilities     Total  
Level 1   $     $  
Level 2   $     $  
Level 3   $ 6,627,023     $ 6,627,023  
                 
March 31, 2017   Derivative Liabilities     Total  
Level 1   $     $  
Level 2   $     $  
Level 3   $ 5,316,130     $ 5,316,130  
XML 34 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
PREPAID EXPENSES (Tables)
12 Months Ended
Mar. 31, 2018
Prepaid Expenses [Abstract]  
Summary of prepaid expenses
    March 31,     March 31,  
    2018     2017  
Prepaid expenses   $     $ 10,000  
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CONVERTIBLE NOTES PAYABLE (Tables)
12 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Schedule of notes payable

As of March 31, 2018, and March 31, 2017, notes payable were comprised of the following:

 

    Original   Due   Interest   Conversion   March 31,     March 31,  
    Note Date   Date   Rate   Rate   2018     2017  
ARC Capital Ltd   10/1/2015   4/2/2016   24%   Variable   $ 2,625     $ 11,625  
Asher Enterprises #4   9/16/2011   6/20/2012   22%   Variable     13,000       13,000  
Auctus Fund #1   12/16/2016   9/16/2017   24%   Variable     46,750       46,750  
Auctus Fund #2   8/9/2017   5/9/2017   24%   Variable     46,750        
Blackbridge Capital #2   5/3/2016   5/3/2017   5%   Variable     80,400       80,400  
Carl Ambrose   3/23/2017   9/1/2018   3%   Variable           20,914  
Direct Capital #26   4/7/2016   10/7/2016   8%   Variable           25,000  
Direct Capital #27   5/17/2016   11/17/2016   8%   Variable           36,000  
EMA Financial   11/9/2016   11/9/2017   24%   Variable     272,576       35,000  
Emunah Funding #1   10/18/2017   10/18/2018   0%   Variable     110,000        
Emunah Funding #2   10/18/2017   10/18/2018   0%   Variable     20,000        
Emunah Funding #3   10/18/2017   10/18/2018   0%   Variable     30,000        
Emunah Funding #4   10/20/2018   7/20/2018   8%   Variable     55,440        
Frank Trapp   3/23/2017   12/31/2017   5%   Variable           14,945  
GHS Investment #3   2/7/2017   Demand   0%   Variable           98,800  
GW Holdings   10/13/2015   4/1/2015   24%   Variable     42,500       42,500  
James Powell   9/7/2015   Demand   8%   Variable     150,875        
Rockwell Capital #5   2/28/2017   Demand   0%   Variable           19,782  
Southridge Partners   10/27/2015   3/1/2014   22%   Variable           15,655  
Syndication Capital #1   12/31/2012   10/10/2011   22%   0.01     5,000       5,000  
Tide Pool   1/1/2015   7/1/2015   22%   Variable           348,500  
Tri-Bridge Ventures #1   1/19/2017   10/19/2017   8%   Variable     9,000       25,000  
Tri-Bridge Ventures #2   1/19/2017   10/19/2017   8%   Variable           150,000  
V2IP #2   5/13/2016   Demand   12%   Variable     10,000       10,000  
                      894,916       998,871  
Less debt discount             (120,083 )     (222,094 )
Notes payable, net of discount*           $ 774,833     $ 776,777  

 

  * During the years ended March 31, 2018 and March 31, 2017, the balance of notes payable, net of discount that are in default is $511,923 and $497,280, respectively.
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DERIVATIVE LIABILITIES (Tables)
12 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of derivative liability activity

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2018:

 

    Notes     Warrants     Stock Payable     Total  
Balance, beginning of period   $ 5,316,130     $     $     $ 5,316,130  
Initial recognition of derivative liability     315,167       8,117             323,284  
Derivatives to stock payable                 2,791,250       2,791,250  
Conversion of derivative instruments to Common Stock     (722,055 )           (638,750 )     (1,360,805 )
(Gain) loss on derivative liability valuation     (889,953 )     (5,986 )     453,103       (442,836 )
Balance, end of period   $ 4,019,289     $ 2,131     $ 2,605,603     $ 6,627,023  

 

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2018:

 

    Commitment date     Valuation date
Expected dividends   0%   0%
Expected volatility   338%-423%   91.6%-102%
Expected term   .5 – 2 years   .25 – 2 years
Risk free interest   .92%-1.41%   1.66%-2.12%

 

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended March 31, 2017:

 

    March 31,  
    2017  
Balance, beginning of period   $ 2,944,855  
Initial recognition of derivative liability     1,282,329  
Conversion of derivative instruments to Common Stock     (1,044,930 )
(Gain) loss on derivative liability valuation     3,952,365  
(Gain) loss on settlement of debt     (1,818,489 )
Balance, end of period   $ 5,316,130  

 

The fair value at the commitment date for the convertible notes and the revaluation dates for the Company’s derivative liabilities were based upon the following management assumptions as of March 31, 2017:

 

    Commitment date     Valuation date
Expected dividends   0%   0%
Expected volatility   350.16%-988.84%   184.75%-1,374.41%
Expected term   .5 - 1 year   .12 – 1.44 years
Risk free interest   .61% -.90%   .23%-.99%

 

Warrants

 

The fair value at the inception date for the warrants and the revaluation dates were based upon the following management assumptions:

 

    Commitment date     Valuation date
Expected dividends   0%   0%
Expected volatility   105.3%-106.8%   105.3%-106.8%
Expected term   5 years   4.56 - 5 years
Risk free interest   1.99%-2.32%   2.14%-2.56%
         
    Commitment date   Valuation date
Expected dividends   0%   0%
Expected volatility   350.16%-988.84%   184.75%-1,374.41%
Expected term   .5 - 1 year   .25 - 1 year
Risk free interest   .61% -.90%   .23%-.99%
XML 37 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Tables)
12 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Schedule of Deferred Tax Liabilities
    2018     2017  
Deferred tax assets:                
NOL Carryover   $ 1,050,050     $ 712,800  
Inventory Allowance           48,900  
Accrued Payroll           256,000  
Deferred tax liabilities                
Valuation allowance     (1,050,050 )     (1,017,700 )
Net deferred tax asset   $     $  
Schedule of Differnce in Income Tax Provision and income tax determined by applying the US federal income tax rate to pretax income from continuing operations
    2018     2017  
Book Income   $ (923,695 )   $ (2,333,700 )
Interest Expense (for derivative)     89,254       485,700  
Imputed Interest     2,784        
Gain/Loss on Derivative     (92,937 )     1,541,400  
Gain/Loss on Settlement of Debt     (116,683 )     (507,900 )
Loss on CEO Settlement     307,850        
Penalties     19,839        
Loss on Conversion     42,380        
Stock Compensation     5,040        
Inventory Allowance           (200 )
Accrued Payroll           186,000  
Meals & Entertainment           600  
Valuation allowance     666,168       628,100  
    $     $  
XML 38 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($)
Mar. 31, 2018
Mar. 31, 2017
Derivative Liability $ 6,627,023 $ 5,316,130
Total Financial Liabilities $ 6,627,023 $ 5,316,130
XML 39 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
Mar. 09, 2016
Mar. 31, 2018
Mar. 31, 2017
Allowance for obsolete inventory   $ 61,188 $ 125,329
Board of Directors Chairman [Member]      
Common stock value issued $ 6,250,000    
Restricted common stock, value $ 5,000,000    
Restricted common stock, description Restricted Common Stock 90 days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of the Company's Preferred Stock (the "Acquisition").    
XML 40 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
PREPAID EXPENSES (Details) - USD ($)
Mar. 31, 2018
Mar. 31, 2017
Prepaid Expenses [Abstract]    
Prepaid expenses $ 10,000
XML 41 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
PREPAID EXPENSES (Details Narrative) - USD ($)
5 Months Ended 12 Months Ended
Aug. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Prepaid Expenses [Abstract]      
Amortized prepaid expenses   $ 0 $ 10,000
Legal fees billed in advance, per month $ 2,000    
XML 42 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONVERTIBLE NOTES PAYABLE (Details) - USD ($)
12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Short-term Debt [Line Items]    
Notes payable, gross $ 894,916 $ 998,871
Debt discount (120,083) (222,094)
Notes payable, net of discount $ 262,910 $ 279,497
Arc Capital Ltd [Member]    
Short-term Debt [Line Items]    
Original Note Date Oct. 01, 2015  
Due Date Apr. 02, 2015  
Interest Rate 24.00% 24.00%
Conversion Rate Variable  
Notes payable, gross $ 2,625 $ 11,625
Asher Enterprises #4    
Short-term Debt [Line Items]    
Original Note Date Sep. 16, 2011  
Due Date Jun. 20, 2012  
Interest Rate 22.00% 22.00%
Conversion Rate Variable  
Notes payable, gross $ 13,000 $ 13,000
Auctus Fund One [Member]    
Short-term Debt [Line Items]    
Original Note Date Dec. 16, 2016  
Due Date Sep. 16, 2017  
Interest Rate 10.00% 10.00%
Conversion Rate Variable  
Notes payable, gross $ 46,750 $ 46,750
Auctus Fund #2    
Short-term Debt [Line Items]    
Original Note Date Aug. 09, 2017  
Due Date May 09, 2017  
Interest Rate 10.00% 10.00%
Conversion Rate Variable  
Notes payable, gross $ 46,750
Blackbridge Capital Two [Member]    
Short-term Debt [Line Items]    
Original Note Date May 03, 2016  
Due Date May 03, 2017  
Interest Rate 5.00% 5.00%
Conversion Rate Variable  
Notes payable, gross $ 80,400 $ 80,400
Carl Ambrose [Member]    
Short-term Debt [Line Items]    
Original Note Date Mar. 23, 2017  
Due Date Sep. 01, 2018  
Interest Rate 3.00% 3.00%
Conversion Rate Variable  
Notes payable, gross $ 20,914
Direct Capital Twenty Six [Member]    
Short-term Debt [Line Items]    
Original Note Date Apr. 07, 2016  
Due Date Oct. 07, 2016  
Interest Rate 8.00% 8.00%
Conversion Rate Variable  
Notes payable, gross $ 25,000
Direct Capital Twenty Seven [Member]    
Short-term Debt [Line Items]    
Original Note Date May 17, 2016  
Due Date Nov. 17, 2016  
Interest Rate 8.00% 8.00%
Conversion Rate Variable  
Notes payable, gross $ 36,000
Ema Financial [Member]    
Short-term Debt [Line Items]    
Original Note Date Nov. 09, 2016  
Due Date Nov. 09, 2017  
Interest Rate 10.00% 10.00%
Conversion Rate Variable  
Notes payable, gross $ 272,576 $ 35,000
Emunah Funding #1    
Short-term Debt [Line Items]    
Original Note Date Oct. 18, 2017  
Due Date Oct. 18, 2018  
Interest Rate 0.00% 0.00%
Conversion Rate Variable  
Notes payable, gross $ 110,000
Emunah Funding #2    
Short-term Debt [Line Items]    
Original Note Date Oct. 18, 2017  
Due Date Oct. 18, 2018  
Interest Rate 0.00% 0.00%
Conversion Rate Variable  
Notes payable, gross $ 20,000
Emunah Funding #3    
Short-term Debt [Line Items]    
Original Note Date Oct. 18, 2017  
Due Date Oct. 18, 2018  
Interest Rate 0.00% 0.00%
Conversion Rate Variable  
Notes payable, gross $ 30,000
Emunah Funding #4    
Short-term Debt [Line Items]    
Original Note Date Oct. 20, 2018  
Due Date Jul. 20, 2018  
Interest Rate 8.00% 8.00%
Conversion Rate Variable  
Notes payable, gross $ 55,440
Frank Trapp [Member]    
Short-term Debt [Line Items]    
Original Note Date Mar. 23, 2017  
Due Date Dec. 31, 2017  
Interest Rate 5.00% 5.00%
Conversion Rate Variable  
Notes payable, gross $ 14,945
GHS Investment #3    
Short-term Debt [Line Items]    
Original Note Date Feb. 07, 2017  
Due Date, Description Demand  
Interest Rate 0.00% 0.00%
Conversion Rate Variable  
Notes payable, gross $ 98,800
Gw Holdings [Member]    
Short-term Debt [Line Items]    
Original Note Date Oct. 13, 2015  
Due Date Apr. 01, 2015  
Interest Rate 24.00% 24.00%
Conversion Rate Variable  
Notes payable, gross $ 42,500 $ 42,500
James Powell [Member]    
Short-term Debt [Line Items]    
Original Note Date Sep. 07, 2015  
Interest Rate 8.00% 8.00%
Conversion Rate Variable  
Notes payable, gross $ 150,875
Rockwell Capital #5    
Short-term Debt [Line Items]    
Original Note Date Feb. 28, 2017  
Due Date, Description Demand  
Interest Rate 0.00% 0.00%
Conversion Rate Variable  
Notes payable, gross $ 19,782
Southridge Partners [Member]    
Short-term Debt [Line Items]    
Original Note Date Oct. 27, 2015  
Due Date Mar. 01, 2014  
Interest Rate 22.00% 22.00%
Conversion Rate Variable  
Notes payable, gross $ 15,655
Syndication Capital #1    
Short-term Debt [Line Items]    
Original Note Date Dec. 31, 2012  
Due Date Oct. 10, 2011  
Interest Rate 22.00% 22.00%
Conversion Rate 0.01  
Notes payable, gross $ 5,000
Tide Pool [Member]    
Short-term Debt [Line Items]    
Original Note Date Jan. 01, 2015  
Due Date Jul. 01, 2015  
Interest Rate 22.00% 22.00%
Conversion Rate Variable  
Notes payable, gross $ 348,500
Tri Bridge Ventures One [Member]    
Short-term Debt [Line Items]    
Original Note Date Jan. 19, 2017  
Due Date Oct. 19, 2017  
Interest Rate 8.00% 8.00%
Conversion Rate Variable  
Notes payable, gross $ 9,000 $ 25,000
Tri-Bridge Ventures #2    
Short-term Debt [Line Items]    
Original Note Date Jan. 19, 2017  
Due Date Oct. 19, 2017  
Interest Rate 8.00% 8.00%
Conversion Rate Variable  
Notes payable, gross $ 150,000
V2IP #2    
Short-term Debt [Line Items]    
Original Note Date May 13, 2016  
Due Date, Description Demand  
Interest Rate 6.00% 6.00%
Conversion Rate Variable  
Notes payable, gross $ 10,000 $ 10,000
XML 43 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Dec. 31, 2016
Mar. 31, 2018
Mar. 31, 2017
Short-term Debt [Line Items]      
Proceeds from convertible notes payable $ 121,000 $ 237,190 $ 146,000
Accrued interest   3,289,044 1,215,519
(Gain) loss on settlement of debt   (555,633) (1,302,334)
Debt discount write-offs   425,018 525,079
Interest expense   1,259,992  
Convertible Notes Payable [Member]      
Short-term Debt [Line Items]      
Convertible promissory notes   61,000  
Accrued interest   872 54,786
Convertible debt     86,952
Convertible note principal   168,000 277,292
(Gain) loss on settlement of debt   162,249 27,000
Debt discount convertible notes payable   165,040 224,087
Amortization   355,067 $ 275,784
Beneficial conversion feature   $ 35,817  
Conversion of notes payable convertible shares   43,046,202  
Interest expense   $ 2,420,978  
XML 44 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
LONG TERM NOTE PAYABLE (Details Narrative) - Convertible Notes Payable [Member]
Oct. 02, 2017
USD ($)
Convertible note principal amount, cancelled $ 61,000
Accrued interest 6,304
Promissiory Notes Issued $ 87,505
Due Date Oct. 01, 2020
XML 45 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVE LIABILITIES (Details) - USD ($)
12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Balance, beginning of period $ 5,316,130 $ 2,944,855
Initial recognition of derivative liability 323,284 1,282,329
Derivatives to stock payable 2,791,250  
Conversion of derivative instruments to Common Stock (1,360,805) (1,044,930)
(Gain) loss on derivative liability valuation   3,952,365
(Gain) loss on settlement of debt (116,683) (1,818,489)
Mark-to-Market adjustment to fair value (442,836)  
Balance, end of period 6,627,023 5,316,130
Warrant [Member]    
Balance, beginning of period  
Initial recognition of derivative liability 8,117  
Derivatives to stock payable  
Conversion of derivative instruments to Common Stock  
Mark-to-Market adjustment to fair value (5,986)  
Balance, end of period 2,131
Stock Payable [Member]    
Balance, beginning of period  
Initial recognition of derivative liability  
Derivatives to stock payable 2,791,250  
Conversion of derivative instruments to Common Stock (638,750)  
Mark-to-Market adjustment to fair value 453,103  
Balance, end of period 2,605,603
Convertible Notes [Member]    
Balance, beginning of period 5,316,130  
Initial recognition of derivative liability 315,167  
Derivatives to stock payable  
Conversion of derivative instruments to Common Stock (722,055)  
Mark-to-Market adjustment to fair value (889,953)  
Balance, end of period $ 4,019,289 $ 5,316,130
XML 46 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
DERIVATIVE LIABILITIES (Details Narrative)
12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Commitment Date [Member] | Warrant [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected dividend rate 0.00%  
Fair value of derivatives, term 5 years  
Commitment Date [Member] | Minimum [Member] | Warrant [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 105.30%  
Fair value of derivatives, risk free interest rate 1.99%  
Commitment Date [Member] | Maximum [Member] | Warrant [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 106.80%  
Fair value of derivatives, risk free interest rate 2.32%  
Commitment Date [Member] | Convertible Notes [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected dividend rate 0.00% 0.00%
Commitment Date [Member] | Convertible Notes [Member] | Minimum [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 338.00% 350.16%
Fair value of derivatives, term 2 years 6 months
Fair value of derivatives, risk free interest rate 1.41% 0.61%
Commitment Date [Member] | Convertible Notes [Member] | Maximum [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 423.00% 988.84%
Fair value of derivatives, term 6 months 1 year
Fair value of derivatives, risk free interest rate 0.92% 0.91%
Valuation Date [Member] | Warrant [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected dividend rate 0.00%  
Valuation Date [Member] | Minimum [Member] | Warrant [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 105.30%  
Fair value of derivatives, term 4 years 6 months 21 days  
Fair value of derivatives, risk free interest rate 2.14%  
Valuation Date [Member] | Maximum [Member] | Warrant [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 106.80%  
Fair value of derivatives, term 5 years  
Fair value of derivatives, risk free interest rate 2.56%  
Valuation Date [Member] | Convertible Notes [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected dividend rate 0.00% 0.00%
Valuation Date [Member] | Convertible Notes [Member] | Minimum [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 91.60% 184.75%
Fair value of derivatives, term 3 months 1 month 13 days
Fair value of derivatives, risk free interest rate 1.66% 0.23%
Valuation Date [Member] | Convertible Notes [Member] | Maximum [Member]    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Fair value of derivatives, expected stock volatility 102.00% 1374.41%
Fair value of derivatives, term 2 years 4 years 5 months 8 days
Fair value of derivatives, risk free interest rate 2.12% 0.99%
XML 47 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
12 Months Ended
Jun. 01, 2017
Mar. 31, 2018
Mar. 31, 2017
Aug. 21, 2017
Mar. 09, 2016
Due to related parties         $ 6,250,000
Shares issued     265,909    
Reduce liability     $ 3,458,750    
Remaining liability     2,791,250    
Proceeds from (payments to) related parties, net   $ 50,262    
Common Stock [Member] | Gary Tilden [Member]          
Shares issued       81,061  
Officer And Director [Member]          
Due to related parties $ 778,750        
Shares issued 536,351        
Reduce liability $ 960,069        
Remaining liability $ 2,012,500        
Series A Preferred Stock [Member]          
Shares issued     698,324    
Proceeds from (payments to) related parties, net   $ 126,494      
Series A Preferred Stock [Member] | Gary Tilden [Member]          
Shares issued       747,206  
Series A Preferred Stock [Member] | Common Stock [Member]          
Shares issued   127,888      
Series B Preferred Stock [Member]          
Shares issued       250  
XML 48 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
PREFERRED STOCK (Details Narrative) - USD ($)
12 Months Ended
Mar. 31, 2018
Aug. 21, 2017
Mar. 31, 2017
Jan. 25, 2011
Class of Stock [Line Items]        
Preferred stock, shares authorized 20,000,000   20,000,000  
Preferred stock par value, per share $ 0.001   $ 0.001  
Gary Tilden [Member]        
Class of Stock [Line Items]        
Unpaid expenses $ 19,902      
Outstanding salary and interest $ 161,415      
Gary Tilden [Member] | Common Stock [Member]        
Class of Stock [Line Items]        
Shares issued   81,061    
Preferred Class A [Member]        
Class of Stock [Line Items]        
Preferred stock, shares authorized       10,000,000
Preferred stock par value, per share       $ 0.001
Class B Preferred Stock [Member]        
Class of Stock [Line Items]        
Preferred stock, shares authorized       10,000,000
Preferred stock par value, per share       $ 0.001
Series A Preferred Stock [Member]        
Class of Stock [Line Items]        
Preferred stock, shares authorized 10,000,000   10,000,000  
Preferred stock, shares issued 3,489,510   2,213,154  
Preferred stock value $ 3,490   $ 2,213  
Preferred stock, shares outstanding 3,489,510   2,213,154  
Series A Preferred Stock [Member] | Common Stock [Member]        
Class of Stock [Line Items]        
Shares issued 127,888      
Series A Preferred Stock [Member] | Gary Tilden [Member]        
Class of Stock [Line Items]        
Preferred stock, shares issued 536,351      
Preferred stock value $ 960,069      
Shares issued   747,206    
Series A Preferred Stock [Member] | Donna Marie Murtaugh [Member]        
Class of Stock [Line Items]        
Shares issued 12,788      
Series B Preferred Stock [Member]        
Class of Stock [Line Items]        
Preferred stock, shares authorized 10,000,000   10,000,000  
Preferred stock, shares issued 500   1,000  
Preferred stock value $ 1   $ 1  
Preferred stock, shares outstanding 500   1,000  
Shares issued   250    
XML 49 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMON STOCK (Details Narrative) - USD ($)
12 Months Ended
Oct. 31, 2017
Nov. 06, 2016
Oct. 20, 2016
Mar. 31, 2018
Mar. 31, 2017
Nov. 01, 2017
Aug. 21, 2017
Common stock, shares authorized       900,000,000 900,000,000 900,000,000  
Common stock, par value       $ 0.00001 $ 0.00001 $ 0.00001  
Common stock, shares issued       2,914,797 733,059    
Common stock, shares outstanding       2,914,797 733,059    
Gain (loss) on settlement of debt       $ 555,633 $ 1,302,334    
Common stock issued for services, shares       53,333      
Common stock issued for services       $ 24,000      
Reverse stock split On October 31, 2017, the Company approved the authorization of a 1 for 1,500 reverse stock split of the Company’s outstanding shares of common stock. The Company’s financial statements have been retroactively adjusted for this stock split for all periods presented.            
Common Stock [Member]              
Common stock issued for services, shares       53,333      
Common stock issued for services       $ 1      
Common share issue in exchange         392,473    
Common Stock [Member] | Notes Payable, Other Payables [Member]              
Principal of convertible notes       $ 162,249 $ 281,732    
Convertible notes converted into common stock       2,081,577 57,776    
Common stock, value       $ 450,142 $ 934,588    
Extinguished derivative liabilities       233,807 773,578    
Debt Discount         19,063    
Gain (loss) on settlement of debt       $ 54,086 $ 101,658    
Warrant [Member]              
Common stock, par value   $ 0.0005 $ .0005        
Common stock, shares issued   15,338,160 52,840,909        
Expiry Date   Nov. 06, 2022 Oct. 20, 2022        
Gary Tilden [Member] | Common Stock [Member]              
Shares, Issued             81,061
Series A Preferred Stock [Member]              
Common share issue in exchange       12,788      
Series A Preferred Stock [Member] | Common Stock [Member]              
Shares, Issued       127,888      
Series A Preferred Stock [Member] | Gary Tilden [Member]              
Shares, Issued             747,206
XML 50 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Details) - USD ($)
Mar. 31, 2018
Mar. 31, 2017
Deferred tax assets:    
NOL Carryover $ 1,050,050 $ 712,800
Inventory Allowance 48,900
Accrued Payroll 256,000
Deferred tax liabilities    
Valuation allowance (1,050,050) (1,017,700)
Net deferred tax asset
XML 51 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Details 2) - USD ($)
12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Tax Disclosure [Abstract]    
Book Income $ (923,695) $ (2,333,700)
Interest Expense (for derivative) 89,254 485,700
Imputed Interest 2,784
Gain/Loss on Derivative (92,937) 1,541,400
Gain/Loss on Settlement of Debt (116,683) (507,900)
Loss on CEO Settlement 307,850
Penalties 19,839
Loss on Conversion 42,380
Stock Compensation 5,040
Inventory Allowance (200)
Accrued Payroll 186,000
Meals & Entertainment 600
Valuation allowance 666,168 628,100
Income Tax Provision
XML 52 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Details Narrative)
Mar. 31, 2018
USD ($)
Income Tax Disclosure [Abstract]  
Net Operating Loss Carryforward $ 5,000,238
XML 53 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMITMENTS AND CONTINGENCIES (Details)
1 Months Ended 12 Months Ended
Nov. 02, 2017
USD ($)
Oct. 23, 2017
USD ($)
Aug. 07, 2017
USD ($)
Jun. 01, 2017
USD ($)
Apr. 27, 2017
shares
Apr. 07, 2017
USD ($)
Apr. 02, 2017
USD ($)
Mar. 27, 2017
shares
Feb. 01, 2018
USD ($)
Mar. 06, 2017
USD ($)
Feb. 01, 2017
USD ($)
ft²
Jun. 27, 2016
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
Payment of retainer services                         $ 24,000  
Accounts payable                         230,553 $ 83,839
Common Stock [Member]                            
Payment of retainer services                         1  
Channel Sales And Consulting Llc [Member]                            
Consulting agreement, description                       The Company has agreed to pay Channel $3,000 per month for the first two months, and $4,000 per month thereafter. Channel will also be paid a 10% commission on all gross sales generated through a licensed dealer and 30% commission on non-licensed dealers.    
Sale of stock, description of transaction                       If within the first twelve months of the Agreement, Channel generates gross sales above $2,000,000, the Company will pay an additional 5% commission on gross sales, either in cash or restricted common stock.    
Standard Office Lease [Member]                            
Area of land | ft²                     1,700      
Lease, term                     1 year      
Rental expenses                 $ 1,400   $ 1,400   16,800 $ 16,800
Ten Associates LLC [Member]                            
Lease, term                   6 months        
Rental expenses                   $ 3,000        
Stock Vest [Member]                            
Consulting agreement, description         The contract term through August 1, 2017.     The company entered into an Investor Relations Consulting Agreement with StockVest that covered the period from April 1, 2017 through July 1, 2017.            
Issuance of restricted common stock, shares | shares         53,333     13,333            
Hanson And Associates [Member]                            
Lease, term             3 months              
Payment of retainer services             $ 15,000              
Monthly fee             5,000              
Stock issued during period ,value             $ 25,000              
Term of agreement             6 months              
Greg Rogers [Member]                            
Payment of retainer services           $ 10,500                
Monthly fee           $ 3,500                
Term of agreement           6 months                
Outstanding balance     $ 1,300                      
Greg Rogers [Member] | Common Stock [Member]                            
Stock issued during period ,value           $ 25,000                
Gary Tilden [Member]                            
Monthly fee       $ 2,500                    
Accuring interest rate       6.00%                    
Haseltine Law Group [Member]                            
Payment of retainer services   $ 5,000                        
Unissued Shares, Value                         5,000  
Unpaid Fees                         2,500  
Accounts payable                         7,500  
Jump Television Studios Llc [Member]                            
Payment of retainer services $ 30,000                          
Unissued Shares, Value                         250,000  
Accounts payable                         $ 83,333  
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