NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – ORGANIZATION
DSG
Global, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on September 24, 2007.
The
Company is a technology development company engaged in the design, manufacture, and marketing of fleet management solutions in
the golf industry. The Company’s principal activities are the sale and rental of GPS tracking devices and interfaces for
golf vehicles and related support services.
On
April 13, 2015, the Company entered into a share exchange agreement with DSG Tag Systems Inc. (“DSG”), now a wholly-owned
subsidiary of the Company, incorporated under the laws of the State of Nevada on April 17, 2008 and extra provincially registered
in British Columbia, Canada in 2008. In March 2011, DSG formed DSG Tag Systems International, Ltd. in the United Kingdom (“DSG
UK”). DSG UK is a wholly owned subsidiary of DSG.
On
March 26, 2019, the Company effected a reverse stock split of its shares of common stock on a four thousand (4,000) old for one
(1) new basis. Upon effect of the reverse split, authorized capital decreased from 3,000,000,000 shares of common stock to 750,000
shares of common stock, with a par value of $0.001. On May 23, 2019, the Company approved to increase its authorized common stock
to 150,000,000, with a par value of $0.001. Shares of preferred stock remain unchanged. These consolidated financial statements
give retroactive effect to such reverse stock split named above and all share and per share amounts have been adjusted accordingly,
unless otherwise noted.
On September 15, 2020, the Company incorporated
Imperium Motor Corp. (“Imperium”), under the laws of the State of Nevada on September 10, 2020, for which it subscribed
to all authorized capital stock, 100 shares of Preferred Class A Stock, at a price of $0.001 per share. Imperium is a wholly owned
subsidiary of the Company.
Note
2 – GOING CONCERN
These
unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company
will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company
as a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of the
Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations.
The
recent outbreak of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide
economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented
emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures may have an adverse impact
on global economic conditions as well as on the Company’s business activities. The extent to which the coronavirus may impact
the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease,
the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and
other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine
their financial impact at this time. While certain restrictions are presently in the process of being relaxed, it is unclear when
the world will return to the previous normal, if ever. This may adversely impact the expected implementation of the Company’s
plans moving forward. The Company has seen a decline in its revenues for the nine months ending September 30, 2020 of approximately
41.8%, largely as a result of the challenges related to COVID-19.
As
at September 30, 2020, the Company has a working capital deficit of $9,626,553 and has an accumulated deficit of $54,417,037 since
inception. Furthermore, the Company incurred a net loss of $9,284,096 and used $669,096 of cash flows for operating activities
during the nine months ended September 30, 2020. These factors raise substantial doubt regarding the Company’s ability to
continue as a going concern. These unaudited interim condensed consolidated financial statements do not include any adjustments
to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.
Note
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying interim condensed consolidated financial statements were prepared in conformity with generally accepted accounting
principles in the United States (“U.S. GAAP”) and with the instructions to Form 10-Q.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been
condensed or omitted pursuant to U.S. GAAP rules and regulations for presentation of interim financial information. Therefore,
the unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements
and the notes thereto, included in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2019. Current
and future financial statements may not be directly comparable to the Company’s historical financial statements. However,
except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements
for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely
of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 2020 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
Principles
of Consolidation
The
interim condensed consolidated financial statements include the accounts of DSG Global Inc. and its wholly owned subsidiaries
DSG, Vantage Tag Systems, Inc. DSG UK, and Imperium Motor Corp (collectively referred to as the “Company”). All intercompany
accounts, transactions and profits were eliminated in the interim condensed consolidated financial statements.
Use
of Estimates
The
preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the interim condensed consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and
the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined. There
were no new estimates in the period.
Recently
Adopted Accounting Pronouncements
In
June 2016, FASB issued ASU 2016-13, Measurement of Credit Loss on financial Instruments. ASU 2016-13 replaces the current
incurred loss impairment methodology with the expected credit loss impairment model, which requires consideration of a broader
range of reasonable and supportable information to estimate expected credit losses over the life of the instrument instead of
only when losses are incurred. This standard applies to financial assets measured at amortized cost basis and investments in leases
recognized by the lessor. The Company adopted ASU 2016-13 on January 1, 2020 with no impact on the interim condensed consolidated
financial statements.
Other
recent accounting pronouncements issued by FASB, including its Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact
on the Company’s interim condensed consolidated financial statements.
Reclassification
Certain
prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no
effect on the reported results of operations or cash flow.
Note
4 – TRADE RECEIVABLES, NET
As
of September 30, 2020 and December 31, 2019, trade receivables consist of the following:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
Accounts receivables
|
|
$
|
150,124
|
|
|
$
|
82,927
|
|
Allowance for doubtful accounts
|
|
|
(15,437
|
)
|
|
|
(8,134
|
)
|
Total trade receivables, net
|
|
$
|
134,687
|
|
|
$
|
74,793
|
|
Note
5 – FIXED ASSETS AND EQUIPMENT ON LEASE
As
of September 30, 2020 and December 31, 2019, fixed assets consisted of the following:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
Computer equipment
|
|
$
|
26,319
|
|
|
$
|
27,025
|
|
Furniture and equipment
|
|
|
2,233
|
|
|
|
-
|
|
Right-of-use lease asset
|
|
|
297,939
|
|
|
|
178,202
|
|
Accumulated depreciation
|
|
|
(52,891
|
)
|
|
|
(65,404
|
)
|
|
|
$
|
273,600
|
|
|
$
|
139,823
|
|
As
of September 30, 2020 and December 31, 2019, equipment on lease consisted of the following:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
Tags
|
|
$
|
123,502
|
|
|
$
|
126,817
|
|
Text
|
|
|
27,296
|
|
|
|
28,029
|
|
Touch
|
|
|
22,612
|
|
|
|
23,218
|
|
Accumulated depreciation
|
|
|
(172,701
|
)
|
|
|
(176,607
|
)
|
|
|
$
|
709
|
|
|
$
|
1,457
|
|
For
the three and nine months ended September 30, 2020, total depreciation expense for fixed assets was $501 and $1,189, respectively
(2019 - $452 and $2,588, respectively) and is included in general and administration expense. For the three and nine months ended
September 30, 2020, total depreciation for right-of-use assets was $19,052 and $42,397, respectively (2019 - $9,036 and $27,107,
respectively) and is included in general and administration expense as operating lease expense.
Note
6 – INTANGIBLE ASSETS
As
of September 30, 2020 and December 31, 2019, intangible assets consist of the following:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
Intangible asset – Patent
|
|
$
|
22,353
|
|
|
$
|
22,353
|
|
Accumulated depreciation
|
|
|
(9,213
|
)
|
|
|
(8,292
|
)
|
|
|
$
|
13,140
|
|
|
$
|
14,061
|
|
The
estimated useful life of the patent is 20 years. Patents are amortized on a straight-line basis. For the three and nine months
ended September 30, 2020, total amortization expense was $307 and $921, respectively (2019 - $307 and $921, respectively).
Note
7 – TRADE AND OTHER PAYABLES
As
of September 30, 2020 and December 31, 2019, trade and other payables consist of the following:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
Accounts payable and accrued expenses
|
|
$
|
1,450,709
|
|
|
$
|
1,334,685
|
|
Accrued interest
|
|
|
841,172
|
|
|
|
992,755
|
|
Other liabilities
|
|
|
88,219
|
|
|
|
17,893
|
|
Total payables
|
|
$
|
2,380,100
|
|
|
$
|
2,345,333
|
|
Note
8 – LOANS PAYABLE
As
of September 30, 2020 and December 31, 2019, loans payable consisted of the following:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
Unsecured loan payable, due on demand, interest at 18% per annum
|
|
$
|
317,500
|
|
|
$
|
317,500
|
|
Unsecured loan payable, due on demand, interest 10% per annum, with a minimum interest amount of $25,000
|
|
|
250,000
|
|
|
|
250,000
|
|
Unsecured share-settled debt, due on May 7, 2019, non-interest bearing(a)
|
|
|
-
|
|
|
|
214,286
|
|
Unsecured loan payable in the amount of CDN$10,000, due on demand, non-interest bearing
|
|
|
-
|
|
|
|
7,683
|
|
Unsecured loan payable in the amount of CDN$40,000, due on or before December 31, 2025(b)
|
|
|
29,890
|
|
|
|
-
|
|
Unsecured loan payable in the amount of CDN$40,000, due on or before December 31, 2025 (c)
|
|
|
29,889
|
|
|
|
-
|
|
Unsecured loan payable, due on May 21, 2022, interest at 1% per annum(d)
|
|
|
30,065
|
|
|
|
-
|
|
Secured loan payable, due on June 5, 2050, interest at 3.75% per annum(e)
|
|
|
150,000
|
|
|
|
-
|
|
Unsecured, loan payable in the amount of CDN$43,244, due on demand, non-interest bearing(f)
|
|
|
32,541
|
|
|
|
-
|
|
Unsecured, loan payable, due on March 20, 2021, non-interest bearing(g)
|
|
|
78,643
|
|
|
|
-
|
|
|
|
|
918,528
|
|
|
|
789,469
|
|
Current portion
|
|
|
(688,296
|
)
|
|
|
(789,469
|
)
|
Loans payable
|
|
$
|
230,232
|
|
|
$
|
-
|
|
(a)
|
On March 8, 2019, the Company entered into a convertible bridge
loan agreement (the “Share-Settled Loan”). The Share-Settled Loan initially bore interest at 4.99% per month,
was due in 60 days on May 7, 2019 and is convertible into restricted common shares of the Company at the lender’s option
at the market price per share less a 30% discount to market. The Company has accounted the Share-Settled Loan as share-settled
debt. It is initially recognized at its fair value and accreted to its share-settled redemption value of $214,286 over the
term of the debt. The Share-Settled Loan was not repaid on May 7, 2019 and is in default. Effective September 1, 2019, interest
was reduced to 2% per month and effective December 1, 2019, the loan became non-interest bearing. On April 23, 2020, the Company
received notice to settle the debt for 3,061,224 shares of common stock at $0.049 per share, a 30% discount to market. On August 25, 2020, the terms of this settlement were amended to settle
remaining principal of $120,000 for 10,714,285 common shares at an adjusted exercise price of $0.0112, a 30% discount to market.
As at September 30, 2020, 6,462,244 shares have been issued and 4,864,285 remain to be issued.
|
|
|
(b)
|
On April 17, 2020, the Company received a loan in the principal
amount of $29,890 (CDN$40,000) under the Canada Emergency Business Account program. The loan is non-interest bearing
and eligible for CDN$10,000 forgiveness if repaid by December 31, 2022. If not repaid by December 31, 2022, the loan bears
interest at 5% per annum and is due on December 31, 2025.
|
|
|
(c)
|
On April 21, 2020, the Company received a loan in the principal
amount of $29,889 (CDN$40,000) under the Canada Emergency Business Account program. The loan is non-interest bearing
and eligible for CDN$10,000 forgiveness if repaid by December 31, 2022. If not repaid by December 31, 2022, the loan bears
interest at 5% per annum and is due on December 31, 2025.
|
|
|
(d)
|
On May 21, 2020, the Company received a loan in the principal amount of $30,065 under the Paycheck Protection Program. The loan bears interest at 1% per annum and is due on May 21, 2022 with payments deferred for the first six months of the term.
|
|
|
(e)
|
On June 5, 2020, the Company received a loan in the principal amount of $150,000. The loan bears interest at 3.75% per annum and is due on June 5, 2050. The loan is secured by all tangible and intangible assets of Company. Fixed payments of $731 are due monthly and begin 12 months from the date of the loan.
|
|
|
(f)
|
On May 15, 2020, the Company assigned an outstanding trade
payable balance to another debtholder who issued a promissory note in its place in the principal amount of
$32,541 (CDN$43,244). The loan is non-interest bearing and is due and payable on demand.
|
|
|
(g)
|
On September 8, 2020, the Company received a promissory note in the principal amount of $78,643 as part of an Assignment Agreement. The loan is non-interest bearing and is due on March 2, 2021. The loan was used to settle outstanding convertible debt, see Note 9(u).
|
Note
9 – CONVERTIBLE NOTES
On
September 30, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) whereby the Company
agreed to issue 2,347 shares of Series C Preferred Shares at a conversion price of $1,000 per preferred share to settle $2,348,208
in outstanding convertible debt and accrued interest as outlined below:
Note
Reference
|
|
Original Note
Issuance Date
|
|
Total Principal and Interest Settled
|
|
|
Series C Preferred Shares
- to be issued
|
|
(y)
|
|
8/30/2017
|
|
$
|
18,131
|
|
|
|
18
|
|
(i)
|
|
1/22/2018
|
|
|
26,622
|
|
|
|
26
|
|
(j)
|
|
3/19/2018
|
|
|
476,661
|
|
|
|
477
|
|
(h)
|
|
5/28/2018
|
|
|
224,319
|
|
|
|
224
|
|
(r)
|
|
3/19/2018
|
|
|
342,641
|
|
|
|
343
|
|
(q)
|
|
8/31/2018
|
|
|
285,428
|
|
|
|
285
|
|
(s)
|
|
1/22/2019
|
|
|
166,401
|
|
|
|
166
|
|
(z)
|
|
5/2/2019
|
|
|
11,841
|
|
|
|
12
|
|
(k)
|
|
5/7/2019
|
|
|
286,302
|
|
|
|
286
|
|
(aa)
|
|
6/10/2019
|
|
|
51,999
|
|
|
|
52
|
|
(w)
|
|
8/31/2020
|
|
|
167,974
|
|
|
|
168
|
|
(x)
|
|
9/17/2020
|
|
|
289,889
|
|
|
|
290
|
|
|
|
|
|
$
|
2,348,208
|
|
|
|
2,347
|
|
Subsequent to September 30, 2020, the Series
C Preferred Shares were issued on October 14, 2020.
As
of September 30, 2020, and December 31, 2019, convertible loans payable consisted of the following:
Convertible
Notes Payable
(a)
|
On
March 31, 2015, the Company issued a convertible promissory note in the principal amount of $310,000 to a company owned by
a former director of the Company for marketing services. The note is unsecured, bears interest at 5% per annum, is convertible
at $1.25 per common share, and is due on demand. As at September 30, 2020, the carrying value of the convertible promissory
note was $310,000 (December 31, 2019 - $310,000).
|
|
|
(b)
|
On
August 25, 2015, the Company issued a convertible promissory note in the principal amount of $250,000. The convertible promissory
note is unsecured, bears interest at 10% per annum, is due on demand, and is convertible at $7,000 per share. As at September
30, 2020, the carrying value of the convertible promissory note was $250,000 (December 31, 2019 - $250,000).
|
|
|
(c)
|
On
November 7, 2016, the Company entered into a securities purchase agreement with a non-related party. Pursuant to the agreement,
the Company was provided with proceeds of $125,000 on November 10, 2016 in exchange for the issuance of a secured convertible
promissory note in the principal amount of $138,889, which was inclusive of an 8% original issue discount and bears interest
at 8% per annum to the holder. The convertible promissory note matures nine months from the date of issuance and is convertible
at the option of the holder into our common shares at a price per share that is the lower of $480 or the closing price of
the Company’s common stock on the conversion date. In addition, under the same terms, the Company also issued a secured
convertible note of $50,000 in consideration for proceeds of $10,000 and another secured convertible note of $75,000 in consideration
for proceeds of $10,000. Under the agreements, the Company has the right to redeem $62,500 and $40,000 of the notes for consideration
of $1 each at any time prior to the maturity date in the event that the convertible promissory note is exchanged or converted
into a revolving credit facility with the lender, whereupon the two $10,000 convertible note balances shall be rolled into
such credit facility.
|
|
|
|
On
May 7, 2017, the Company triggered an event of default in the convertible note by failing to repay the full principal amount
and all accrued interest on the due date. The entire convertible note payable became due on demand and would accrue interest
at an increased rate of 1.5% per month (18% per annum) or the maximum rate permitted under applicable law until the convertible
note payable was repaid in full.
|
|
|
|
On
May 8, 2017, the Company issued 25 common shares for the conversion of $5,000 of the $72,500 convertible note dated November
7, 2016. On May 24, 2017, the Company issued 53 common shares for the conversion of $10,500 of the $72,500 convertible note
dated November 7, 2016. On May 25, 2017, the lender provided conversion notice for the remaining principal $57,000 of the
$72,500 convertible note dated November 7, 2016. This conversion was not processed by the Company’s transfer agent due
to direction from the Company not to honor any further conversion notices from the lender. In response, the Company received
legal notification pursuant to the refusal to process further conversion notices. The Company has continually attempted
to settle this litigation but has yet to reach an agreement. Refer to Note 17.
|
|
|
|
During
the year ended December 31, 2019, the Company issued 72,038 common shares with a fair value of $59,097 for the conversion
of $32,000 of principal resulting in a loss on settlement of debt of $27,097.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 53,764 common shares with a fair value of $53,226 for the conversion
of $20,000 of principal resulting in a loss on settlement of debt of $33,226.
|
|
|
|
As
at September 30, 2020, the carrying value of the note was $193,889 (December 31, 2019 - $213,889) and the fair value of the
derivative liability was $5,849,664 (December 31, 2019 - $360,718).
|
(d)
|
On
June 5, 2017, the Company issued a convertible promissory note in the principal amount of $110,000. As at September 30, 2020,
the carrying value of the note was $9,487 (December 31, 2019 - $9,487), relating to an outstanding penalty.
|
|
|
(e)
|
On
July 17, 2017, the Company issued a convertible promissory note in the principal amount of $135,000. The note is unsecured,
bears interest at 10% per annum, is due on July 17, 2018, and is convertible into common shares at a conversion price equal
to the lessor of (i) 55% multiplied by the lowest trading price during the previous twenty trading day period ending on the
latest complete trading day prior to the date of this note and (ii) $244. Interest will be accrued and payable at the time
of promissory note repayment. Financing fees on the note were $16,500. Derivative liability applied as discount on the note
was $118,500 and is accreted over the life of the note.
|
|
|
|
As
at September 30, 2020, the carrying value of the note was $81,470 (December 31, 2019 - $81,470).
On
November 10, 2020, the Company paid cash of $100,000, pursuant to a Settlement Agreement (the “Settlement Agreement”),
in full and final satisfaction of $110,740 in outstanding principal and accrued interest on the above convertible note
and corresponding pending litigation, see also Note 17. The Company wrote down the liability at September 30, 2020, to
the subsequent settlement amount and recorded a gain on the settlement of $10,974.
As
at September 30, 2020, the fair value of the derivative liability of $752,842 (December 31, 2019 - $111,990) was extinguished
in lieu of the Settlement Agreement.
|
|
|
(f)
|
In
January 2018, the Company issued a convertible promissory note in the principal amount of $15,000 as a commitment fee. The
note is unsecured, non-interest bearing until default, was due on August 16, 2018, and is convertible into common shares at
a conversion price equal to 75% of the average closing trading price during the previous five trading days prior to conversion
date, with a minimum of $0.20.
|
|
|
|
During
the year ended December 31, 2018, the Company issued 1,558 common shares with a fair value of $19,937 for the conversion
of $10,000 of principal resulting in a loss on settlement of debt of $9,937.
On
April 22, 2020, the Company issued 258,000 common shares with a fair value of $25,800 to settle $7,166 in principal and
interest.
|
|
|
|
As
at September 30, 2020, the carrying value of the note was $Nil (December 31, 2019 - $5,000) and the fair value of the derivative
liability was $Nil (December 31, 2019 - $2,601).
|
|
|
(g)
|
On
May 8, 2018, the Company issued a convertible note in the principal amount of $51,500. The note is unsecured, bears interest
at 10% per annum, and is due on February 8, 2019. The note is convertible into common shares at a 32% discount to the lowest
intra-day trading price of the Company’s common stock for the ten trading days immediately preceding the conversion
date.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 8,618,831,000 common shares with a fair value of $495,936 for
the conversion of $107,352 principal and accrued interest resulting in a loss on settlement of debt of $388,586.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished (December 31, 2019 - $51,500 and $48,918, respectively).
During the nine months ended September 30, 2020, the Company accreted $Nil (2019 - $7,277) of the debt discount to finance
costs.
|
|
|
(h)
|
On
May 28, 2018, the Company issued a convertible note in the principal amount of $180,000. The note is unsecured, bears
interest at 10% per annum, and was due on February 28, 2019. The note is convertible into common shares at a 32% discount
to the lowest intra-day trading price of the Company’s common stock for the ten trading days immediately preceding the
conversion date.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $224,319 for 224 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were extinguished
(December 31, 2019 - $180,000 and $169,234, respectively). During the nine months ended September 30, 2020, the Company accreted
$Nil (2019 - $38,478) of the debt discount to finance costs.
|
|
|
(i)
|
On
June 18, 2018, the Company reassigned convertible note balances from the original lender to another unrelated party in the
principal amount of $168,721. The note is unsecured, bears interest at 10% per annum, which was due on August 2, 2018, and
is convertible into common shares at a conversion price equal to the lesser of the lowest trading price during the previous
twenty-five trading days prior to: (i) the date of the promissory note; or (ii) the latest complete trading day prior to the
conversion date. Interest is accrued will be and payable at the time of promissory note repayment. The remaining derivative
liability applied as a discount on the reassigned note was $25,824 and is accreted over the remaining life of the note.
|
|
|
|
During
the year ended December 31, 2019, the Company issued 234,350 common shares with a fair value of $268,614 for the conversion
of $63,012 of principal and $9,671 of accrued interest resulting in a loss on settlement of debt of $195,931.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 2,600,000 common shares
with a fair value of $310,700 for the conversion of $15,444 of principal
and accrued interest resulting in a loss on settlement of debt of $295,256.
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and
interest of $26,622 for 26 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were
extinguished (December 31, 2019 - $39,037 and $21,869, respectively).
|
(j)
|
On
April 26, 2019, the Company entered into a note purchase and assignment agreement with two unrelated parties pursuant to a
certain secured inventory convertible note issued on March 19, 2018 in the principal amount of $900,000. Pursuant to this
agreement, the seller desired to sell the balance owing under the Second and Third tranche of the original note in four separate
closings on April 26, May 22, June 24, and July 24, 2019, totaling $84,396, $85,838, $120,490 and $122,866, respectively (consisting
of $375,804 principal and $37,786 of accrued interest). As at September 30, 2020, $413,590 in principal and accrued interest
had been assigned to the purchaser.
|
|
|
|
The
note is unsecured, bears interest at 12% per annum, is due 184 days upon receipt, and is convertible into common shares after
180 days from issuance date at a conversion price equal to the lessor of: (i) the lowest trading price during the previous
fifteen trading days prior to the date of the promissory note; or (ii) 55% of the lowest trading price during the previous
fifteen days prior to the latest complete trading day prior to the conversion date. Interest will be accrued and payable at
the time of promissory note repayment.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $476,661 for 477 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were extinguished
(December 31, 2019 - $413,590 and $181,870, respectively).
|
|
|
(k)
|
On
May 7, 2019, the Company entered into a secured convertible promissory note agreement with an unrelated party. The note is
secured by an unconditional first priority interest in and to, any and all property of the Company and its subsidiaries, of
any kind or description, tangible or intangible, whether now existing or hereafter arising or acquired until the balance of
all Notes has been reduced to $Nil. The note bears interest at 10% per annum, each tranche matures 12 months from the funding
date and is convertible into common shares at the holder’s discretion at a conversion price equal to 62% of the lowest
trading price of the Company’s common stock during the 10 trading days immediately preceding the conversion of the note.
|
|
|
|
The
note was funded in four tranches on May 7, 2019, June 28, 2019, July 8, 2019 and August 8, 2019, totaling $250,420. Proceeds
from the note were paid directly to a former lender as an inducement for entering into a debt assignment arrangement. The
$250,420 inducement is recorded to finance costs for the year ended December 31, 2019.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $286,302 for 286 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were extinguished
(December 31, 2019 - $124,695 and $323,514, respectively). During the nine months ended September 30, 2020, the Company accreted
$125,725 (2019 - $9,605) of the debt discount to finance costs.
|
|
|
(l)
|
On
July 30, 2019, the Company issued a convertible promissory note in the principal amount of $220,000. The note is unsecured,
bears interest at 10% per annum, is due on July 30, 2020, and is convertible into common shares at a conversion price equal
to the lesser of (i) 60% of the lowest trading price during the previous twenty trading days prior to the issuance date, or
(ii) the lowest trading price for the Common Stock during the twenty day period ending one trading day prior to conversion
of the note. Deferred financing fees and original issuance discount on the note were $23,500. The derivative liability applied
as a discount on the note was $196,500 and is accreted over the life of the note.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 6,907,267 common shares with a fair value of $860,248 for the
conversion of all outstanding principal and accrued interest totaling $266,192 resulting in a loss on settlement of debt of
$620,056.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished (December 31, 2019 - $92,219 and $284,734, respectively).
During the nine months ended September 30, 2020, the Company accreted $127,781 (2019 - $Nil) of the debt discount to finance
costs.
|
|
|
(m)
|
On
September 4, 2019, the Company issued a convertible promissory note in the principal amount of $137,500. The note is unsecured,
bears interest at 10% per annum, is due on June 3, 2020, and is convertible during the first 180 calendar days from the issuance
date at a price of $0.50 per share. For the subsequent period until repayment the conversion price shall equal the lesser
of (i) 60% multiplied by the lowest traded price of the Common Stock during the previous twenty trading days before the issuance
date of the note, or (ii) the lowest traded price for the Common Stock during the twenty day period ending on the last complete
trading day before conversion. Deferred financing fees and original issuance discount on the note were $16,000. The derivative
liability applied as a discount on the note was $121,500 and is accreted over the life of the note.
|
|
In
connection with the note, the Company granted 100,000 warrants to the lender. Each warrant can be exercised to purchase shares
of common stock of the Company at a price of $0.75 per warrant for a period of five years. As the entire net proceeds of $121,500
were first allocated to the derivative liability which is measured at fair value on a recurring basis, the residual value
of $Nil was allocated to the equity-classified warrants.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 8,623,931 common shares with a fair value of $494,031 for the
conversion of $107,500 of principal and accrued interest resulting in a loss on settlement of debt of $383,281. On September
18, 2020, the Company paid cash of $22,500 to settle all outstanding principal and interest on the note, resulting in a gain
on the settlement of debt totaling $20,056.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished (December 31, 2019 - $43,322 and $173,596, respectively).
During the nine months ended September 30, 2020, the Company accreted $94,178 (2019 - $Nil), of the debt discount to finance
costs.
|
|
|
(n)
|
On
September 19, 2019, the Company issued a convertible promissory note in the principal amount of $55,000. The note is unsecured,
bears interest at 10% per annum, is due on September 19, 2020, and is convertible during the first six months from the issuance
date at a price of $0.50 per share. For the subsequent period until repayment the conversion price shall equal the lesser
of (i) 60% multiplied by the lowest traded price of the Common Stock during the previous twenty trading days before the issuance
date of the note, or (ii) the lowest traded price for the Common Stock during the twenty day period ending on the last complete
trading day before conversion. Deferred financing fees and original issuance discount on the note were $7,000. The derivative
liability applied as a discount on the note was $48,000 and is accreted over the life of the note.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 5,758,117 common shares with a fair value of $332,480 for the
conversion of total outstanding principal and interest totaling $57,750 resulting in a loss on settlement of debt of $272,230.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished (December 31, 2019 - $15,370 and $70,052, respectively).
During the nine months ended September 30, 2020, the Company accreted $39,630 (2019 - $Nil), of the debt discount to finance
costs.
|
|
|
(o)
|
On
September 19, 2019, the Company issued a convertible promissory note in the principal amount of $141,900. The note is unsecured,
bears interest at 10% per annum, is due on September 19, 2020, and is convertible during the first six months from the issuance
date at a price of $0.50 per share. For the subsequent period until repayment the conversion price shall equal the lesser
of (i) 60% multiplied by the lowest traded price of the Common Stock during the previous twenty trading days before the issuance
date of the note, or (ii) the lowest traded price for the Common Stock during the twenty day period ending on the last complete
trading day before conversion. Deferred financing fees and original issuance discount on the note were $16,400. The derivative
liability applied as a discount on the note was $125,500 and is accreted over the life of the note.
|
|
|
|
In
connection with the note, the Company granted 113,250 warrants to the lender. Each warrant can be exercised to purchase shares
of common stock of the Company at a price of $0.75 per warrant for a period of five years. As the entire net proceeds of $125,500
were first allocated to the derivative liability which is measured at fair value on a recurring basis, the residual value
of $Nil was allocated to the equity-classified warrants.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 5,159,991 common shares with a fair value of $261,912 for the
conversion of $71,490 of principal and accrued interest resulting in a loss on settlement of debt of $187,292. On September
18, 2020, the Company paid cash of $76,000 to settle all outstanding principal and interest on the note, resulting in a gain
on the settlement of debt totaling $7,273.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished (December 31, 2019 - $40,043 and $190,246, respectively).
During the nine months ended September 30, 2020, the Company accreted $101,857 (2019 - $Nil), of the debt discount to finance
costs.
|
|
|
(p)
|
On
October 2, 2019, the Company issued a convertible promissory note in the principal amount of $82,500. The note is unsecured,
bears interest at 10% per annum, is due on September 30, 2020, and is convertible during the first six months from the issuance
date at a price of $0.50 per share. For the subsequent period until repayment the conversion price shall equal the lesser
of (i) 60% multiplied by the lowest traded price of the Common Stock during the previous twenty trading days before the issuance
date of the note, or (ii) the lowest traded price for the Common Stock during the twenty day period ending on the last complete
trading day before conversion. Deferred financing fees and original issuance discount on the note were $9,500. The derivative
liability applied as a discount on the note was $73,000 and is accreted over the life of the note.
|
|
|
|
In
connection with the note, the Company granted 83,333 warrants to the lender. Each warrant can be exercised to purchase shares
of common stock of the Company at a price of $0.75 per warrant for a period of five years. As the entire net proceeds of $73,000
were first allocated to the derivative liability which is measured at fair value on a recurring basis, the residual value
of $Nil was allocated to the equity-classified warrants.
|
|
During
the nine months ended September 30, 2020, the Company issued 3,409,090 common shares with a fair value of $193,296 for
the conversion of $22,500 of principal resulting in a loss on settlement of debt of $170,796.
On
September 18, 2020, the Company paid cash of $60,000 to settle all outstanding principal and interest on the note, resulting
in a gain on the settlement of debt totaling $8,075.
As
at September 30, 2020, the note and derivative liability were extinguished (December 31, 2019 - $20,795 and $105,790,
respectively). During the nine months ended September 30, 2020, the Company accreted $61,705 (2019 - $Nil), of the debt
discount to finance costs.
|
|
|
(q)
|
During
the year ended December 31, 2019, a convertible promissory note with an outstanding principal balance of $226,000 was
assigned to another unrelated party with no changes to the terms of the note upon assignment. The note is unsecured, bears
interest at 12% per annum, was due on August 31, 2019 and is convertible into common shares at a conversion price equal
to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the
conversion date. Interest will be accrued and payable at the time of promissory note repayment.
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and
interest of $285,428 for 285 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were
extinguished (December 31, 2019 - $226,000 and $289,462, respectively).
|
|
|
(r)
|
During
the year ended December 31, 2019, a convertible promissory note with an outstanding principal balance of $258,736 was assigned
to another unrelated party with no changes to the terms of the note upon assignment. The note is unsecured, bears interest
at 12% per annum, was due on September 19, 2018 and is convertible into common shares at a conversion price equal to the lessor
of: (i) the lowest trading price during the previous fifteen trading days prior to the date of the promissory note; or (ii)
55% of the lowest trading price during the previous fifteen days prior to the latest complete trading day prior to the conversion
date. Interest will be accrued and payable at the time of promissory note repayment.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $342,641 for 343 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were extinguished
(December 31, 2019 - $258,736 and $351,774, respectively).
|
|
|
(s)
|
During
the year ended December 31, 2019, a convertible promissory note with an outstanding principal balance of $137,500 was
assigned to another unrelated party with no changes to the terms of the note upon assignment. The note is unsecured, bears
interest at 12% per annum, was due on January 22, 2020 and is convertible into common shares at a conversion price equal
to 55% of the lowest trading price during the previous fifteen trading days prior to the conversion date, including the
conversion date. Interest will be accrued and payable at the time of promissory note repayment.
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $166,401 for 166 Series C Preferred Shares. As at September 30, 2020, the note and derivative liability were extinguished
(December 31, 2019 - $137,500 and $170,201, respectively).
|
|
|
(t)
|
On
February 10, 2020, the Company issued a convertible promissory note in the principal amount of $119,600. The note is unsecured,
bears interest at 8% per annum, is due on February 10, 2021, and is convertible into common shares of the Company,
beginning 180 days from the date of the note up to maturity or repayment, at a price equal to 80% of the average of the lowest
two trading prices for the common stock during the fifteen trading days before conversion. Deferred financing fees and original
issuance discount on the note were $22,135. The derivative liability applied as a discount on the note was $97,465 and is
accreted over the life of the note.
|
|
|
|
During
the nine months ended September 30, 2020, the Company issued 11,549,008 common shares with a fair value of $549,376 for the
conversion of $119,600 of principal resulting in a loss on settlement of debt of $429,776.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished. During the nine months ended September 30, 2020,
the Company accreted $119,600, of the debt discount to finance costs.
|
(u)
|
On
March 2, 2020, the Company issued a convertible promissory note in the principal amount of $60,950. The note is unsecured,
bears interest at 8% per annum, is due on March 2, 2021, and is convertible into common shares of the Company, beginning
180 days from the date of the note up to maturity or repayment, at a price equal to 80% of the average of the lowest two trading
prices for the common stock during the fifteen trading days before conversion. Deferred financing fees and original issuance
discount on the note were $10,950. The derivative liability applied as a discount on the note was $50,000 and is accreted
over the life of the note.
|
|
|
|
On
September 18, 2020, the Company paid cash, received pursuant to the promissory note outlined in Note 8(g), of $78,643 for
outstanding principal and interest on the note including a prepayment penalty of $15,221 to settle the debt.
|
|
|
|
As
at September 30, 2020, the note and derivative liability were extinguished. During the nine months ended September 30, 2020,
the Company accreted $60,950, of the debt discount to finance costs.
|
|
|
(v)
|
On
April 15, 2020, the Company issued a convertible promissory note in the principal amount of $60,950. The note is unsecured,
bears interest at 8% per annum, is due on April 15, 2021, and is convertible into common shares of the Company, beginning
180 days from the date of the note up to maturity or repayment, at a price equal to 80% of the average of the lowest two trading
prices for the common stock during the fifteen trading days before conversion. Deferred financing fees and original issuance
discount on the note were $10,950. The derivative liability applied as a discount on the note was $50,000 and is accreted
over the life of the note.
|
|
|
|
On
September 18, 2020, the Company paid cash of $66,000 to settle all outstanding principal and interest on the note, resulting
in a loss on the settlement of debt totaling $2,966.
As
at September 30, 2020, the note and derivative liability were extinguished. During the nine months ended September 30,
2020, the Company accreted $60,950, of the debt discount to finance costs.
|
|
|
(w)
|
On
August 31, 2020, the Company issued a convertible promissory note in the principal amount of $166,650 with a 10% original
issuance discount totaling $16,650, for net proceeds of $150,000. The note is unsecured, bears interest at 10% per annum,
is due and payable on demand, and is convertible into common shares of the Company, at a price equal to the lesser of
(a) five cents ($0.05) per share or (b) seventy percent (70%) of the lowest traded price for the Company’s common
stock during the fifteen (15) trading days preceding the relevant conversion.
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $167,974 for 168 Series C Preferred Shares. As at September 30, 2020, the note was extinguished.
|
|
|
(x)
|
On
September 17, 2020, the Company issued a convertible promissory note in the principal amount of $288,860 with a 10% original
issuance discount totaling $28,860, for net proceeds of $260,000. The note is unsecured, bears interest at 10% per annum,
is due on June 17, 2021, and is convertible into common shares of the Company at a price equal to the lesser of (a) four cents
($0.04) per share or (b) seventy percent (70%) of the lowest traded price for the Company’s common stock during the
fifteen (15) trading days preceding the relevant conversion.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $289,889 for 290 Series C Preferred Shares. As at September 30, 2020, the note was extinguished.
|
|
|
(y)
|
On
August 30, 2017, the Company issued a convertible promissory note in the principal amount of $15,000. The note is unsecured,
bears interest at 10% per annum, is due on August 30, 2018, and is convertible into common shares of the Company at a price
equal to a 20% discount of the average closing bid price for the Company’s common stock during the five (5) trading
days immediately preceding a conversion date, with a floor price of $0.005. The note was issued as a Commitment fee and is
included in Finance costs during the nine months ending September 30, 2020.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $18,131 for 18 Series C Preferred Shares. As at September 30, 2020, the note was extinguished.
|
|
|
(z)
|
On
May 2, 2019, the Company issued a convertible promissory note in the principal amount of $10,000. The note is unsecured, bears
interest at 8% per annum, is due on May 2, 2020, and is convertible into common shares of the Company at a price equal to
a 58% of the lowest traded price of the Company’s common stock during the five (5) trading days immediately preceding
the conversion date. The note was issued for proceeds paid directly to legal counsel for legal fees, related to the 2019 S-1
Registration Statement, and is included in Accounting & Legal during the nine months ending September 30, 2020.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $11,841 for 12 Series C Preferred Shares. As at September 30, 2020, the note was extinguished.
|
|
|
(aa)
|
On
June 10, 2019, the Company issued a convertible promissory note in the principal amount of $15,000. The note is unsecured,
bears interest at 10% per annum, is due on August 30, 2018, and is convertible into common shares of the Company at a price
equal to a 20% discount of the average closing bid price for the Company’s common stock during the five (5) trading
days immediately preceding a conversion date, with a floor price of $0.005. The note was issued for proceeds paid directly
to a third party for audit fees, related to the 2019 S-1 Registration Statement, and is included in Accounting & Legal
during the nine months ending September 30, 2020.
|
|
|
|
On
September 30, 2020, pursuant to the Exchange Agreement described above, the Company settled outstanding principal and interest
of $51,999 for 52 Series C Preferred Shares. As at September 30, 2020, the note was extinguished.
|
Note
10 – DERIVATIVE LIABILITIES
The
following range of inputs and assumptions were used to value the derivative liabilities outstanding during the nine months ended
September 30, 2020 and year ended December 31, 2019, assuming no dividend yield:
|
|
|
September 30, 2020
|
|
|
|
December 31,
2019
|
|
Expected volatility
|
|
|
243 - 531
|
%
|
|
|
176 - 374
|
%
|
Risk free interest rate
|
|
|
0.1 - 0.2
|
%
|
|
|
1.6 - 2.6
|
%
|
Expected life (years)
|
|
|
0.25 - 0.92
|
|
|
|
0.25 - 2.0
|
|
A
summary of the activity of the derivative liabilities is shown below:
Balance, December 31, 2018
|
|
$
|
2,188,354
|
|
New issuances
|
|
|
939,919
|
|
Change in fair value
|
|
|
(271,704
|
)
|
Balance, December 31, 2019
|
|
|
2,856,569
|
|
New issuances
|
|
|
197,465
|
|
Extinguished
|
|
|
(4,590,622
|
)
|
Change in fair value
|
|
|
7,386,252
|
|
Balance, September 30, 2020
|
|
$
|
5,849,664
|
|
Note
11 - LEASES
The
Company leases certain assets under lease agreements. On April 1, 2020, the Company terminated its showroom space lease, resulting
in a gain of $11,294 which is included in general and administrative expense. On May 31, 2020, the Company’s office leases
expired.
On July 10, 2020, the Company entered
into a lease agreement for retail, showroom and warehouse space in Fairfield, CA (the “Fairfield Lease”). Upon initial
recognition of the lease, the Company recognized right-of-use assets of $164,114 and lease liabilities of $156,364. The difference
between the recorded operating lease assets and lease liabilities is due to prepaid rent deposits to be applied to first months’
rent of $7,750. The lease included a rent-free period with rent payments commencing on October 1, 2020. As of September 30, 2020,
Fairfield Lease had a remaining term of 1.92 years. The Fairfield Lease also included a refundable security deposit of
$7,750 which is included in prepaid expenses and deposits at September 30, 2020.
On
July 14, 2020, the Company entered into a lease agreement for office space in Surrey, BC (the “Croydon Lease”). Upon
initial recognition of the lease, the Company recognized right-of-use assets of $133,825 and lease liabilities of $125,014. The
difference between the recorded operating lease assets and lease liabilities is due to prepaid rent deposits to be applied to
first months’ rent of $8,811 (CDN$11,948). The lease included a rent-free period with rent payments commencing on September
1, 2020. As of September 30, 2020, the lease had a remaining term of 2.83 years.
Right-of-use
assets have been included within fixed assets, net and lease liabilities have been included in operating lease liability on the
Company’s consolidated balance sheet.
Right-of-use assets
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Cost
|
|
$
|
297,939
|
|
|
$
|
178,202
|
|
Accumulated depreciation
|
|
|
(27,337
|
)
|
|
|
(39,671
|
)
|
|
|
$
|
270,602
|
|
|
$
|
138,531
|
|
Lease liability
|
|
September 30, 2020
|
|
Current portion
|
|
$
|
117,443
|
|
Long-term portion
|
|
|
174,316
|
|
Total lease liability
|
|
$
|
291,759
|
|
|
|
December 31, 2019
|
|
Current portion
|
|
|
62,935
|
|
Long-term portion
|
|
|
74,225
|
|
Total lease liability
|
|
$
|
137,160
|
|
Operating
lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Company’s
lease did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at
the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of
11.98% in determining its lease liabilities. The discount rate was derived from the Company’s assessment of borrowings.
Right-of-use
assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for
minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend
or terminate the lease if it is reasonably certain that the Company will exercise that option.
Operating
lease expense for the three and nine months ended September 30, 2020 was $24,034 and $54,803, respectively (2019 - $18,418 and
$55,231, respectively) and is recorded in general and administration expense.
Future
minimum lease payments to be paid by the Company as a lessee for operating leases as of September 30, 2020 for the next three
years are as follows:
Remainder of 2020
|
|
$
|
36,375
|
|
2021
|
|
|
147,393
|
|
2022
|
|
|
119,536
|
|
2023
|
|
|
33,125
|
|
|
|
|
|
|
Total future minimum lease payments
|
|
$
|
336,429
|
|
Discount
|
|
|
(44,670
|
)
|
|
|
|
|
|
Total
|
|
$
|
291,759
|
|
Note
12 – MEZZANINE EQUITY
Authorized
5,000,000
shares of redeemable Series C preferred shares, authorized, each having a par value of $0.001 per share. Each share of Series
C preferred shares is convertible into shares of common stock at a conversion rate equal to the lowest traded price for the fifteen
trading days immediately preceding the date of conversion.
1,000,000
shares of redeemable Series D preferred shares, authorized, each having a par value of $0.001 per share. Each share of Series
D preferred shares is convertible into 5 shares of common stock.
5,000,000
shares of redeemable Series E preferred shares, authorized, each having a par value of $0.001 per share. Each share of Series
E preferred shares is convertible into 4 shares of common stock.
Mezzanine
Preferred Equity Transactions
During
the nine months ended September 30, 2020:
|
●
|
On
September 30, 2020, the Company entered into an Exchange Agreement, as outlined in Note
9, to settle outstanding convertible debt and accrued interest in exchange for 2,347
shares of Series C preferred shares with an aggregate carrying amount of $2,348,208.
The shares were all issued subsequently on October 14, 2020.
|
|
●
|
On
September 30, 2020, the Company into a Securities Purchase Agreement (the “SPA”)
whereby the Company agrees to sell and the Purchaser agrees to purchase, in a series
of closings (the “Closings”), up to 200 shares of Series C preferred shares
at a price of $1,000 per share. At the First Closing, the Company agrees to issue 250
shares of Series C preferred shares, representing 200 Purchased Shares and 50 Commitment
Shares.
|
During
the year ended December 31, 2019:
|
●
|
The
Company settled various accounts payable balances, debt and preferred shares in exchange for shares of common stock to be
issued and warrants. Included in these settlements were 100,500 and 4,649,908 shares of Series D and Series E preferred shares,
respectively, with an aggregate carrying value of $6,668,643.
|
Note
13 – PREFERRED STOCK
Authorized
3,000,000
shares of Series A preferred shares authorized, each having a par value of $0.001 per share.
10,000
shares of Series B convertible preferred shares authorized, each having a par value of $0.001 per share. Each share of Series
B convertible preferred shares is convertible into 100,000 shares of common stock.
Preferred
Stock Transactions
During
the nine months ended September 30, 2020:
|
●
|
On
May 21, 2020, the Company issued an aggregate of 136 shares of Series B convertible preferred shares to various parties for
past services to the Company, which included 122 issued to related parties and 2 issued to a former director of the Company.
These preferred shares were valued at $767,040, based on the fair value of the underlying common stock, discounted for the
six month hold period before the preferred shares can be converted. The issuance is recorded under compensation expense.
|
During
the year ended December 31, 2019:
|
●
|
The
Company settled various accounts payable balances, debt and preferred shares in exchange for shares of common stock to be
issued and warrants. Included in these settlements were 132 shares of Series B Preferred Stock with a carrying value of $4,872,732.
|
|
|
|
|
●
|
On
October 29, 2019, the Company issued an aggregate of 200,376 shares of Series A preferred shares at value of $200 to three
directors of the Company.
|
Note
14 – COMMON STOCK AND ADDITIONAL PAID IN CAPITAL
Authorized
On
March 26, 2019, the Company effected a reverse stock split of its shares of common stock on a four thousand (4,000) old for one
(1) new basis. Upon effect of the reverse split, authorized capital decreased from 3,000,000,000 shares of common stock to 750,000
shares of common stock. Subsequently, on May 23, 2019, an increase in common shares to 150,000,000 was authorized, with a par
value of $0.001. These consolidated financial statements give retroactive effect to such reverse stock split named above and all
share and per share amounts have been adjusted accordingly, unless otherwise noted. Each share of common stock is entitled to
one vote.
Common
Stock Transactions
During
the nine months ended September 30, 2020:
|
●
|
The
Company issued an aggregate of 191,865 shares of common stock for cash proceeds of $100,031.
|
|
|
|
|
●
|
The
Company issued an aggregate of 2,003,000 shares of common stock with a fair value of $783,899 in exchange for services.
|
|
|
|
|
●
|
The
Company issued an aggregate of 9,430,146 shares of common stock with a fair value of $7,402,254 to satisfy shares to
be issued.
|
|
|
|
|
●
|
The
Company issued 6,462,244 shares of common stock with a fair value of $136,457 for share-settled debt.
|
|
|
|
|
●
|
The
Company issued an aggregate of 52,937,999 shares of common stock with a fair value of $3,577,005 upon the conversion of $777,872
of convertible debentures and accrued interest, as outlined in Note 9, per the table below:
|
Date issued
|
|
Common
shares issued
(#)
|
|
|
Fair value(1)
|
|
|
Converted balance(2)
|
|
|
Loss on conversion
|
|
January 7, 2020
|
|
|
53,764
|
|
|
$
|
53,226
|
|
|
$
|
20,000
|
|
|
$
|
(33,226
|
)
|
February 4, 2020
|
|
|
135,802
|
|
|
|
127,654
|
|
|
|
19,500
|
|
|
|
(108,154
|
)
|
February 7, 2020
|
|
|
151,234
|
|
|
|
142,160
|
|
|
|
24,000
|
|
|
|
(118,160
|
)
|
February 26, 2020
|
|
|
151,515
|
|
|
|
45,455
|
|
|
|
19,500
|
|
|
|
(25,955
|
)
|
February 26, 2020
|
|
|
140,151
|
|
|
|
39,242
|
|
|
|
18,000
|
|
|
|
(21,242
|
)
|
March 9, 2020
|
|
|
170,000
|
|
|
|
27,200
|
|
|
|
13,090
|
|
|
|
(14,110
|
)
|
March 9, 2020
|
|
|
195,547
|
|
|
|
68,441
|
|
|
|
12,500
|
|
|
|
(55,941
|
)
|
March 11, 2020
|
|
|
180,505
|
|
|
|
63,177
|
|
|
|
11,500
|
|
|
|
(51,677
|
)
|
April 1, 2020
|
|
|
140,000
|
|
|
|
9,800
|
|
|
|
3,889
|
|
|
|
(5,911
|
)
|
April 1, 2020
|
|
|
220,000
|
|
|
|
15,400
|
|
|
|
6,166
|
|
|
|
(9,234
|
)
|
April 2, 2020
|
|
|
218,678
|
|
|
|
16,379
|
|
|
|
6,500
|
|
|
|
(9,879
|
)
|
April 21, 2020
|
|
|
264,026
|
|
|
|
24,649
|
|
|
|
7,500
|
|
|
|
(17,149
|
)
|
May 15, 2020
|
|
|
258,000
|
|
|
|
25,800
|
|
|
|
7,166
|
|
|
|
(18,634
|
)
|
May 19, 2020
|
|
|
426,000
|
|
|
|
80,940
|
|
|
|
17,338
|
|
|
|
(63,602
|
)
|
May 19, 2020
|
|
|
675,675
|
|
|
|
100,000
|
|
|
|
29,500
|
|
|
|
(70,500
|
)
|
May 19, 2020
|
|
|
350,000
|
|
|
|
33,250
|
|
|
|
12,205
|
|
|
|
(21,045
|
)
|
May 19, 2020
|
|
|
337,837
|
|
|
|
50,000
|
|
|
|
14,500
|
|
|
|
(35,500
|
)
|
May 21, 2020
|
|
|
298,606
|
|
|
|
56,735
|
|
|
|
12,653
|
|
|
|
(44,082
|
)
|
May 21, 2020
|
|
|
611,111
|
|
|
|
116,111
|
|
|
|
27,000
|
|
|
|
(89,111
|
)
|
July 8, 2020
|
|
|
500,000
|
|
|
|
45,000
|
|
|
|
10,500
|
|
|
|
(34,500
|
)
|
July 8, 2020
|
|
|
857,142
|
|
|
|
72,857
|
|
|
|
18,000
|
|
|
|
(54,857
|
)
|
July 8, 2020
|
|
|
600,000
|
|
|
|
22,800
|
|
|
|
11,549
|
|
|
|
(11,251
|
)
|
July 8, 2020
|
|
|
639,846
|
|
|
|
51,188
|
|
|
|
13,437
|
|
|
|
(37,751
|
)
|
July 8, 2020
|
|
|
880,952
|
|
|
|
70,476
|
|
|
|
18,500
|
|
|
|
(51,976
|
)
|
July 10, 2020
|
|
|
809,523
|
|
|
|
29,952
|
|
|
|
17,000
|
|
|
|
(12,952
|
)
|
July 17, 2020
|
|
|
1,121,212
|
|
|
|
55,948
|
|
|
|
18,500
|
|
|
|
(37,448
|
)
|
July 17, 2020
|
|
|
1,151,515
|
|
|
|
46,291
|
|
|
|
19,500
|
|
|
|
(26,791
|
)
|
July 20, 2020
|
|
|
1,130,000
|
|
|
|
45,426
|
|
|
|
17,091
|
|
|
|
(28,335
|
)
|
July 23, 2020
|
|
|
879,157
|
|
|
|
43,870
|
|
|
|
14,506
|
|
|
|
(29,364
|
)
|
August 3, 2020
|
|
|
1,309,824
|
|
|
|
35,234
|
|
|
|
14,146
|
|
|
|
(21,088
|
)
|
August 3, 2020
|
|
|
1,638,117
|
|
|
|
33,991
|
|
|
|
17,692
|
|
|
|
(16,299
|
)
|
August 10, 2020
|
|
|
1,412,525
|
|
|
|
30,553
|
|
|
|
15,255
|
|
|
|
(15,298
|
)
|
August 13, 2020
|
|
|
1,000,000
|
|
|
|
20,100
|
|
|
|
15,000
|
|
|
|
(5,100
|
)
|
August 13, 2020
|
|
|
1,130,000
|
|
|
|
25,877
|
|
|
|
11,311
|
|
|
|
(14,566
|
)
|
August 13, 2020
|
|
|
1,465,201
|
|
|
|
29,451
|
|
|
|
16,000
|
|
|
|
(13,451
|
)
|
August 19, 2020
|
|
|
1,484,615
|
|
|
|
22,269
|
|
|
|
19,300
|
|
|
|
(2,969
|
)
|
August 25, 2020
|
|
|
1,750,000
|
|
|
|
125,125
|
|
|
|
11,340
|
|
|
|
(113,785
|
)
|
August 25, 2020
|
|
|
1,483,146
|
|
|
|
106,045
|
|
|
|
13,200
|
|
|
|
(92,845
|
)
|
August 25, 2020
|
|
|
620,033
|
|
|
|
44,332
|
|
|
|
4,018
|
|
|
|
(40,314
|
)
|
August 25, 2020
|
|
|
1,490,000
|
|
|
|
106,535
|
|
|
|
8,851
|
|
|
|
(97,684
|
)
|
August 25, 2020
|
|
|
1,893,939
|
|
|
|
135,417
|
|
|
|
12,500
|
|
|
|
(122,917
|
)
|
August 26, 2020
|
|
|
1,818,182
|
|
|
|
130,000
|
|
|
|
12,000
|
|
|
|
(118,000
|
)
|
August 27, 2020
|
|
|
1,808,989
|
|
|
|
156,839
|
|
|
|
16,100
|
|
|
|
(140,739
|
)
|
August 31, 2020
|
|
|
1,808,989
|
|
|
|
84,842
|
|
|
|
16,100
|
|
|
|
(68,742
|
)
|
September 1, 2020
|
|
|
1,560,000
|
|
|
|
79,560
|
|
|
|
9,266
|
|
|
|
(70,294
|
)
|
September 2, 2020
|
|
|
1,808,989
|
|
|
|
80,283
|
|
|
|
16,100
|
|
|
|
(64,183
|
)
|
September 9, 2020
|
|
|
1,808,989
|
|
|
|
66,119
|
|
|
|
16,100
|
|
|
|
(50,019
|
)
|
September 10, 2020
|
|
|
2,727,273
|
|
|
|
92,045
|
|
|
|
18,000
|
|
|
|
(74,045
|
)
|
September 14, 2020
|
|
|
1,560,000
|
|
|
|
46,566
|
|
|
|
9,266
|
|
|
|
(37,300
|
)
|
September 17, 2020
|
|
|
345,291
|
|
|
|
12,879
|
|
|
|
7,700
|
|
|
|
(5,179
|
)
|
September 18, 2020
|
|
|
2,938,117
|
|
|
|
113,705
|
|
|
|
19,039
|
|
|
|
(94,666
|
)
|
September 22, 2020
|
|
|
1,515,151
|
|
|
|
57,879
|
|
|
|
10,000
|
|
|
|
(47,879
|
)
|
September 24, 2020
|
|
|
412,831
|
|
|
|
51,232
|
|
|
|
5,699
|
|
|
|
(45,533
|
)
|
September 29, 2020
|
|
|
2,600,000
|
|
|
|
310,700
|
|
|
|
15,444
|
|
|
|
(295,256
|
)
|
Total
|
|
|
52,937,999
|
|
|
$
|
3,577,005
|
|
|
$
|
777,872
|
|
|
$
|
(2,799,133
|
)
|
|
(1)
|
Fair
values are derived based on the closing price of the Company’s common stock on the date of the conversion notice.
|
|
|
|
|
(2)
|
Converted
balance includes portions of principal, accrued interest, financing fees, interest penalties and other fees converted upon
the issuance of shares of common stock.
|
During
the year ended December 31, 2019:
|
●
|
The
Company issued an aggregate of 72,295 shares of common stock with a fair value of $63,437 in exchange for services.
|
|
|
|
|
●
|
The
Company issued an aggregate of 32,000 shares of common stock with a fair value of $37,760 as partial settlement for accounts
payable.
|
|
|
|
|
●
|
The
Company issued an aggregate of 407,536 shares of common stock with a fair value of $506,468 upon the conversion of $180,642
of convertible debentures, accrued interest and accounts payable per the table below:
|
Date issued
|
|
Common shares issued
(#)
|
|
|
Fair value(1)
|
|
|
Converted balance(2)
|
|
|
Loss on conversion
|
|
January 22, 2019
|
|
|
10,189
|
|
|
$
|
28,527
|
|
|
$
|
15,690
|
|
|
$
|
(12,837
|
)
|
March 11, 2019
|
|
|
18,606
|
|
|
|
37,211
|
|
|
|
12,280
|
|
|
|
(24,931
|
)
|
March 15, 2019
|
|
|
27,137
|
|
|
|
54,238
|
|
|
|
17,899
|
|
|
|
(36,339
|
)
|
June 17, 2019
|
|
|
45,216
|
|
|
|
58,781
|
|
|
|
31,651
|
|
|
|
(27,130
|
)
|
June 20, 2019
|
|
|
34,450
|
|
|
|
36,517
|
|
|
|
19,895
|
|
|
|
(16,622
|
)
|
July 17, 2019
|
|
|
37,900
|
|
|
|
33,352
|
|
|
|
5,628
|
|
|
|
(27,724
|
)
|
August 26, 2019
|
|
|
40,000
|
|
|
|
27,020
|
|
|
|
6,620
|
|
|
|
(20,400
|
)
|
September 18, 2019
|
|
|
39,500
|
|
|
|
49,376
|
|
|
|
8,255
|
|
|
|
(41,121
|
)
|
October 11, 2019
|
|
|
35,000
|
|
|
|
44,450
|
|
|
|
13,475
|
|
|
|
(30,975
|
)
|
November 13, 2019
|
|
|
47,500
|
|
|
|
77,899
|
|
|
|
18,810
|
|
|
|
(59,089
|
)
|
November 7, 2019
|
|
|
23,149
|
|
|
|
18,519
|
|
|
|
10,000
|
|
|
|
(8,519
|
)
|
December 19, 2019
|
|
|
48,889
|
|
|
|
40,578
|
|
|
|
22,000
|
|
|
|
(18,578
|
)
|
Total
|
|
|
407,536
|
|
|
$
|
506,468
|
|
|
$
|
182,203
|
|
|
$
|
(324,265
|
)
|
|
(1)
|
Fair
values are derived based on the closing price of the Company’s common stock on the date of the conversion notice.
|
|
|
|
|
(2)
|
Converted
balance includes portions of principal, accrued interest, accounts payable, financing fees and interest penalties converted
upon the issuance of shares of common stock.
|
Common
stock to be issued
Common
stock to be issued as at September 30, 2020 consists of:
|
●
|
4,864,285
shares valued at $77,829 to be issued pursuant to settlement
of share-settled debt.
|
Warrants
During
the nine months ended September 30, 2020, the Company granted 2,829,859 warrants with a contractual life of five years and exercise
price of $0.25 per share in exchange for strategic advisory services. Warrants were valued at $465,248 using the Black Scholes
Option Pricing Model with the assumptions outlined below. Expected life was determined based on historical exercise data of the
Company.
|
|
September 30, 2020
|
|
Risk-free interest rate
|
|
|
0.88
|
%
|
Expected life
|
|
|
5.0 years
|
|
Expected dividend rate
|
|
|
0
|
%
|
Expected volatility
|
|
|
266
|
%
|
Continuity
of the Company’s common stock purchase warrants issued and outstanding is as follows:
|
|
Warrants
|
|
|
Weighted average exercise price
|
|
Outstanding at year December 31, 2019
|
|
|
6,859,954
|
|
|
$
|
0.77
|
|
Granted
|
|
|
2,829,859
|
|
|
|
0.25
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding as at September 30, 2020
|
|
|
9,689,813
|
|
|
$
|
0.62
|
|
As
at September 30, 2020, the weighted average remaining contractual life of warrants outstanding was 2.94 years with an intrinsic
value of $Nil.
Note
15 – RELATED PARTY TRANSACTIONS
As
at September 30, 2020, the Company owed $274,778 (December 31, 2019 - $263,409) to the President, CEO, and CFO of the Company
for management fees and salaries, which has been recorded in trade and other payables. The amounts owed and owing are unsecured,
non-interest bearing, and due on demand. During the nine months ended September 30, 2020 the Company incurred $150,000 (2019 -
$100,000) in salaries to the President, CEO, and CFO of the Company and made payments of $60,000.
As
at September 30, 2020, the Company owed $6,950 (CDN$9,450) (December 31, 2019 - $7,260 (CDN$9,450)) to a company controlled by
the son of the President, CEO, and CFO of the Company for subcontractor services. The balance owing has been recorded in trade
and other payables. The amount owing is unsecured, non-interest bearing, and due on demand.
On
May 21, 2020, the Company issued an aggregate of 136 shares of Series B convertible preferred shares to various parties for past
services to the Company, which included 122 issued to related parties and 2 issued to a former director of the Company. These
preferred shares were valued at $767,040, based on the fair value of the underlying common stock, discounted for the six month
hold period before the preferred shares can be converted. The issuance is recorded under compensation expense.
Note
16 – COMMITMENTS
Product
Warranties
The
Company’s warranty policy generally covers a period of two years which is also covered by the manufacturer warranty. Thus,
any warranty costs incurred by the Company are immaterial.
Indemnifications
In
the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions
with the Company, with respect to certain matters. The Company has agreed to hold the other parties harmless against losses arising
from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain
parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In
addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws
contain similar indemnification obligations to the Company’s agents. It is not possible to determine the maximum potential
amount under these indemnification agreements due to the Company’s limited history with prior indemnification claims and
the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these
agreements have not had a material effect on the Company’s operating results, financial position, or cash flows.
Note
17 – CONTINGENCIES
On
September 7, 2016, Chetu Inc. filed a Complaint for Damage in Florida to recover an unpaid invoice amount of $27,335 plus interest
of $4,939. The invoice was not paid due to a service dispute. As at September 30, 2020, included in trade and other payables is
$47,023 (December 31, 2019 - $40,227) related to this unpaid invoice, interest and legal fees.
On
May 24, 2017, the Company received a notice of default from Coastal Investment Partners LLC (“Coastal”), on three
8% convertible promissory notes issued by the Company in aggregate principal amount of $261,389 and commenced a lawsuit on June
12, 2017 in the United States District Court, Southern District of New York. Coastal alleges that the Company failed to deliver
shares of common stock underlying the Coastal notes, and thus giving rise to an event of default. Coastal seeks damages in excess
of $250,000 for breach of contact damages, and legal fees incurred by Coastal with respect to the lawsuit.
On
June 13, 2017, Coastal filed a Complaint and Motion for a Preliminary Injunction seeking conversion of the principal amount of
a note issued by it to the Company into common stock of the Company. The Court issued an Order to Show Cause as to why a preliminary
injunction should not be issued on June 27, 2017, and the Company opposed Coastal’s Motion. A hearing on the Motion for
Preliminary Injunction was held on July 26, 2017. For the following reasons, the Court denied Coastal’s Motion for a Preliminary
Injunction. A) The Company also filed a Cross Motion to Dismiss on the grounds that the $72,500 Note violates New York’s
criminal usury law. The Court did not address this Motion at that time and has set a separate briefing schedule for it. This action
is still pending. As at September 30, 2020 the principal balance and accrued interest on this convertible note is included on
the consolidated balance sheet under convertible notes payable.
On
October 10, 2017, a vendor filed a complaint for Breach of Contract with Superior Court of the State of California. The Complainant
is alleging that it is contractually owed 1,848,130 shares of the Company’s common stock and is seeking damages of $270,000.
In addition, a related vendor filed in the same filing a complaint for $72,000 as part of a consulting agreement the Company executed.
The Company is currently in the process of negotiating a settlement and no accrual has been recorded to date due to the uncertainty
of the settlement amount.
On
April 9, 2018, the Company received a share-reserve increase letter from JSJ Investments Inc. (“JSJ”) pursuant to
the terms of a 10% convertible promissory note issued to the Company in the principal amount of $135,000. On April 24, 2018, the
Company received a notice of default from JSJ for failure to comply with the share-reserve increase and on April 30, 2018 demanded
payment in full of the default amount totaling $172,845. On May 7, 2018, JSJ commenced a lawsuit in the United States District
Court, District of Dallas County, Texas. JSJ alleges that the Company failed to comply with the share-reserve increase letter,
thus giving rise to an event of default, and failed to pay the outstanding default amount due under the terms of the note. JSJ
seeks damages in excess of $200,000 but not more than $1,000,000, which consists of the principal amount of the note, default
interest, and legal fees incurred by JSJ with respect to the lawsuit. This action is still pending but as at September 30, 2020,
JSJ has negotiated a reduced amount with a private investor. As at September 30, 2020, the principal balance and accrued interest
on this convertible note is included on the consolidated balance sheet under convertible notes payable. Subsequent to September
30, 2020, the Company entered into a Settlement Agreement with JSJ for full and final satisfaction if its claims for $100,000
(the “Settlement Payment”) paid in cash on or before November 10, 2020. Upon receipt of the Settlement Payment, JSJ
agreed to provide (a) a settlement agreement and release of all its claims against the Company; and (b) a consent dismissal order
in B.C. Supreme Court Action No. 1911876 on a “without costs” basis. The Company paid cash of $100,000 on November
10, 2020 in satisfaction of the agreement. See Note 9(e).
Note
18 – SUPPLEMENTAL CASH FLOW INFORMATION
|
|
Nine-months ended
|
|
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Income tax payments
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest payments
|
|
$
|
2,676
|
|
|
$
|
2,513
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing transactions:
|
|
|
|
|
|
|
|
|
Shares issued for convertible notes payable and accrued interest
|
|
$
|
3,577,005
|
|
|
$
|
215,275
|
|
Shares issued and to be issued for share-settled debt
|
|
$
|
214,286
|
|
|
|
$
|
|
Initial recognition of lease assets
|
|
$
|
—
|
|
|
$
|
51,203
|
|
Initial recognition of lease liabilities
|
|
$
|
—
|
|
|
$
|
47,118
|
|
Note
19 – SUBSEQUENT EVENTS
Management
has evaluated events subsequent to the year ended for transactions and other events that may require adjustment of and/or disclosure
in such consolidated financial statements.
The
recent outbreak of the coronavirus, also known as “COVID-19”, has spread across the globe and is impacting worldwide
economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented
emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures may have an adverse impact
on global economic conditions as well as on the Company’s business activities. The extent to which the coronavirus may impact
the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease,
the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and
other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine
their financial impact at this time.
Subsequent
to September 30, 2020, the Company issued:
|
●
|
8,734,721 shares of common stock for conversion of 521 Series C Preferred Shares with an aggregate carrying value of $521,000.
|
|
|
|
|
●
|
2,000,000 shares of common stock to a third
party for advisory services valued at $100,000 and data deliverables valued at $300,000 pursuant to a Services Agreement and a
Data Delivery Agreement, dated October 21, 2020, with a third party.
|
|
|
|
|
●
|
The Company issued 250 Series C Preferred Shares in exchange for proceeds of $200,000 pursuant to the SPA on October 14, 2020, representing the First Closing of 200 Purchase Shares and 50 Commitment Shares.
|
|
|
|
|
●
|
The Company agreed to issue 300 Series C Preferred Shares in exchange for proceeds of $300,000 pursuant to the SPA on November 6, 2020, representing the Second Closing of 300 Purchase Shares.
|
On
November 1, 2020, the Company entered into an Advisory Services and Consulting Agreement with a third party for a term of twelve
(12) months, and which may be terminated by either party after six (6) months, whereby the Company agrees to pay a non-refundable
cash consulting fee of $3,500 per month as well as consideration of an amount of restricted shares of the Company’s common
stock to be determined as mutually agreed upon by the parties upon the Company’s listing on a U.S. national exchange.
On
November 10, 2020, the Company paid $100,000 in cash pursuant to the Settlement Agreement for full and final satisfaction of the
outstanding pending litigation and all related principal and accrued interest outstanding for $100,000. See Note 9(e) and Note
17.
On November 11, 2020, the Company received
a conversion notice to issue 1,622,840 shares of common stock for the conversion of 180 Series C Preferred Shares with a carrying
value of $180,000. The shares have yet to be issued as of the date of this report.