☒
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended
June 30, 2018
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
transition period
from _________________ to __________________
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Delaware
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000-54905
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99-0373067
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1250 Oakmead Pkwy
Sunnyvale, California
(Address
of principal executive offices)
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94085
(Zip
Code)
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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(Do not
check if a smaller reporting company)
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Smaller
reporting company
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☒
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Emerging
Growth Company
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☐
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PART I - FINANCIAL INFORMATION
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Item 1.
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Condensed
Consolidated Interim Financial Statements (Unaudited)
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2
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Condensed
Consolidated Balance Sheets as of June 30, 2018 and March 31,
2017
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2
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Condensed
Consolidated Statements of Operations for the three months ended
June 30, 2018 and 2017
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3
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Condensed
Consolidated Statements of Cash Flows for the three months ended
June 30, 2018 and 2017
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4
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Notes
to Condensed Consolidated Financial Statements
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5
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Item 2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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12
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Item 3.
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Quantitative
and Qualitative Disclosures About Market Risk
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13
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Item 4.
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Controls
and Procedures
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14
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PART II – OTHER INFORMATION
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Item 1.
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Legal
Proceedings
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14
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Item 1A.
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Risk
Factors
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14
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Item 2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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14
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Item 3.
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Defaults
Upon Senior Securities
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14
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Item 4.
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Mine
Safety Disclosures
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14
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Item 5.
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Other
Information
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14
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Item 6.
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Exhibits
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15
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SIGNATURES
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16
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June
30,
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March
31,
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2018
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2018
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ASSETS
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Current
Assets
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Cash
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$185,236
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$109,426
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Prepaid
expenses
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-
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-
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Total
Current Assets
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185,236
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109,426
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TOTAL
ASSETS
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$185,236
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$109,426
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LIABILITIES
& STOCKHOLDERS' EQUITY
(DEFICIT)
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Current
Liabilities
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Accounts
payable and accrued expenses
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657,871
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606,751
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Accrued
technology access fee
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158,968
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171,105
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Secured
convertible debentures
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1,371,126
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947,160
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Convertible
debt related party
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300,512
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257,614
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Total
Current Liabilities
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2,488,477
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1,982,630
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TOTAL
LIABILITIES
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$2,488,477
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$1,982,630
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Stockholders'
Equity (Deficit)
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Common stock,
$0.001 par value, (250,000,000 shares authorized, 53.9 million and
51.9 million shares issued and outstanding as of June 30, 2018 and
March 31, 2018, respectively)
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53,864
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51,857
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Stock
subscriptions
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1,060,000
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1,060,000
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Additional
paid in capital
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1,169,584
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1,134,763
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Accumulated
deficit
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(4,586,689)
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(4,119,824)
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Total Stockholders'
Equity (Deficit)
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(2,303,241)
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(1,873,204)
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TOTAL
LIABILITIES & STOCKHOLDERS' EQUITY
(DEFICIT)
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$185,236
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$109,426
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June
30, 2018
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June
30,2017
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Operating
Expenses
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Research
and development
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$111,220
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$97,192
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General
& administrative
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124,653
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190,733
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Total Operating
Expenses
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235,873
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287,925
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Loss
From Operations
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(235,873)
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(287,925)
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Other
Income & (Expenses)
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Interest
expense
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(348,992)
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(74,471)
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Change
in fair value of embedded derivatives, including modification
accounting
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118,000
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10,000
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Total
Other Income & (Expenses)
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(230,992)
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(64,471)
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Net
Loss
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$(466,865)
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$(352,396)
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Basic
and Diluted Loss per share
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$(0.01)
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$(0.01)
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Weighted
average number of common shares outstanding
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53,031,199
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27,004,613
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Three
Months Ended
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June
30,
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June
30,
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2018
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2017
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CASH
FLOWS FROM OPERATING ACTIVITIES
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Net
loss
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$(466,865)
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$(352,396)
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Adjustments to
reconcile net loss to net cash used in operating
activities:
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Accretion
to notes payable to related party
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-
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1,266
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Amortization
of debt discount
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328,233
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58,130
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Change
in fair value of embedded derivative
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(118,000)
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(10,000)
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Share
based compensation for services
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10,000
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39,549
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Changes in
operating assets and liabilities:
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Accounts
payable and accrued expenses
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51,120
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87,955
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Accrued
technology access fee
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(12,137)
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10,012
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Accrued
debenture interest
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18,459
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10,062
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Due
to officers
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-
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-
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Prepaid
Expenses
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-
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1,248
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Net
cash used in operating activities
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(189,190)
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(154,274)
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CASH
FLOWS FROM FINANCING ACTIVITIES
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Proceeds
from issuance of convertible debt related party, net of issuance
cost
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265,000
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127,000
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Proceeds
from issuance of convertible debenture, net of issuance
cost
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-
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-
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Proceeds
from notes payable related party
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-
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-
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Repayment
to notes payable related party
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-
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-
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Share
subscriptions
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-
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-
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Net
cash provided by financing activities
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265,000
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127,000
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Net
increase (decrease) in cash
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75,810
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(27,274)
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Cash at
beginning of period
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109,426
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32,275
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Cash at
end of period
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$185,236
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$5,001
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Schedule of non-cash financing activities
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Recognition
of beneficial conversion feature associated with convertible
debentures
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$-
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$35,000
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Conversion
of secured convertible debentures
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58,733
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-
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Share based compensation for
services
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10,000
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39,549
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June
30,
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June
30,
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2018
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2017
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Convertible
debentures (Note 6)
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25,007,000
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5,865,000
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Convertible debt
related party (Note 7)
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5,908,000
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-
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Stock
subscriptions
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530,000
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530,000
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For
the three months ended June 30,
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2018
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2017
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Operating
expenses:
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Toth and Associates LTD
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$44,000
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$40,000
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Capro LTD
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24,000
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33,000
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Eden Professional LTD
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23,000
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21,000
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Max Zhu Consulting (1)
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3,000
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6,000
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Total related party
transactions
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$94,000
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$100,000
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June 30, 2018
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March 31, 2018
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Stock
price
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$0.04
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$0.06
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Probability
of Triggering Date
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100%
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100%
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Volatility
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300%
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300%
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Risk-free
rate
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1%
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1%
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Discount
rate
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0%
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0%
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June 30, 2018
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March 31, 2018
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Stock
price
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$0.04 - $0.06
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$0.06
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Exercise
price
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$0.04 - $0.06
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$0.06
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Volatility
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300%
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300%
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Contractual
term
|
0.42 - 1 year
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1 year
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Risk-free
rate
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1%
|
1%
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Discount
rate
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0%
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0%
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Balance
at
March
31, 2018
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Issuance
of new debentures
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Change
due to modification
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Net
unrealized (gain)/loss
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Balance
at
June
30, 2018
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736,000
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$281,000
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$76,000
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$(195,000)
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$898,000
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June
30, 2018
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March
31, 2018
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Principal value of
5%, convertible, net of conversion
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$1,000,000
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$750,000
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Fair value of
embedded derivative
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898,000
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736,000
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Accrued
interest
|
23,000
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22,264
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Debt
discount
|
(550,000)
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(561,104)
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Carrying
value of Secured Convertible Debenture Note
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$1,371,000
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$947,160
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June 30, 2018
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March 31, 2018
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Stock
price
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$0.04
|
$0.02- $0.07
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Contractual
term
|
0.1 - 0.5
years
|
0.1 - 1.0
years
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Volatility
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300%
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275% - 300%
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Risk-free
rate
|
1%
|
1%
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Balance
at
March 31, 2018
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Net
unrealized (gain)/loss
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Balance
at
June 30, 2018
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$156,000
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$(1,000)
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$157,000
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|
June
30, 2018
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March
31, 2018
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Principal value of
5%, convertible
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$220,000
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$220,000
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Fair value of
embedded conversion option
|
157,000
|
156,000
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Accrued
Interest
|
23,704
|
15,204
|
Debt
discount
|
(100,192)
|
(133,590)
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Carrying
value of Secured Convertible Debenture Note
|
$300,512
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$257,614
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None
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31.1
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Certification
of Principal Executive Officer and Acting Principal Accounting
Officer pursuant to Rule 13a-14 and 15d-14 of the Securities
Exchange Act of 1934
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31.2
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Certification
of Chief Financial Officer pursuant to Rule 13a-14 and 15d-14 of
the Securities Exchange Act of 1934
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32.1
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Certification
of the Principal Executive Officer and Acting Principal Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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32.2
|
Certification
of the Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 14, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | Cantabio Pharmaceuticals Inc. | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Entity Central Index Key | 0001550518 | |
Current Fiscal Year End Date | --03-31 | |
Entity Common Stock, Shares Outstanding | 56,510,521 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ctbo |
Consolidated Balance Sheets - USD ($) |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Current Assets | ||
Cash | $ 185,236 | $ 109,426 |
Total Current Assets | 185,236 | 109,426 |
TOTAL ASSETS | 185,236 | 109,426 |
Current Liabilities | ||
Accounts payable and accrued expenses | 657,871 | 606,751 |
Accrued technology access fee | 158,968 | 171,105 |
Convertible debentures | 1,371,126 | 947,160 |
Convertible debentures related party | 300,512 | 257,614 |
Total Current Liabilities | 2,488,477 | 1,982,630 |
TOTAL LIABILITIES | 2,488,477 | 1,982,630 |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock value | 53,864 | 51,857 |
Stock subscriptions | 1,060,000 | 1,060,000 |
Additional paid-in capital | 1,169,584 | 1,134,763 |
Accumulated deficit | (4,586,689) | (4,119,824) |
Total Stockholders' Equity (Deficit) | (2,303,241) | (1,873,204) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 185,236 | $ 109,426 |
Balance Sheets (parenthetical) - $ / shares |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Balance Sheet | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 53,863,584 | 51,857,201 |
Common stock, shares outstanding | 53,863,584 | 51,857,201 |
Consolidated Statements of Operations - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement | ||
Revenues | ||
Operating Costs and Expenses | ||
Research and development expense | 111,220 | 97,192 |
General and administrative expenses | 124,653 | 190,733 |
Total operating costs and expenses | 235,873 | 287,925 |
Income (loss) from operations | (235,873) | (287,925) |
Other Income and Expenses | ||
Interest expense | 348,992 | 74,471 |
Change in fair value of embedded derivative | 118,000 | 10,000 |
Total other income and (expenses) | (230,992) | (64,471) |
Net income (loss) | $ (466,865) | $ (352,396) |
Basic and diluted earnings (loss) per share | $ (0.01) | $ (0.01) |
Weighted average common shares outstanding - basic and diluted | 53,031,199 | 27,004,613 |
Organization and Description of The Business |
3 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
Organization and Description of The Business | NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Cantabio Pharmaceuticals Inc. (the Company or Cantabio) is a preclinical stage biotechnology company focusing on commercializing novel therapies and the intellectual property generated from research and development activities for Parkinsons disease (PD) and Alzheimers disease (AD). The Companys strategy involves integration of therapeutic focus, the targeting of family biophysics, drug discovery technology and expertise into an innovative drug discovery approach, which synergizes to identify and develop small molecule pharmacological chaperones for clinical trials. In addition, the Companys research efforts concentrate on the development of therapeutic proteins that can pass through the blood-brain barrier and supplement in vivo levels of proteins with display loss of function during disease conditions. |
Going Concern Disclosure |
3 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
Going Concern Disclosure | NOTE 2 - GOING CONCERN
As of June 30, 2018, the Company had a working capital deficit of $2,303,241 and continues to have losses from operations due to its research and development activities.
The Company typically raises capital which it spends on maintaining its research and corporate operations. At this early stage in the life of the Company funding is often short term in nature. While the Company has been proficient in raising funds in the past the short-term nature of these funding cycles raises substantial doubt about the Company's ability to continue as a going concern within one year from the date of this filing.
Management is addressing going concern risk by seeking new sources of capital and is continuing initiatives to raise capital through private placements, related party loans and other institutional sources to meet future working capital requirements. Furthermore, strategic partnerships, most likely with larger pharmaceutical industry companies, will be needed to continue to fund research and development costs as our projects expand. These measures, if successful, may contribute to reduce the risk of going concern uncertainties for the Company for at least twelve months from issuance of these condensed consolidated financial statements.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital and achieve profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||
Notes | |||||||||||||||||
Summary of Significant Accounting Policies | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Reporting The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such Securities and Exchange Commission (SEC) rules and regulations and accounting principles applicable for interim periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Operating results for the three months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending March 31, 2019. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2018.
Use of Estimates The preparation of financial statements in conformity with GAAP 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 expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Earnings (Loss) per Share The Company calculates earnings per share using basic net income (loss) per common share be computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. The Company does not compute diluted earnings per share because to do so would be anti-dilutive.
Potentially dilutive securities
Recent Accounting Standards
Fiscal 2019 Accounting Pronouncement Adoptions
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. This new standard became effective for the Company on April 1, 2018. The new standard does not have a material impact on our financial statements.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this new standard and does not expect it to have a material impact on our financial statements.
In June 2018, the FASB issued Accounting Standards Update (ASU) 2018-07 intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. This ASU expands the scope of Topic 718, Compensation-Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity-Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company's adoption date of Topic 606, Revenue from Contracts with Customers. The Company is currently evaluating the impact of this new standard and does not expect it to have a material impact on our financial statements. |
Related Party Transactions Disclosure |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions Disclosure | NOTE 4 - RELATED PARTY TRANSACTIONS
There have been no changes to the Companys related party consulting arrangements as they have been disclosed in our most recently filed form 10K.
Costs incurred associated with related party transactions included in general and administrative in the statement of operations are as follows:
Accounts payable and accrued expenses includes amounts payable to related parties of $0.7 and $0.6 million for the period ended June 30, 2018 and March 31, 2018, respectively. |
Convertible Debentures, As Amended, Disclosure |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debentures, As Amended, Disclosure | NOTE 5 - CONVERTIBLE DEBENTURES AS AMENDED
New issuance On June 5, 2018 the Company entered into a new securities purchase agreement with an accredited investor to place Convertible Debentures (as amended the Debentures) in the aggregate principal amount of up to $300,000 net of issuance costs of $35,000, for net proceeds to the Company of $265,000 (the Transaction). The Debentures bear interest at the rate of 5% per annum with a maturity date of June 5, 2019, as may be extended at the option of the note holder. In addition, the Company must pay to the holder an annual fee equal to 7% of the amount of the Debentures to assist in their monitoring costs for the Debentures. The net proceeds of the financing were used for general corporate matters and for other expenses. The Debentures may be converted at any time on or prior to maturity at the lower of $0.05 or 93% of the average of the three lowest daily volume weighted average price (VWAP) during the 10 consecutive trading days immediately preceding the conversion date, provided that as long as we are not in default under the Debenture and the conversion price is never lower than a stated floor price.
Amendment At the same time all previous debentures were amended to align them with the new agreement. All the Debentures may be converted at any time on or prior to maturity at the lower of $0.05 (rather than $0.10 as previously) or 93% of the average of the three lowest daily volume weighted average price (VWAP) during the 10 consecutive trading days immediately preceding the conversion date, provided that as long as we are not in default under the Debenture and the conversion price is never lower than a stated floor price. The Company accounted for the amendment as a debt modification which resulted in $76,000 impact that was recorded in the change in fair value of embedded derivatives in the Companys statements of operations.
Embedded Derivatives The monthly payment provision within the Debentures is a contingent put option that is required to be separately measured at fair value, with subsequent changes in fair value recognized in the Condensed Consolidated Statements of Operations. The Company estimated the fair value of the monthly payment provision, as of the issuance date and June 30, 2018 using probability analysis of the occurrence of a Triggering Date applied to the discounted maximum redemption premium for any given payment. The probability analysis utilized in calculating the embedded derivative upon issuance and at June 30, 2018 was calculated using the following key inputs:
Due to the Companys sequencing policy the Company recorded an embedded derivative associated with the conversion feature. The following are the inputs associated with the conversion feature.
The fair value estimate of the embedded derivatives is a Level 3 measurement. The roll-forward of the Level 3 fair value measurement, for the three months ended June 30, 2018, is as follows:
The approximate carrying value of the Debentures, as of June 30, 2018 and March 31, 2018 is comprised of the following:
As of June 30, 2018, the estimated aggregate fair value of outstanding convertible notes payable is approximately $1.4 million. The fair value estimate is based on the estimated option value of the conversion terms. The estimated fair value represents a Level 3 measurement.
Converted debenture During the three months ended June 30, 2018, holders of approximately $0.1 million in principal amount and accrued interest with respect to Secured Convertible Debentures exercised the conversion option and converted into 1.6 million shares of common stock.
Events of Default or Financial covenants The Company is in compliance with all terms associated with the convertible note. |
Convertible Debt Related Party Disclosures |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Convertible Debt Related Party Disclosures | NOTE 6 - CONVERTIBLE DEBT RELATED PARTY
The analysis utilized in calculating the embedded derivative at June 30, 2018 and March 31, 2018 was calculated using the following key inputs:
The fair value estimate of the embedded derivative is a Level 3 measurement. The roll-forward of the Level 3 fair value measurement, for the three months ended June 30, 2018, is as follows:
The carrying value of the Notes, as of June 30, 2018 and March 31, 2018 is comprised of the following:
As of June 30, 2018, the estimated aggregate fair value of outstanding convertible notes payable is approximately $0.3 million. The fair value estimate is based on the estimated option value of the conversion terms. The estimated fair value represents a Level 3 measurement.
Technical default The notes which are due in January 2018 are in technical default, although the obligation has not been called by the lender. The note agreement provided for such circumstances with the effect that the Company is currently accruing the interest at the default interest rate of 28%. |
Capital Stock Disclosure |
3 Months Ended |
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Jun. 30, 2018 | |
Notes | |
Capital Stock Disclosure | NOTE 7 - CAPITAL STOCK
Issuance of shares for consulting services. During the three months ended June 30, 2018 the Company issued approximately 0.4 million shares with a fair value of approximately $10,000 as compensation for services performed. |
Subsequent Events, Disclosure |
3 Months Ended |
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Jun. 30, 2018 | |
Notes | |
Subsequent Events, Disclosure | NOTE 8 - SUBSEQUENT EVENTS
On July 26, 2018 a holder of convertible debentures converted approximately $0.1 million of principal and interest into approximately 2.6 million shares of common stock. |
Summary of Significant Accounting Policies: Interim Reporting Policy (Policies) |
3 Months Ended |
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Jun. 30, 2018 | |
Policies | |
Interim Reporting Policy | Interim Reporting The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such Securities and Exchange Commission (SEC) rules and regulations and accounting principles applicable for interim periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Operating results for the three months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending March 31, 2019. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2018. |
Summary of Significant Accounting Policies: Use of Estimates Policy (Policies) |
3 Months Ended |
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Jun. 30, 2018 | |
Policies | |
Use of Estimates Policy | Use of Estimates The preparation of financial statements in conformity with GAAP 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 expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. |
Summary of Significant Accounting Policies: Earnings (loss) Per Share Policy (Policies) |
3 Months Ended | ||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||
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Earnings (loss) Per Share Policy | Earnings (Loss) per Share The Company calculates earnings per share using basic net income (loss) per common share be computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. The Company does not compute diluted earnings per share because to do so would be anti-dilutive.
Potentially dilutive securities
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Summary of Significant Accounting Policies: Recent Accounting Standards (Policies) |
3 Months Ended |
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Jun. 30, 2018 | |
Policies | |
Recent Accounting Standards | Recent Accounting Standards
Fiscal 2019 Accounting Pronouncement Adoptions
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. This new standard became effective for the Company on April 1, 2018. The new standard does not have a material impact on our financial statements.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this new standard and does not expect it to have a material impact on our financial statements.
In June 2018, the FASB issued Accounting Standards Update (ASU) 2018-07 intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. This ASU expands the scope of Topic 718, Compensation-Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity-Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company's adoption date of Topic 606, Revenue from Contracts with Customers. The Company is currently evaluating the impact of this new standard and does not expect it to have a material impact on our financial statements. |
Summary of Significant Accounting Policies: Earnings (loss) Per Share Policy: Schedule of Potentially Dilutive Securities (Tables) |
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Jun. 30, 2018 | |||||||||||||||||
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Schedule of Potentially Dilutive Securities |
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Related Party Transactions Disclosure: Schedule of Related Party Transaction Costs (Tables) |
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Schedule of Related Party Transaction Costs |
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Convertible Debentures, As Amended, Disclosure: Convertible Debt, Embedded Derivative - key inputs (Tables) |
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Convertible Debt, Embedded Derivative - key inputs |
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Convertible Debentures, As Amended, Disclosure: Convertible Debt, Beneficial Conversion Feature - key inputs (Tables) |
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Convertible Debt, Beneficial Conversion Feature - key inputs |
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Convertible Debentures, As Amended, Disclosure: Fair Value Measured on Embedded Derivative (Tables) |
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Tables/Schedules | |||||||||||||||||||||
Fair Value Measured on Embedded Derivative |
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Convertible Debentures, As Amended, Disclosure: Schedule of Carrying Values of Convertible Debt Instruments (Tables) |
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Schedule of Carrying Values of Convertible Debt Instruments |
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Convertible Debt Related Party Disclosures: Embedded Derivative - key inputs (related party) (Tables) |
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Embedded Derivative - key inputs (related party) |
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Convertible Debt Related Party Disclosures: Fair Value Measured on Embedded Derivative (related party) (Tables) |
3 Months Ended | ||||||||||||
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Jun. 30, 2018 | |||||||||||||
Tables/Schedules | |||||||||||||
Fair Value Measured on Embedded Derivative (related party) |
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Convertible Debt Related Party Disclosures: Schedule of Carrying Values of Convertible Debt Instruments (related party) (Tables) |
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Schedule of Carrying Values of Convertible Debt Instruments (related party) |
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Going Concern Disclosure (Details) |
Jun. 30, 2018
USD ($)
|
---|---|
Details | |
working capital deficit | $ 2,303,241 |
Summary of Significant Accounting Policies: Earnings (loss) Per Share Policy: Schedule of Potentially Dilutive Securities (Details) - shares |
3 Months Ended | |
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Jun. 30, 2018 |
Jun. 30, 2017 |
|
Secured convertible debentures (anti-dilutive shares) | ||
Potentially dilutive securities | 25,007,000 | 5,865,000 |
Convertible debt related party (anti-dilutive shares) | ||
Potentially dilutive securities | 5,908,000 | |
Stock subscription (anti-dilutive shares) | ||
Potentially dilutive securities | 530,000 | 530,000 |
Related Party Transactions Disclosure: Schedule of Related Party Transaction Costs (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Related party consulting fees incurred | $ 94,000 | $ 100,000 |
Toth and Associates LTD | ||
Related party consulting fees incurred | 44,000 | 40,000 |
Capro LTD | ||
Related party consulting fees incurred | 24,000 | 33,000 |
Eden Professional LTD | ||
Related party consulting fees incurred | 23,000 | 21,000 |
Max Zhu | ||
Related party consulting fees incurred | $ 3,000 | $ 6,000 |
Related Party Transactions Disclosure (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Mar. 31, 2018 |
---|---|---|
Details | ||
Accounts payable and accrued expenses - related party | $ 0.7 | $ 0.6 |
Convertible Debentures, As Amended, Disclosure (Details) - USD ($) |
3 Months Ended | |
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Jun. 30, 2018 |
Jun. 30, 2017 |
|
Proceeds from issuance of convertible debentures | $ 265,000 | $ 127,000 |
Change in fair value of embedded derivative | (118,000) | $ (10,000) |
Conversion of convertible debt instruments(1) | ||
Amount of debt being converted | 100,000 | |
Securities purchase agreement with an accredited investor | ||
Proceeds from issuance of convertible debentures | 265,000 | |
Estimated aggregate fair value of all outstanding convertible notes payable | 1,400,000 | |
Convertible debt amendment/modification | ||
Change in fair value of embedded derivative | $ 76,000 |
Convertible Debentures, As Amended, Disclosure: Fair Value Measured on Embedded Derivative (Details) - USD ($) |
3 Months Ended | |
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Jun. 30, 2018 |
Jun. 30, 2017 |
|
Change in fair value of embedded derivative | $ (118,000) | $ (10,000) |
Other debentures | ||
Change in fair value of embedded derivative | $ (195,000) |
Convertible Debentures, As Amended, Disclosure: Schedule of Carrying Values of Convertible Debt Instruments (Details) - USD ($) |
Jun. 30, 2018 |
Mar. 31, 2018 |
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Convertible debentures | $ 1,371,126 | $ 947,160 |
Secured Convertible Debentures - Principal | ||
Convertible debentures | 1,000,000 | 750,000 |
Secured Convertible Debentures - Fair vale of embedded derivative | ||
Convertible debentures | 898,000 | 736,000 |
Secured Convertible Debentures - Accrued interest | ||
Convertible debentures | 23,000 | 22,264 |
Secured Convertible Debentures - Debt discount | ||
Convertible debentures | $ (550,000) | $ (561,104) |
Convertible Debt Related Party Disclosures: Fair Value Measured on Embedded Derivative (related party) (Details) - USD ($) |
3 Months Ended | |
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Jun. 30, 2018 |
Jun. 30, 2017 |
|
Change in fair value of embedded derivative | $ (118,000) | $ (10,000) |
Related debentures | ||
Change in fair value of embedded derivative | $ (1,000) |
Convertible Debt Related Party Disclosures: Schedule of Carrying Values of Convertible Debt Instruments (related party) (Details) - USD ($) |
Jun. 30, 2018 |
Mar. 31, 2018 |
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Convertible debentures related party | $ 300,512 | $ 257,614 |
Secured Convertible Debentures - Principal | ||
Convertible debentures related party | 220,000 | 220,000 |
Secured Convertible Debentures - Fair vale of embedded derivative | ||
Convertible debentures related party | 157,000 | 156,000 |
Secured Convertible Debentures - Accrued interest | ||
Convertible debentures related party | 23,704 | 15,204 |
Secured Convertible Debentures - Debt discount | ||
Convertible debentures related party | $ (100,192) | $ (133,590) |
Convertible Debt Related Party Disclosures (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
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Convertible debt arrangements with Max Zhu | |
Estimated aggregate fair value of all outstanding convertible notes payable | $ 0.3 |
Capital Stock Disclosure (Details) - Issuance of shares for consulting services. shares in Millions |
3 Months Ended |
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Jun. 30, 2018
USD ($)
shares
| |
Common stock issued for services | shares | 0.4 |
Fair value of services performed | $ | $ 10,000 |
Subsequent Events, Disclosure (Details) shares in Millions, $ in Millions |
1 Months Ended |
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Jul. 26, 2018
USD ($)
shares
| |
Convertible debentures converted - July 26, 2018 | |
Amount of debt being converted | $ | $ 0.1 |
Convertible debentures converted - April 30, 2018 | |
Shares of common stock issued for debt conversion | shares | 2.6 |
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