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Equity
3 Months Ended
Oct. 31, 2019
Equity [Abstract]  
Equity

NOTE 5 – EQUITY

 

Common stock

 

The holders of the Company’s common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the board from time to time may determine. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. There is no cumulative voting of the election of directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of the company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.

 

The Company has 4,853,112,943 and 4,433,279,043 shares of common stock issued and outstanding as of October 31, 2019 and July 31, 2019, respectively.

 

During the three months ended October 31, 2019, the Board of Directors with the consent of majority shareholders authorized an increase in the authorized stock to 500,000,000 shares Preferred Series A and 19,500,000,000 shares common stock.

 

During the three months ended October 31, 2019, Auctus Fund LLC (“Auctus Fund”) issued a conversion notice for the loan executed on August 1, 2018 to the Company for 204,833,900 shares of common stock for a principal reduction of $2,917, interest of $4,776 and fees of $500.

 

During the three months ended October 31, 2019, Crown Bridge Partners Fund LLC issued a conversion notice for the loan executed February 25, 2019 to the Company for 215,000,000 shares of common stock for a principal reduction of $6,775 and fees of $750.

 

During the three months ended October 31, 2018, the Company reserved 21,618,534 shares of common stock for Veyo Partners per the consulting agreement dated November 30, 2017. Fair value of the shares reserved as of October 31, 2018 is $8,647.

 

During the three months ended October 31, 2018, the Company issued to Auctus Fund 110,289,820 shares of common stock to convert the principal amount due of $3,516 and settlement of unpaid interest of $83 and penalty of $10,000.

 

Warrants

 

On February 25, 2019, the Company also issued Crown Bridge Partners LLC a Common Stock Purchase Warrant for 18,857,142 shares of common stock. The warrants have an exercise price of $0.0035 per share and expiration date of February 25, 2024. These warrants were tainted by the variable notes and the fair value of $47,063 was accounted for as a derivative liability in accordance with ASC 815. During the three months ended October 31, 2019, no warrants were granted, forfeited, expired or cancelled. As of October 31, 2019, there were 18,857,142 warrants outstanding with a weighted average exercise price of $0.0035, a weighted average remaining of 4.3 years and intrinsic value of zero.

 

Series A Convertible Preferred Stock

 

On October 31, 2019, pursuant to the Certificate of Designation, the Company authorized 500,000,000 shares of the Series A Convertible Preferred Stock, which shall be convertible into shares of common stock of the Company at the option of the holders thereof at any time after the issuance of the preferred stock. Each Series A Convertible Preferred Stock shall be converted into 24 shares of common stock.

 

The Series A Convertible Preferred Stock has the following rights and privileges:

 

Voting – The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted.

 

Conversion – Each share of Preferred Stock, is convertible at the option of the holder into twenty-four shares of common stock, subject to certain adjustments for dilution, if any, resulting from future stock issuances, including for any subsequent issuance of common stock at a price per share less than that paid by the holders of the Preferred Stock. The outstanding shares of Preferred Stock can be converted into common stock upon the request of the holding shareholder.

 

Liquidation – In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price of $0.001 (as adjusted, as defined), plus all declared but unpaid dividends.

 

Contingent redemption - In the event that a Mandatory Redemption Event (as defined below) occurs, each Holder shall have the right to have all or any portion of the Preferred Shares held by such Holder redeemed by the Company (a “Mandatory Redemption”) at the Mandatory Redemption Price. The “Mandatory Redemption Price” shall be equal to the Liquidation Preference of the Preferred Shares being redeemed multiplied by one hundred and twenty five percent (125%) in same day funds. In order to exercise its right to effect a Mandatory Redemption, a Holder must deliver a written notice (a “Mandatory Redemption Notice”) to the Company at any time on or before the Business Day following the day on which such event is no longer continuing.

 

(i) the Company fails for any reason (including without limitation as a result of not having a sufficient number of shares of Common Stock authorized and reserved for issuance, or as a result of the limitation contained in the stock designation, or due to voluntary action undertaken by the Company or a failure by the Company to take action, to issue shares of Common Stock to a Holder and deliver certificates representing such shares to such Holder as and when required by the provisions hereof upon Conversion of any Preferred Shares, and such failure continues for ten (10) Business Days;

 

(ii)  the Company breaches, in a material respect, due to voluntary action undertaken by the Company or a failure by the Company to take action, any covenant or other material term or condition of the Preferred Stock, or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby, and such breach continues for a period of five (5) Business Days after written notice thereof to the Company from a Holder;

 

(iii) any material representation or warranty made by the Company in any agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby or thereby is inaccurate or misleading in any material respect as of the date such representation or warranty was made due to voluntary action undertaken by the Company or a failure by the Company to take action.

 

The Board voted to award the CEO Carmine T. Biscardi 500,000,000 shares of Preferred Series A stock, of which 50,000,000 shares of Series A convertible preferred stock were issued in exchange for $50,000 of the debt and 450,000,000 shares of Series A convertible preferred stock were issued as compensation for his long service to the Company. We determined the fair value of the preferred stock as of the issuance date based on the market price of $0.0001 for common stock with 1 share of Series A Preferred Stock convertible to 24 shares of common stock, resulting in a fair value of $0.0024 per share. Thus, the fair value for 50,000,000 and 450,000,000 shares of Series A Convertible Preferred Stock is $120,000 and $1,080,000, respectively. The Company recognized a loss on settlement of debt of $70,000 and stock-based compensation of $1,080,000 for the above-mentioned preferred stock issuances, during the three months ended October 31, 2019. Due to the Preferred Stock's contingent redemption feature, the Series A Convertible Preferred Stock are reported as temporary equity in the consolidated balance sheet.