UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIESSECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended AprilSeptember 30, 2009
2022
or
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
000-56090
Commission fileFile Number
PHARMAGREEN BIOTECH INC. |
(Exact name of registrant as specified in its charter) |
Nevada | 98-0491567 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2987 Blackbear Court, Coquitlam, British Columbia | V3E 3A2 | |
(Address of principal executive offices) | (Zip Code) |
702-803-9404
(Registrant’s telephone number, 333-151350
AIR TRANSPORT GROUP HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 98-0491567
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7453 Woodruff Way
Stone Mountain Ga 30087
(Address of Principal Executive Offices & Zip Code)
404-671-9253
(Telephone Number)
including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]☐ No [X]
☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the ActAct. Yes [ ]☒ No [X]
☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes [X]☐ No [ ]
Indicate by check mark if disclosure of delinquent filerswhether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Item 405Rule405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part IIIS-T (§232.405 of this Form 10-K or any amendmentchapter) during the preceding 12 months (or for such shorter period that the registrant was required to this
Form 10-K. [ ]
submit such files). ☐ Yes ☒ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer”, “smaller reporting company” and "smaller
reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Act:
Large accelerated filer | ☐ | Non-accelerated Filer | ☒ |
Accelerated filer | ☐ | Smaller reporting company | ☒ |
Emerging Growth | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting company [X]
(Do not check if a smaller reporting company)
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes [ ]☒ No [X]
Securities registered pursuant to Section 12(b) of the Act:
Title of class: Common stock
Trading symbol: PHBI
Name of each exchange on which registered: OTC
As at March 31, 2022, the last business day of the registrant's most recently completed fiscal second quarter, the aggregate market value of the registrant's outstanding common shares held by non-affiliates was approximately $6,505,862, which was calculated based on 342,413,769 common shares outstanding held by non-affiliates at the closing price of the registrant's common shares on the OTC Pinks on such date. As at March 31, 2022 the total issued and outstanding shares of the registrant was 397,221,269 common shares.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.As of August 12, 2009 the registrantJanuary 16, 2023, we had 53,600,000454,760,969 shares of common stock issued and outstanding.
AIR TRANSPORT GROUP HOLDINGS, INC.
(fka Azure International, Inc.)
TABLE OFof CONTENTS
| 2 |
| Table of Contents |
PART I
Item 1. Business........................................................... 3
Item 1A. Risk Factors....................................................... 4
Item 2. Properties......................................................... 9
Item 3. Legal Proceedings.................................................. 9
Item 4. Submission of Matters to a Vote of Security Holders................ 9
Item 5. Market for Common Equity and Related Stockholder Matters........... 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 10
Item 8. Financial Statements............................................... 12
Item 9. Changes in and Disagreements with Accountants on Financial
Disclosure......................................................... 23
Item 9A. Controls and Procedures............................................ 23
Item 10. Directors, Executive Officers and Control Persons.................. 25
Item 11. Executive Compensation............................................. 27
Item 12. Security Ownership of Certain Beneficial Owners and Management..... 27
Item 13. Certain Relationships and Related Transactions..................... 28
Item 14. Principal Accounting Fees and Services............................. 28
Item 15. Exhibits........................................................... 29
Signatures.................................................................. 29
2
PART I
ITEM 1. BUSINESS
SUMMARY
COMPANY OVERVIEW
Air Transport Group Holdings, Inc ("the Company"Business.
Pharmagreen Biotech Inc. (the “Company”) was incorporated under the laws of the State of Nevada on November 26, 2007. The Company is headquartered in Coquitlam, British Columbia. The Company’s mission is to advance the technology of tissue culture science and to provide the highest quality 100% germ free, disease free and all genetically the same plantlets of high CBD hemp and other flora and offering full spectrum DNA testing for plant identification, live genetics preservation using low temperature storage for various cannabis and horticulture plants; extraction of botanical oils mainly CBD oil, and to deliver laboratory based services to the North American high CBD hemp, Cannabis and agriculture sectors.
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favourable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
In 2021, the Company had changed its business development from Canada to the United States, as it was determined that the opportunities in the hemp and cannabis industries were much greater in the United States, specifically California.
On July 25, 2021, the Company entered into a Memorandum of Understanding to acquire all the assets and cannabis business operation (includes 12 acres property, structure and cannabis licenses, existing sales channels and distribution networks) from a private company situated in Northern California. Upon reaching a definitive agreement, the Company intends to further develop a state-of-the-art flowering greenhouse of approximately 12,000 square feet or the maximum allowed by California State and Regional County. The acquisition price is $2.4 million to be paid through a combination of cash and shares. The Company also has an option from the seller to acquire an additional 120 acres or more of land for business expansion and development. The Company currently lacks funds with which to consummate the contemplated transaction and has not negotiated a definitive agreement with respect to the contemplated transaction. Thus, there is no assurance that the Company will ever enter into, and consummate, a definitive agreement with respect to the contemplated transaction.
In 2022, the Cannabis market in California entered a regression stage with prices for the raw materials dropping below production costs including greatly diminished demand for the sun grown raw material. Because of the current state of the Cannabis market in California, the company has put the acquisition on hold. The Company plans to move forward with the biotech complex infrastructure capable of producing tissue cultured high CBD hemp starter plantlets, once the economy turns around.
Focusing on immediate revenues, the Company has been and is currently formulating its nutraceutical products from blends of therapeutic plants and fungi. Utilizing the Company’s expertise in plant genetics, Pharmagreen’s transgenic program uses the newest technology available to research and create nutraceuticals, for daily supplements with the potential to help, support and improve human lives, and to address a wide variety of ailments.
Pharmagreen's first new product, MaxGenomic(TM) Supplement, is a proprietary blend, formulated in the U. S. A., of nine medicinal mushrooms and six medicinal plants to help support the human mind and body. This supplement is produced in a U.S.A cGMP facility, in enteric capsules to enhance the bioavailability of the MaxGenomic(TM) supplement.
The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Company’s supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Company’s operations and the operations of the Company’s suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company’s customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its potential impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources and financial results.
| 3 |
| Table of Contents |
Company History Overview
Pharmagreen Biotech Inc. (“the Company”) was incorporated under the laws of Nevada, U.S. on November 26, 2007 under the name Azure International, Inc. On October 30, 2008 and effective as of the same date, the Company filed Articles of Merger ("Articles") with the Secretary of State of the State of Nevada, to effect a merger by and between Air Transport Group Holdings, Inc., a Nevada corporation incorporated on October 16, 2008, and Azure International, Inc. As a result of the merger, the Company changed its name to Air Transport Group Holdings, Inc.
On April 12, 2018, the Company entered into a share exchange agreement with WFS Pharmagreen Inc., a private company incorporated under the laws of British Columbia, Canada, whereby the Company acquired all of the issued and outstanding shares of WFS Pharmagreen Inc. in exchange for 37,704,500 shares of common stock of the Company. Upon completion of this transaction, the shareholders of WFS Pharmagreen hold 95.5% of voting control of the Company.
Immediately prior to closing of the Agreement, the majority shareholder of the Company was also the majority shareholder of WFS. As a result of the common ownership upon closing of the transaction, the acquisition was considered a common-control transaction and was outside the scope of the business combination guidance in ASC 805-50. The entities are deemed to be under common control as of February 27, 2018, which was the date that the majority shareholder acquired control of the Company and, therefore, held control over both companies. On May 2, 2018, the Share Exchange Agreement was effected. In connection with this transaction, the Company changed its name on May 8, 2018 to Pharmagreen Biotech Inc. and changed its year end from April 30 to September 30.
Our principal executive offices are temporarily located at 2987 Blackbear Court, Coquitlam, British Columbia, Canada. Our telephone number is (702-803-9404). Our internet address is www.pharmagreen.ca.
On August 7, 2020, our company (including our subsidiaries) filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the development stage as defined under Statement on Financial
Accounting StandardsUnited States Bankruptcy Court for the District of Nevada, Case No. 7,Development Stage Enterprises ("SFAS No.7"). The
Company has not generated any revenue to date and consequently its operations
are subject to all risks inherent in the establishment of20-13886.
On October 9, 2020, a new business
enterprise. The company is in the business of providing technical advisory and
appraisals to the aircraft and aviation business as well as providing sourcing
for aircraft leases and parts.
There are no preferred shares authorized. The Company has issued no preferred
shares.
The Company has no stock option plan, warrants or other dilutive securities.
We are contemplating raising additional capital to finance our development
programs. No final decisions regarding the program or financing have been made
at this time.
BANKRUPTCY OR SIMILAR PROCEEDINGS
We have not been the subject ofstay order was lifted by a bankruptcy, receivership or similar
proceedings.
PRODUCTS AND SERVICES
The company is in the business of providing technical advisory and appraisal
services to the aircraft and aviation business as well as providing sourcing for
aircraft leases and parts.
MARKETS AND CUSTOMERS
The company asUnited States District Judge of the dateUnited States District Court for the Southern District of this filing does not have any clients but is
currently negotiating contracts with some potential customers.
COMPETITION
The airlineNew York, on an action filed by a lender. This effectively removed the Company from its Chapter 11 bankruptcy proceedings and aviation industry is highly competitive. Competitors will
include major and minor airline and aviation companies most of which will have
financial resources, personnel and facilities substantially greater than we
have. protection.
We expect to face intense competition in this industrial sector.
REGULATIONS
Our proposed business will be affected by numerous laws and regulations,
including environmental, conservation, tax federal aviation, and other laws and
regulations relatingcontinue to incur losses for at least the resource industry. Most of our extraction operations
will require permits or authorizations from federal, provincial or local
agencies.
Changes in any of these laws and regulations or the denial or vacating of
permits could have a material adverse effect on our business. In view of the
many uncertainties with respect to current and future laws and regulations,
including their applicability to us, we cannot predict the overall effect of
such laws and regulations on our future operations.
3
We expect that our operations will comply in all material respects with
applicable laws and regulations. We believe that the existence and enforcement
of such laws and regulations will have no more restrictive an effect on our
operations than on other similar companies in the resource industry.
ENVIRONMENTAL MATTERS
Our proposed business activities will be subject to extensive federal,
provincial and local environmental laws and regulations relating to water, air,
hazardous substances and wastes that may restrict or limit such business
activities. Compliance with the multitude of regulations issued by federal,
state, provincial and local administrative agencies can be burdensome and
costly.
EMPLOYEES
We have no employees as of the date of this filing.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our
incorporation.
PATENTS AND TRADEMARKSnext 12 months. We do not own, either legally or beneficially, any patents or trademarks.
REPORTS TO SECURITIES HOLDERS
We provide an annual reportexpect to generate revenue that includes audited financial informationis sufficient to cover our shareholders.expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next twelve months. We will makeneed to obtain additional financing, through equity security sales, debt instruments and private financing, to conduct our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-K for a small business issuer under the Securities Exchange Act of
1934. We are subject to disclosure filing requirements including filing Form 10K
annually and Form 10Q quarterly. In addition, we will file Form 8K and other
proxy and information statements from time to time as required. We do not intend
to voluntarily file the above reports in the event that our obligation to file
such reports is suspended under the Exchange Act. The public may read and copy
any materials that we file with the Securities and Exchange Commission, ("SEC"),
at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
ITEM 1A. RISK FACTORS
WE ARE A DEVELOPMENT STAGE COMPANY AND WE EXPECT TO INCUR OPERATING LOSSES FOR
THE FORESEEABLE FUTURE.
We were incorporated on November 26, 2007day-to-day operations, and to date have recently been
involved in the development of our company. We have no way to evaluate the
likelihood thatfully execute our business will be successful.plan. We have not earned any revenues
as of the date of this annual report. Potential investors should be aware of the
difficulties normally encountered by development companies and the high rate of
failure of such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the development that we plan to undertake. These
4
potential problems include, but are not limitedraise the capital necessary to unanticipated problems
relating to development offund our business and additional costs and expenses that
may exceed current estimates. Prior to completionthrough the sale of our development stage, we
anticipate that we will incur increased operating expenses without realizing any
revenues. We expect to incur significant losses into the foreseeable future. We
recognize that if production of our business is not forthcoming, we will not be
able to continue business operations. There is no history upon which to base any
assumption as to the likelihood that we will prove successful, and it is
doubtful that we will generate any operating revenuesequity securities, debt instruments or ever achieve profitable
operations. If we are unsuccessful in addressing these risks, our business will
most likely fail.
WE HAVE YET TO EARN REVENUE AND OUR ABILITY TO SUSTAIN OUR OPERATIONS IS
DEPENDENT ON OUR ABILITY TO RAISE ADDITIONAL FINANCING TO RUN OUR BUSINESS. AS A
RESULT, OUR ACCOUNTANT BELIEVES THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE AS A GOING CONCERN.
We have accrued net losses of $71,351 for the period from inception (November
26, 2007) to April 30, 2009, and have no revenues to date. Our future is
dependent upon our ability to obtain financing and upon future profitable
operations from the development of our business.private financing. These factors raise substantial doubt that we will be able to continue as a going concern. Seale and Beers,
CPAs, our independent auditor, has expressed substantial doubt about ourupon the Company’s ability to continue as a going concern. This opinion could materially limit our abilityreport does not reflect all the adjustments that may be necessary if the Company is unable to raise additional funds by issuing new debt or equity securities or otherwise.
If we fail to raise sufficient capital when needed, we will not be able to
complete our business plan. continue as a going concern.
Item 1A. Risk Factors.
As a result we may have to liquidate our business
and you may lose your investment. You should consider our auditor's comments
when determining if an investment“smaller reporting company,” as defined in our company is suitable.
BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN NEW VENTURES,
WE FACE A HIGH RISK OF BUSINESS FAILURE.
You should be awareRule 12b-2 of the difficulties normally encounteredExchange Act, we are not required to provide the information called for by new companiesthis Item.
Item 1B. Unresolved Staff Comments.
None
Item 2. Properties.
We do not own any real estate or other properties and have not entered into any long-term lease or rental agreements for property.
| 4 |
| Table of Contents |
Item 3. Legal Proceedings.
On July 22, 2020, the high rateCompany received a preliminary statement of claim from a convertible note holder for failure of such enterprises. The likelihoodthe Company to deliver shares of success mustcommon stock upon receipt of notices of conversion. Pursuant to the claim, the plaintiff has requested receipt of all shares of common stock requested in the notices of conversion, and also damages in an amount to be considereddetermined at trial but in lightany event in excess of principal amount of $78,000 for a total sum of $180,000, including without limitation the balance of any portion of the problems, expenses, difficulties, complicationsconvertible note that ultimately is not converted into shares of common stock, along with default interest, liquidated damages, and delays encountereddamages as provided for in connectionthe convertible note.
On October 9, 2020, a stay order was lifted by a United States District Judge of the United States District Court for the Southern District of New York, on an action filed by a lender. This effectively removed the Company from its Chapter 11 bankruptcy proceedings and protection. The lifting of the stay order further allowed the convertible note holders to convert thereby increasing the number of shares issued and outstanding.
On October 29, 2020 a second note holder filed a statement of claim. This lender, as of December 24, 2020, has completely converted the full amount of the note of $100,000, interest of $8,690 and penalty and fees aggregating $19,500.
Also, as mentioned above, the Company filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada on August 7, 2020. The Company’s filing with the development business. If no
funding is available, we may be forced to abandon our operations.
BECAUSE OUR CURRENT OFFICERS AND DIRECTORS HAVE OTHER BUSINESS INTERESTS, THEY
MAY NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS
OPERATIONS, CAUSING OUR BUSINESS TO FAIL.
Mr. Arnold Leonora our CEO and director, currently devotes up to 20 hours per
week providing services toCourt was designated as Case No. 20-13886. During the company. While he presently possesses adequate
time to attend to our interest, it is possible thatpendency of this matter, the demands on him from
other obligations could increase,Company has also filed motions with the result that he would no longer be
able to devote sufficient time to the management of our business. This could
negatively impact our business development. Our other Directors spend less time
providing services to the company and there is no guarantee that they will have
sufficient time to devote to the management of our business.
WE MAY BE UNABLE TO OBTAIN ADDITIONAL CAPITAL THAT WE MAY REQUIRE TO IMPLEMENT
OUR BUSINESS PLAN. THIS WOULD RESTRICT OUR ABILITY TO GROW.
We currently have insufficient working capital to fund our proposed operations.
We will require additional capitalCourt seeking authorization to continue to operate our businessits businesses as “debtors-in-possession” under the jurisdiction of the Court and our
proposed operations. We may be unablein accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. Due to obtain additional capital asthe stay order mentioned, the Company did not file a plan of reorganization with the Court for approval.
On March 12, 2021, the Company entered into a settlement agreement with the convertible noteholder that had filed a preliminary statement of claim on July 22, 2020. Pursuant to the agreement the Company was required to honor various conversion notices and when
required.
Future acquisitionsthe noteholder agreed to wave all principal, interest and future development, production and marketing activities,
as well as our administrative requirements (such as salaries, insurance expenses
and general overhead expenses, as well as legal compliancepenalties incurred.
On March 10, 2021, the promissory note holder referred to in Note 4 (a) of the accompanying consolidated financial statements filed a Notice of Motion For Summary Judgement in Lieu of Complaint (the “Notice”) with the State of New York Supreme Court, County of New York for $40,504 plus interest at the rate of 10% per annum from January 6, 2021 plus costs. On July 31, 2021, the Notice was dismissed without prejudice by the State of New York Supreme Court. On October 20, 2021, the promissory note holder filed an Amended Notice of Motion for Summary Judgment in Lieu of Complaint with the State of New York Supreme Court, County of New York for $44,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs and accounting
expenses)attorney fees. The plaintiff filed for an oral argument which was heard by the State of New York Supreme Court on September 15, 2022 and is pending a final decision. The Company believes the claim is without merit, as evidenced by the initial claim being dismissed by the same courts, and will require a substantial amount of additional capital and cash flow.
5
We may not be successful in locating suitable financing transactionsvigorously defend its position.
Except as mentioned in the time
period required or at all, and we may not obtain the capital we require by other
means. If we do not succeed in raising additional capital, the capital we have
received to date may not be sufficient to fund our operations going forward
without obtaining additional capital financing.
Any additional capital raised through the sale of equity may dilute your
ownership percentage. This could also result in a decrease in the fair market
value of our equity securities because our assets would be owned by a larger
pool of outstanding equity. The terms of securities we issue in future capital
transactions may be more favorable to our new investors, and may include
preferences, superior voting rights and the issuance of warrants or other
derivative securities, and issuances of incentive awards under equity employee
incentive plans, which may have a further dilutive effect.
Our ability to obtain needed financing may be impaired by such factors as the
capital markets (both generally and in the resource industry in particular), our
status as a new enterprise without a demonstrated operating history, the
location of our mineral properties and the price of minerals on the commodities
markets (which will impact the amount of asset-based financing available to us)
or the retention or loss of key management. Further, if mineral prices on the
commodities markets decrease, then our revenues will likely decrease, and such
decreased revenues may increase our requirements for capital. If the amount of
capital wepreceding paragraphs, there are able to raise from financing activities is not sufficient to
satisfy our capital needs, we may be required to cease our operations.
We may incur substantial costs in pursuing future capital financing, including
investment banking fees,no pending legal fees, accounting fees, securities law compliance
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which may adversely impact
our financial condition.
AMENDMENTS TO CURRENT LAWS AND REGULATIONS GOVERNING OUR PROPOSED OPERATIONS
COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR PROPOSED BUSINESS.
Our business will be subject to substantial regulation under state and federal
laws. Amendments to current laws and regulations governing operations and
activities of resource operations could have a material adverse impact on our
proposed business. In addition, there can be no assurance that income tax laws,
royalty regulations and government incentive programs related to the resource
industry generally, will not be changed in a manner which may adversely affect
us and cause delays, inability to complete or abandonment of properties.
Permits, leases, licenses, and approvals are required from a variety of
regulatory authorities at various stages of mining and extraction. There can be
no assurance that the various government permits, leases, licenses and approvals
sought will be granted to us or, if granted, will not be cancelled or will be
renewed upon expiration.
ABANDONMENT AND RECLAMATION COSTS ARE UNKNOWN AND MAY BE SUBSTANTIAL.
We will be responsible for compliance with terms and conditions of environmental
and regulatory approvals and all laws and regulations regarding the abandonment
of our properties and reclamation of lands at the end of their economic life,
which abandonment and reclamation costs may be substantial. A breach of such
legislation and/or regulations may result in the issuance of remedial orders,
the suspension of approvals, or the imposition of fines and penalties, including
an order for cessation of operations at the site until satisfactory remedies are
made. It is not possible to estimate with certainty the abandonment and
reclamation costs since they will be a function of regulatory requirements at
the time.
6
INCREASES IN OUR OPERATING EXPENSES WILL IMPACT OUR OPERATING RESULTS AND
FINANCIAL CONDITION.
Extraction, development, production, marketing (including distribution costs)
and regulatory compliance costs (including taxes) will substantially impact the
net revenues we derive from the minerals that we produce. These costs are
subject to fluctuations and variation in different locales in which we will
operate, and we may not be able to predict or control these costs. If these
costs exceed our expectations, this may adversely affect our results of
operations. In addition, we may not be able to earn net revenue at our predicted
levels, which may impact our ability to satisfy our obligations.
PENALTIES WE MAY INCUR COULD IMPAIR OUR BUSINESS.
Failure to comply with government regulations could subject us to civil and
criminal penalties, could require us to forfeit property rights, and may affect
the value of our assets. We may also be required to take corrective actions,
such as installing additional equipment or taking other actions, each of which
could require us to make substantial capital expenditures. We could also be
required to indemnify our employees in connection with any expenses or
liabilities that they may incur individually in connection with regulatory
action against them. As a result, our future business prospects could
deteriorate due to regulatory constraints, and our profitability could be
impaired by our obligation to provide such indemnification to our employees.
ENVIRONMENTAL RISKS MAY ADVERSELY AFFECT OUR BUSINESS.
Mineral extraction operations present environmental risks and hazards and are
subject to environmental regulation pursuant to a variety of federal, state,
provincial and municipal laws and regulations. Environmental legislation
provides for, among other things, restrictions and prohibitions on spills,
releases or emissions of various substances produced in association with
resource operations. The legislation also requires that facility sites be
operated, maintained, abandoned and reclaimed to the satisfaction of applicable
regulatory authorities. Compliance with such legislation can require significant
expenditures and a breach may result in the imposition of fines and penalties,
some of which may be material. Environmental legislation is evolving in a manner
we expect may result in stricter standards and enforcement, larger fines and
liability and potentially increased capital expenditures and operating costs.
The discharge of pollutants into the air, soil or water may give rise to
liabilities to governments and third parties and may require us to incur costs
to remedy such discharges. The application of environmental laws to our business
may cause us to curtail our production or increase the costs of our business.
CHALLENGES TO TITLE TO OUR PROPERTIES MAY IMPACT OUR FINANCIAL CONDITION.
Title to mineral interests is often not capable of conclusive determination
without incurring substantial expense. While we intend to make appropriate
inquiries into the title of properties and other development rights we acquire,
title defects may exist. In addition, we may be unable to obtain adequate
insurance for title defects, on a commercially reasonable basis or at all. If
title defects do exist, it is possible that we may lose all or a portion of our
right, title and interests in and to the propertiesproceedings to which the title defects
relate.
THE LIMITED TRADING OF OUR COMMON STOCK ON THE OTC BULLETIN BOARD MAY IMPAIR
YOUR ABILITY TO SELL YOUR SHARES.
There has been no trading market for our common stock since our inception. The
lackCompany is a party or in which any director, officer or affiliate of tradingthe Company, any owner of our common stock and the low volumerecord or beneficially of more than 5% of any future trading may
impair your ability to sell your shares atclass of voting securities of the time you wish to sell themCompany, or atstockholder is a price that you consider reasonable. Such factors may also impair our ability
to raise capital by selling shares of capital stock and may impair our ability
to acquire other companies or technologies by using common stock as
consideration.
THE MARKET PRICE OF OUR COMMON STOCK IS LIKELY TO BE HIGHLY VOLATILE AND SUBJECT
TO WIDE FLUCTUATIONS.
7
Assuming we are able to establish an active trading market for our common stock,
the market price of our common stock is likely to be highly volatile and could
be subject to wide fluctuations in response to a number of factors that are
beyond our control, including:
* dilution caused by our issuance of additional shares of common stock
and other forms of equity securities, which we expect to make in
connection with future capital financings to fund our operations and
growth, to attract and retain valuable personnel and in connection
with future strategic partnerships with other companies;
* announcements of acquisitions, reserve discoveries or other business
initiatives by our competitors;
* fluctuations in revenue from our mineral business as new reserves come
to market;
* changes in the market for commodities or in the capital markets
generally;
* quarterly variations in our revenues and operating expenses;
* changes in the valuation of similarly situated companies, both in our
industry and in other industries;
* changes in analysts' estimates affecting us, our competitors or our
industry;
* changes in the accounting methods used in or otherwise affecting our
industry;
* additions and departures of key personnel;
* fluctuations in interest rates and the availability of capital in the
capital markets; and
These and other factors are largely beyond our control, and the impact of these
risks, singly or in the aggregate, may result in materialparty adverse changes to the market priceCompany or has a material interest adverse to the Company.
Item 4. Mine Safety Disclosures.
N/A
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of our common stock and our results of operations and financial
condition.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND THESE FLUCTUATIONS MAY
CAUSE OUR STOCK PRICE TO DECLINE.
Equity Securities.
Our operating results will likely vary in the future primarily as the result of
fluctuations in our revenues and operating expenses, expenses that we incur, the
price of minerals in the commodities markets and other factors. If our results
of operations do not meet the expectations of current or potential investors,
the price of our common stock may decline.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We do not intend to declare dividends for the foreseeable future, as we
anticipate that we will reinvest any future earnings in the development and
growth of our business. Therefore, investors will not receive any funds unless
they sell their common stock, and stockholders may be unable to sell their
shares on favorable terms or at all. Investors cannot be assured of a positive
return on investment or that they will not lose the entire amount of their
investment in the common stock.
8
APPLICABLE SEC RULES GOVERNING THE TRADING OF "PENNY STOCKS" WILL LIMIT THE
TRADING AND LIQUIDITY OF OUR COMMON STOCK, WHICH MAY AFFECT THE TRADING PRICE OF
OUR COMMON STOCK.
Our common stockCommon Stock is presently considered to be a "penny stock" and is subject to
SEC rules and regulations which impose limitations upon the manner in which such
shares may be publicly traded and regulate broker-dealer practices in connection
with transactions in "penny stocks." Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges orcurrently quoted on the NASDAQ system, provided
that current priceOTC Market under the symbol “PHBI.” Prior to July 31, 2018, our Common Stock was quoted under the symbol “AITGD.” Quotations of our Common Stock began on June 10, 2008. Our Common Stock was listed and volume information with respect to transactions in such
securitiescommenced trading on the OTC Market on June 10, 2008.
| 5 |
| Table of Contents |
The Company’s Regulation offering was “qualified” on September 24, 2021. Under the terms of the offering, the Company is provided by the exchange or system). The penny stock rules require
a broker-dealer, prioroffering for sale up to a transaction in a penny stock not otherwise exempt
from the rules,maximum of 300,000,000 units at $0.025 per unit to deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market.raise up to US $7.5 million. The broker-dealer must also provide the customer with current bid and offer
quotationsminimum investment is set at US $1,000.00. The primary use of proceeds is to be used for the penny stock, the compensationacquisition of a California based Cannabis Licensed Company and to construct state of the broker-dealerart greenhouse on property owned by this Company.
As of September 30, 2022, we had 442,260,969 shares of our Common Stock issued and outstanding held by approximately 217 stockholders of record. To date, we have not paid dividends on our Common Stock.
Our Common Stock is very thinly traded and, thus, pricing of our Common Stock on OTC Markets does not necessarily represent its salespersonfair market value.
Item 6. Selected Financial Data
As a “smaller reporting company,” as defined in Rule 12b-2 of the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock, the broker-dealer make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules which may increase the
difficulty investors may experience in attempting to liquidate such securities.
FORWARD-LOOKING STATEMENTS
This Form 10-KSB contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons.
ITEM 2. PROPERTIES
We currently do not own any physical property or own any real property. Our
principal executive office is located at 7453 Woodruff Way, Stone Mountain, GA,
30087.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings andExchange Act, we are not awarerequired to provide the information called for by this Item.
Item 7. Management’s Discussion and Analysis of any pending or potential legal actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a voteFinancial Condition and Results of the security holders during the
year ended April 30, 2008.
9
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NO PUBLIC MARKET FOR COMMON STOCK
Our common stock is listed for trading under the symbol "AITG".
As of the date of this report we have approximately 45 shareholders of record.
We have paid no cash dividendsOperations.
Management’s Discussion and have no outstanding options. We have no
securities authorized for issuance under equity compensation plans.
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or quotation system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document prepared by the SEC, that: (a)
contains a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading; (b) contains a
description of the broker's or dealer's duties to the customer and of the rights
and remedies available to the customer with respect to a violation to such
duties or other requirements of Securities' laws; (c) contains a brief, clear,
narrative description of a dealer market, including bid and ask prices for penny
stocks and the significance of the spread between the bid and ask price; (d)
contains a toll-free telephone number for inquiries on disciplinary actions; (e)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (f) contains such other information and is in such
form, including language, type, size and format, as the SEC shall require by
rule or regulation. The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock if it becomes subject to these
penny stock rules. Therefore, if our common stock becomes subject to the penny
stock rules, stockholders may have difficulty selling those securities.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
Analysis
This section of this reportthe Form 10-K includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like:like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the
date of our report.statements. These forward-looking statements are subject to certain
10
historical results or our predictions. We are a development stage company
Capital Resources and have not yet generated or realized any revenues.
RESULTS OF OPERATIONS
We are still in the development stage and have not generated any revenues to
date.
We incurred operating expenses of $71,351from inception to the year ended April
30, 2009. These expenses consisted of general operating expenses and
professional fees incurred in connection with the day to day operation of our
business and the preparation and filing of our periodic reports and for the year
ended April 30, 2009. Our net loss for the year ending April 30, 2009 was
$69,682. Liquidity
Our auditors have issued a going concern opinion. This means“going concern” opinion, meaning that there is substantial doubt thatif we can continue as an on-going business for the next
twelve months unless we obtain additional capital to paycapital. No substantial revenues from our bills. This is
because we have not generated revenues and no revenuesplanned business model are anticipated until we begin removinghave completed financing the Company. As at September 30, 2022, the Company has a working capital deficit of $1,703,176 and selling minerals. There isan accumulated deficit of $12,574,895. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
We need to seek capital from resources such as the sale of private placements in the Company’s common stock or debt financing, which may not even be available to the Company. However, if such financing were available, because we are an early stage company with no assuranceor limited operations to date, it would likely have to pay additional costs associated with such financing and in the case of high risk loans be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such financing. If the Company cannot raise additional proceeds via such financing, it may be required to cease business operations.
As of September 30, 2022, we will ever reach
that point. We are stillhad $8,016 in our development stagecash, amounts receivable of $383, and have generated no revenuesprepaid expenses and deposits of $200,572, as compared to date.
LIQUIDITY AND CAPITAL RESOURCES
Our$25,300 in cash, balance at Aprilamounts receivable of $290 and prepaid expenses and deposits of $347,491 as of September 30, 2009 was $0 with outstanding liabilities of
$11,351. Management believes our current cash balance will be unable to sustain
operations2021. The primary reason for the next 12 months. We will be forceddecrease in cash was due to raise additionalthe increase in cash used in operating activities, while prepaids and deposits decreased due to fewer shares being issued in advance to consultants as payment for their future services. As of the date of this Form 10-K, the current funds by issuing new debt or equity securities or otherwise. If we failavailable to raise
sufficient capital when needed, wethe Company will not be ablesufficient to completefund the expenses related to maintaining our business
plan.planned operations. We are a development stage companyin the process of seeking additional equity financing in the form of private placements, loans and have generated no revenue to date.
PLAN OF OPERATION
Our cash balance is $0 as of April 30, 2009. We believe our cash balance is
insufficientregistration statements to fund our levels of operations for the next twelve months. As a
resultintended business operations.
Management believes that if subsequent private placements are successful or we are successful in raising funds from registered securities, we will generate sales revenue within twelve months thereof. However, additional equity financing may not be forcedavailable to raise additional funds by issuing new debtus on acceptable terms or equity
securities or otherwise. Ifat all, and thus we could fail to raise sufficient capital when needed, we
will not be able to completesatisfy our business plan. We are a development stage
company and have generated no revenue to date.
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated revenues and no revenues are anticipated until we
begin removing and selling minerals. There is no assurance we will ever reach
that stage.
OFF-BALANCE SHEET ARRANGEMENTS
future cash requirements.
We do not haveanticipate researching any further products nor the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees.
Results of Operations
We had no revenue for the years ended September 30, 2022 and 2021.
| 6 |
| Table of Contents |
Total operating expenses for the fiscal year ended September 30, 2022 was $1,101,493 compared to operating expenses for the fiscal year ended September 30, 2021, of $744,064. In addition to operating expenses, we had other income $225,998 during the fiscal year ended September 30, 2022 compared to incurring other expenses of $3,788,160 for the fiscal year ended September 30, 2021. During the fiscal year ended September 30, 2022, we incurred a net loss of $875,478 compared to a net loss of $4,532,071 for the year ended September 30, 2021. The decrease in net loss for the fiscal year ended September 30, 2022 compared to September 30, 2021 was mainly due to the following:
· | A decrease in accretion of discount of convertible notes from $88,264 in 2021 to $18,465 in 2022 due to the decrease in the convertible notes balance from $198,668 in 2021 to $120,038 in 2022; | |
· | A decrease in interest and finance costs from $680,714 in 2021 to $28,780 in 2022 due to the decrease in finance and commitment fees from $250,000 in 2021 to $nil in 2022, a decrease in loan interest from $108,851 in 2021 to $28,780 in 2022, and a decrease in default penalties on convertible notes from $321,863 in 2021 to $nil in 2022; and | |
· | A change in fair value of derivative liabilities from loss of $3,257,122 in 2021 to a gain of $215,620 in 2022 due to a court judgement ordering the surrender of a convertible note’s conversion rights, leading to the derecognition of its derivative liability. |
The increase was partially offset by the following:
· | An increase in consulting fees from $526,522 in 2021 to $924,625 in 2022 due to a larger number of consulting agreements entered into in 2022; and | |
· | A decrease in recovery of default penalties from $237,940 in 2021 to $57,613 in 2022 due to the derecognition of a default penalty relating to the court judgement of a convertible note. |
During the year ended September 30, 2022, and 2021, we incurred a net loss of $0.00 and $0.02 per share, respectively.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on our financial condition, changes inthe company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that isare material to investors. 11
ITEMThe term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
| 7 |
| Table of Contents |
Item 8. FINANCIAL STATEMENTS
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
Financial Statements and Supplementary Data
PHARMAGREEN BIOTECH INC.
Consolidated Financial Statements
Years Ended September 30, 2022, and 2021
(Expressed in U.S. Dollars)
| 8 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors Air Transport Group Holdings,and Shareholders of Pharmagreen Biotech Inc. fka Azure International, Inc.
(A Development Stage Company)
:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheetssheet of Air Transport Group Holdings,Pharmagreen Biotech Inc. fka Azure International, Inc. (A Development Stage Company)(“the Company”) as of AprilSeptember 30, 2009 and 2008, and2022, the related consolidated statements of operations stockholders' equity
(deficit)and comprehensive loss, stockholders’ deficit, and cash flows for the year April 30, 2009,then ended, and for the periods from
inception on November 26, 2007 through April 30, 2008 and 2009. These financial
statements arerelated notes (collectively referred to as the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conduct our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States)“financial statements”). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Air Transport Group Holdings,
Inc. fka Azure International, Inc. (A Development Stage Company)the Company as of AprilSeptember 30, 2009 and 2008,2022, and the related statementsresults of its operations stockholders' equity
and its cash flows for the year then ended, April 30, 2009, and the periods from inception
on November 26, 2007 through April 30, 2008 and 2009, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 31 to the financial statements, the Company has an accumulated deficit of $71,351, which
raisessuffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans concerningin regard to these matters are also described in Note 3.1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Seale
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and Beers, CPAs
- ---------------------------------
Seale and Beers, CPAs
Las Vegas, Nevada
August 12, 2009
6490 West Desert Inn Rd, Las Vegas, NV 89146 (702) 253-7492 Fax (702) 253-7501
12
AIR TRANSPORT GROUP HOLDINGS, INC.
(fka Azure International, Inc.)
(A Development Stage Company)
Balance Sheets
(Stated in US Dollars)
As of
April 30, April 30,
2009 2008
-------- --------
(Audited) (Audited)
Assets
Current assets
Cash $ -- $ 30,619
-------- --------
Total current assets -- 30,619
-------- --------
Total Assets $ -- $ 30,619
======== ========
Liabilities
Current liabilities
Accounts payable $ 8,575 $ --
-------- --------
Total current liabilities 8,575 --
Long term liabilities
Loan from Director 2,776 788
-------- --------
Total Liabilities $ 11,351 $ 788
======== ========
Equity
75,000,000 Common Shares Authorized, 53,600,000
at $0.001 Per Share Issued and Outstanding $ 53,600 $ 52,500
Additional paid-in capital 6,400 (21,000)
Deficit accumulated during development stage (71,351) (1,669)
-------- --------
Total stockholders equity (11,351) 29,831
-------- --------
Total liabilites and stockholders equity $ -- $ 30,619
======== ========
The accompanying notes are an integral part of these financial statements.
13
Air Transport Group Holdings, Inc.
(fka Azure International, Inc.)
(A Development Stage Company)
Statements of Operations
(Stated in US Dollars)
For the From Inception From Inception
year ended November 26, 2007 to (November 26, 2007) to
April 30, April 30, April 30,
2009 2008 2009
------------ ------------ ------------
Revenue $ -- $ -- $ --
------------ ------------ ------------
Expenses
General and Adminstrative Expenses 69,682 1,669 71,351
------------ ------------ ------------
Total Expenses 69,682 1,669 71,351
------------ ------------ ------------
Provision for Income Tax -- -- --
------------ ------------ ------------
Net Income (Loss) $ (69,682) $ (1,669) $ (71,351)
============ ============ ============
Basic & Diluted (Loss) per Common Share (0.001) (0.000)
------------ ------------
Weighted Average Number of Common Shares 53,517,978 52,500,000
------------ ------------
The ccompanying aotes are an n integral part of these financial statements.
14
AIR TRANSPORT GROUP HOLDINGS, INC.
(fka Azure International, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception (November 26, 2007)required to April 30, 2009
(Stated in US Dollars)
Deficit
Accumulated
Additional During
Common Stock Paid in Development Total
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Balance at Inception, November 26, 2007 0 $ -- $ -- $ -- $ --
Shares issued for cash - February 4, 2008
at $0.0001 per share 30,000,000 30,000 (27,000) 3,000
Shares issued for cash - February 12, 2008
at 0.01 per share 21,000,000 21,000 -- 21,000
Shares issued for cash - March 11, 2008
at 0.05 per share 1,500,000 1,500 6,000 7,500
Net (Loss) for period from inception
(November 26, 2007) to April 30, 2008 (1,669) (1,669)
----------- ------- -------- -------- --------
Balance, April 30, 2008 52,500,000 52,500 (21,000) (1,669) 29,831
=========== ======= ======== ======== ========
Shares issued from Treasury, February 1, 2009
at $0.021 per share 1,000,000 1,000 20,000 21,000
Shares issued from Treasury, March 15, 2009
at $0.075 per share 100,000 100 7,400 7,500
Net (Loss) for period ended April 30, 2009 (69,682) (69,682)
----------- ------- -------- -------- --------
Balance, April 30, 2009 53,600,000 $53,600 $ 6,400 $(71,351) $(11,351)
=========== ======= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
15
AIR TRANSPORT GROUP HOLDINGS, INC.
(fka Azure International, Inc.)
(A Development Stage Company)
Statements of Cash Flows
(Stated in US Dollars)
For the From Inception From Inception
year ended November 26, 2007 to (November 26, 2007) to
April 30, April 30, April 30,
2009 2008 2009
---------- ---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ (69,682) $ (1,669) $ (71,351)
Accounts Payable 8,575 -- 8,575
---------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (61,107) (1,669) (62,776)
INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES -- -- --
---------- ---------- ----------
FINANCING ACTIVITIES
Common shares issued at founders @ $0.001 per share 1,100 52,500 53,600
Additional paid-in capital 27,400 (21,000) 6,400
Loans From Director 1,988 788 2,776
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 30,488 32,288 62,776
Cash at beginning of period 30,619 -- --
---------- ---------- ----------
CASH AT END OF PERIOD $ -- $ 30,619 $ --
========== ========== ==========
Cash Paid For:
Interest $ -- $ -- $ --
========== ========== ==========
Income Tax $ -- $ -- $ --
========== ========== ==========
Non-Cash Activities
Shares issued in Lieu of Payment for Service $ -- $ -- $ --
========== ========== ==========
Stock issued for accounts payable $ -- $ -- $ --
========== ========== ==========
Stock issued for notes payable and interest $ -- $ -- $ --
========== ========== ==========
Stock issued for convertible debentures and interest $ -- $ -- $ --
========== ========== ==========
Convertible debentures issued for services $ -- $ -- $ --
========== ========== ==========
Warrants issued $ -- $ -- $ --
========== ========== ==========
Stock issued for penalty on default of convertible
debentures $ -- $ -- $ --
========== ========== ==========
Note payable issued for finance charges $ -- $ -- $ --
========== ========== ==========
Forgiveness of note payable and accrued interest $ -- $ -- $ --
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
16
AIR TRANSPORT GROUP HOLDINGS INC.
(fka Azure International, Inc.)
(A Development Stage Company)
Footnotesbe independent with respect to the Financial Statements
From Inception to April 30, 2009
(StatedCompany in US Dollars)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Air Transport Group Holdings, Inc ("accordance with the Company") was incorporated underU.S. federal securities laws and the lawsapplicable rules and regulations of the State of Nevada, U.S. on November 26, 2007 underSecurities and Exchange Commission and the name Azure
International, Inc. On October 30, 2008, and effective asPCAOB.
We conducted our audit in accordance with the standards of the same date,PCAOB. Those standards require that we plan and perform the Company filed Articlesaudit to obtain reasonable assurance about whether the financial statements are free of Merger ("Articles") with the Secretary of State of the
State of Nevada,material misstatement, whether due to effect a merger by and between Air Transport Group Holdings,
Inc., a Nevada corporation and Azure International, Inc. As a result of the
merger, the Company changed its name to Air Transport Group Holdings, Inc.
On March 10, 2009, the Company completed a forward stock split of its common
stock on a ratio of ten shares for every one share of the Company. The record
date of the forward stock split was February 27, 2009, the payment date of the
forward split was March 9, 2009, and the ex-dividend date of the forward split
was March 10, 2009. The forward split was payable as a dividend, thereby
requiring no action by shareholders, nor any amendment to the articles of
incorporation of the Company.error or fraud. The Company is innot required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the development stage as defined under Statement on Financial
Accounting Standards No. 7, Development Stage Enterprises ("SFAS No.7"). The
Company has not generated any revenue to date and consequently its operations
are subject to all risks inherent in the establishmentpurpose of a new business
enterprise. For the period from inception, November 26, 2007 through April 30,
2009 the Company has accumulated losses of $71,351. The company is in the
airline business asexpressing an independent consultant and contractor.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected an April 30 year-end.
b. Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement
exists, goods delivered, the contract price is fixed or determinable, and
collectability is reasonably assured.
c. Income Taxes
The Company prepares its tax returnsopinion on the accrual basis. The Company accounts
for income taxes undereffectiveness of the StatementCompany’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
17
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
d. Use of Estimates
The preparationmaterial misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in conformity with generally
acceptedthe financial statements. Our audits also included evaluating the accounting principles requiresused and significant estimates made by management, to make estimates and
assumptionsas well as evaluating the overall presentation of the financial statements. We believe that affectour audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the datecurrent period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the reported amountsfinancial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of revenuescritical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and expenses duringwe are not, by communicating the reporting period. Actual results could differ from those estimates.
e. Assets
The company has no cash as of April 30, 2009.
f. Income
Income represents allcritical matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Matter #1
Critical Audit Matter Description
As described further in Notes 5 and 6 of the company's revenue less all its expenses in the
period incurred. The Company has no revenues as of April 30, 2009 and has paid
expenses of $71,351 since inception. Forfinancial statements, during the year ended AprilSeptember 30, 2009 it has
incurred expenses2022, and in prior periods, the Company issued convertible notes and warrants that required management to assess whether the conversion features of $69,682.
g. Recent Account Pronouncements
In April 2009, the FASBconvertible notes required bifurcation and separate valuation as a derivative liability, and whether the warrants required accounting treatment as derivative liabilities. The Company determined that the conversion features of certain of its convertible notes and issued FSP No. FAS 157-4, "Determining Fair Value When
the Volume and Level of Activityin financing arrangements required to be accounted for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4").
FSP FAS 157-4 provides guidance on estimatingas derivative liabilities. The derivative liabilities were recorded at fair value when market activity
has decreasedissued and on identifying transactions that are not orderly.
Additionally, entities are requiredsubsequently re-measured to disclose in interim and annual periodsfair value upon settlement or at the inputs and valuation techniques used to measure fair value. This FSP is
effective for interim and annual periods ending after June 15, 2009.end of each reporting period. The Company does not expect the adoption of FSP FAS 157-4 will haveutilized a material impact on its
financial condition or results of operation.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise's
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with earlier application
encouraged. The Company adopted this FSP effective January 1, 2009. The adoption
of the FSP had no impact on the Company's results of operations, financial
condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
requires additional fair value disclosures about employers' pension and
postretirement benefit plan assets consistent with guidance contained in SFAS
157. Specifically, employers will be requiredCox-Ross-Rubinstein binomial lattice pricing model to disclose information about how
investment allocation decisions are made,determine the fair value of each major category
of plan assetsthe derivative liabilities, which uses certain assumptions related to exercise price, term, expected volatility, and information aboutrisk- free interest rate.
We identified auditing the inputsdetermination and valuation techniquesof the derivative liabilities as a critical audit matter due to the significant judgements used to
developby the Company in determining whether the embedded conversion features and warrants required derivative accounting treatment and the significant judgements used in determining the fair value measurements of plan assets. This FSP is effective for
fiscal years ending after December 15, 2009. Thethe derivative liabilities. Auditing the determination and valuation of the derivative liabilities involved a high degree of auditor judgement, and specialized skills and knowledge were needed.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures included the following, among others:
· | We inspected and reviewed debt agreements, conversion notices, and settlement agreements to evaluate the Company's determination of whether derivative accounting was required, including assessing and evaluating management's application of relevant accounting standards to such transactions. | |
· | We tested the reasonableness of the assumptions used by the Company in the binomial option model, including exercise price, expected term, expected volatility, and risk-free interest rate. | |
· | We tested the accuracy and completeness of data used by the Company in developing the assumptions used in the binomial option model. | |
· | We developed an independent expectation for comparison to the Company's estimate, which included developing our own binomial option model and assumptions. | |
· | We evaluated the accuracy and completeness of the Company's presentation of these instruments in the financial statements and related disclosures in Notes 5 and 6, including evaluating whether such disclosures were in accordance with relevant accounting standards. |
Professionals with specialized skill and knowledge were utilized by the Firm to assist in the evaluation of the Company does not expectestimate of fair value and the adoptiondevelopment of FSP FAS 132(R)-1 willour own independent expectation.
/s/ Sadler, Gibb & Associates, LLC
We have a material impact on its financial
condition or resultsserved as the Company’s auditor since 2022
Draper, UT
January 16, 2023
| 9 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of operation.
18
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair ValueDirectors and Stockholders of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS
157-3"), which clarifies application of SFAS 157 in a market that is not active.
FSP FAS 157-3 was effective upon issuance, including prior periods for which
financial statements have not been issued. The adoption of FSP FAS 157-3 had no
impactPharmagreen Biotech Inc.
Opinion on the Company's resultsConsolidated Financial Statements
We have audited the accompanying consolidated balance sheets of operations, financial condition or cash
flows.
InPharmagreen Biotech Inc. (the “Company”) as of September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and FASB Interpretation 46 (revised December 2003), "Consolidation of Variable
Interest Entities - an interpretation of ARB No. 51," as well as other
modifications. While the proposed revised pronouncements have not been finalized30, 2021, and the proposals are subject to further public comment, the Company anticipates
the changes will not have a significant impact on the Company's financial
statements. The changes would be effective March 1, 2010, on a prospective
basis.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share under the two-class method as described in
FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share."
FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and earlier adoption is prohibited. We
are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF
03-6-1 would have material effect on ourrelated consolidated financial position and
results of operations if adopted.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation
of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations orand comprehensive loss, stockholders’ deficit, and cash flows at this
time.
In May 2008,for the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities--an
amendment of FASB Statement No. 133. This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instrumentsyear then ended and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity'snotes (collectively, the “consolidated financial position, financial performance, and cash flows. This Statement is effective for
19
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.statements”). In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
inour opinion, the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversitystatements present fairly, in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations'. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users ofall material respects, the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
20
Statements. The Company will adopt this statement beginning March 1, 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position results of operations or cash flows.
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.
h. Basic Income (Loss) Per Share
In accordance with SFAS No. 128-"Earnings Per Share", the basic loss per common
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. At April 30, 2009, the Company
has no stock equivalents that were anti-dilutive and excluded in the earnings
per share computation.
i. Cash and Cash Equivalents
For purposes of the statement of cash flows, the company considers all highly
liquid investments purchased with maturity of three months or less to be cash
equivalents. As of April 30, 2009 the company had no cash.
j. Liabilities
Liabilities are made up of current liabilities and long-term liabilities.
Current liabilities include accounts payable of $8,575. There is a long term
liability of $2,776 outstanding for the company. The loan of $2,776 is a related
part loan as it is lent from a director. The loan is non-interest bearing loan
with no fixed due date.
Share Capital
a) Authorized:
75,000,000 common shares with a par value of $0.001
b) Issued:
The authorized capital of the Company is 75,000,000 common shares with a par
value of $0.001 per share. In February 2008, the Company issued 30,000,000
shares of common stockas at a price of $0.001 per share for total cash proceeds of
$3,000.
21
In February 2008, the Company issued 21,000,000 shares of common stock at a
price of $0.01 per share for total cash proceeds of $21,000.
In March 2008, the Company also issued 1,500,000 shares of common stock at a
price of $0.05 per share for total cash proceeds of $7,500.
On February 1, 2009, the Company issued 1,000,000 shares of common stock at a
price of $0.021 per share for total cash proceeds of $21,000.
On April 15, 2009, the Company also issued 100,000 shares of common stock at a
price of $0.075 per share for total cash proceeds of $7,500.
On March 10, 2009, the Company completed a forward stock split of its common
stock on a ratio of ten shares for every one share of the Company. The record
date of the forward stock split was February 27, 2009, the payment date of the
forward split was March 9, 2009,September 30, 2021, and the ex-dividend dateresults of their operations and cash flows for the forward split
was March 10, 2009. The forward split was payable as a dividend, thereby
requiring no action by shareholders, nor any amendment toyear then ended in conformity with accounting principles generally accepted in the articlesUnited States of incorporation of the Company.
There are no preferred shares authorized. The Company has issued no preferred
shares.
The Company has no stock option plan, warrants or other dilutive securities.
k. Advertising
The Company expenses advertising as incurred. To this date, the Company has
incurred no advertising expenses.
l. Property Note
The Company does not own or rent any property. The office space is contributed
by a director at no charge.
NOTE 3 - GOING CONCERN
America.
Explanatory Paragraph Regarding Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplatesconcern. As discussed in Note 1 to the realization of
assets and the liquidation of liabilities in the normal course of business.
However,consolidated financial statements, the Company has incurred significant operating losses and negative cash flows from operations since inception. As at September 30, 2021, the Company has a working capital deficit of $1,653,334 and an accumulated a loss and is new. This raisesdeficit of $11,699,417. These factors raise substantial doubt about the Company'sCompany’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. As shownpart of our audit, we are required to obtain an understanding of the Company’s internal controls over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the accompanyingconsolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (i) relate to accounts or disclosures that are material to the financial statements; and (ii) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter, in any way, our opinion on the consolidated financial statements taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures for which they relate.
Accounting for Embedded Conversion Features (Derivative Liabilities) within Convertible Notes Payable
Description of Critical Audit Matter
As at September 30, 2021, the Company has incurredhad $472,003 of derivative liabilities resulting from two convertible note agreements with third parties that have a net lossfloating rate of $71,351 forconversion into the period from inception to April 30, 2009 and has not
generated any revenues. The futureCompany’s common shares based on a discount percentage of the Company is dependent upon its abilitylowest trading price of the Company’s common stock on the prior twenty trading days prior to obtain financing and upon future profitable operationsconversion. The determination of the fair value of the derivative liabilities requires the fair value of the conversion feature to be bifurcated from the developmentoriginal terms of acquisitions. Management has plansthe convertible note, and requires management judgement to seek additional capital through a
private placement and public offeringdetermine the appropriate fair value of its common stock. The financial
statements do not include any adjustmentsthe embedded conversion feature using valuation techniques that utilizes management judgement in determining appropriate inputs to the valuation model.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures relating to the recoverabilityevaluation for the Company’s assessment of the fair value of the derivative liabilities included:
· | Independent confirmation of convertible note balances, including accrued interest and terms of the agreement as at September 30, 2021; | |
· | Independent assessment of the appropriate valuation model for derivative liability, including performing independent calculations based on the same model utilized by the Company, and comparing the results of our assessment to the Company; | |
· | Reviewing board resolutions and communications from convertible note holders to determine if any other default factors or additional penalties should be considered for recognition in the Company’s consolidated financial statements; and | |
· | Testing of substantially all transaction related to this matter, including the issuance of common shares relating to the conversion of convertible notes. |
Saturna Group Chartered Professional Accountants LLP
We have served as the Company’s auditor since 2017
Vancouver, Canada
December 29, 2021
| 10 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
|
| September 30, 2022 |
|
| September 30, 2021 |
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
| ||
Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Cash |
|
| 8,016 |
|
|
| 25,300 |
|
Amounts receivable |
|
| 383 |
|
|
| 290 |
|
Prepaid expenses and deposits (Notes 11 and 12) |
|
| 200,572 |
|
|
| 347,491 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
| 208,971 |
|
|
| 373,081 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities (Notes 3 and 7) |
|
| 724,876 |
|
|
| 659,437 |
|
Advances from Alliance Growers Corp. (Note 12(a)) |
|
| 54,847 |
|
|
| 59,122 |
|
Loans payable (Note 4) |
|
| 99,077 |
|
|
| 40,000 |
|
Convertible notes – current portion, net of unamortized discount of $15,781 and $nil, respectively (Note 4 and 5) |
|
| 120,038 |
|
|
| 190,834 |
|
Derivative liabilities (Notes 4, 5 and 6) |
|
| 271,394 |
|
|
| 472,003 |
|
Due to related parties (Note 7) |
|
| 641,915 |
|
|
| 605,019 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
| 1,912,147 |
|
|
| 2,026,415 |
|
|
|
|
|
|
|
|
|
|
Loans payable (Note 4) |
|
| 29,252 |
|
|
| 31,532 |
|
Loans payable to related parties (Note 7) |
|
| 90,221 |
|
|
| - |
|
Convertible notes, net of unamortized discount of $nil and $19,233, respectively (Note 4 and 5) |
|
| - |
|
|
| 7,834 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 2,031,620 |
|
|
| 2,065,781 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock Authorized: 1,000,000 shares, $0.001 par value; 10,000 shares issued and outstanding (Note 9) |
|
| 10 |
|
|
| 10 |
|
Common stock Authorized: 2,000,000,000 shares, $0.001 par value; 442,260,969 and 381,171,269 shares issued and outstanding, respectively (Note 8) |
|
| 442,261 |
|
|
| 381,171 |
|
Common stock issuable (Note 12) |
|
| 1,130 |
|
|
| - |
|
Additional paid-in capital (Note 8) |
|
| 10,261,777 |
|
|
| 9,680,572 |
|
Accumulated other comprehensive income (loss) |
|
| 93,753 |
|
|
| (8,378 | ) |
Deficit |
|
| (12,574,895 | ) |
|
| (11,699,417 | ) |
|
|
|
|
|
|
|
|
|
Total Pharmagreen Biotech Inc. stockholders’ deficit |
|
| (1,775,964 | ) |
|
| (1,646,042 | ) |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
| (46,685 | ) |
|
| (46,658 | ) |
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
| (1,822,649 | ) |
|
| (1,692,700 | ) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit |
|
| 208,971 |
|
|
| 373,081 |
|
|
|
|
|
|
|
|
|
|
Nature of business and continuance of operations (Note 1) |
|
|
|
|
|
|
|
|
Commitments and contingency (Note 12) |
|
|
|
|
|
|
|
|
Subsequent events (Note 14) |
|
|
|
|
|
|
|
|
(The accompanying notes are an integral part of these consolidated financial statements)
| 11 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Consolidated Statements of Operations and classificationComprehensive Loss
(Expressed in U.S. dollars)
|
| Year ended September 30, 2022 $ |
|
| Year ended September 30, 2021 $ |
| ||
|
|
|
|
|
|
| ||
Expenses |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Consulting fees (Note 7 and 12) |
|
| 924,625 |
|
|
| 526,522 |
|
Foreign exchange loss (gain) |
|
| 31,745 |
|
|
| (8,665 | ) |
General and administrative |
|
| 65,560 |
|
|
| 79,422 |
|
Professional fees |
|
| 63,088 |
|
|
| 127,352 |
|
Salaries and wages |
|
| 16,475 |
|
|
| 19,433 |
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
| 1,101,493 |
|
|
| 744,064 |
|
|
|
|
|
|
|
|
|
|
Net loss before other income (expenses) |
|
| (1,101,493 | ) |
|
| (744,064 | ) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of discount on convertible notes (Note 5) |
|
| (18,465 | ) |
|
| (88,264 | ) |
Interest and finance costs (Note 4 and 5) |
|
| (28,780 | ) |
|
| (680,714 | ) |
Gain (loss) on change in fair value of derivative liabilities (Note 4 and 6) |
|
| 215,620 |
|
|
| (3,257,122 | ) |
Recovery of default penalties (Note 4 and 5) |
|
| 57,613 |
|
|
| 237,940 |
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
| 225,988 |
|
|
| (3,788,160 | ) |
|
|
|
|
|
|
|
|
|
Net loss |
|
| (875,505 | ) |
|
| (4,532,224 | ) |
|
|
|
|
|
|
|
|
|
Less: net loss attributable to non-controlling interest |
|
| 27 |
|
|
| 153 |
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Pharmagreen Biotech Inc. |
|
| (875,478 | ) |
|
| (4,532,071 | ) |
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| (102,131 | ) |
|
| (45,057 | ) |
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to Pharmagreen Biotech Inc. |
|
| (977,609 | ) |
|
| (4,577,128 | ) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share attributable to Pharmagreen Biotech Inc. stockholders |
|
| (0.00 | ) |
|
| (0.02 | ) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding used in the calculation of net loss per share attributable to Pharmagreen Biotech Inc. |
|
| 403,732,631 |
|
|
| 293,706,579 |
|
(The accompanying notes are an integral part of recorded assets, orthese consolidated financial statements)
| 12 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Consolidated Statements of Stockholders’ Deficit
(Expressed in U.S. dollars)
|
| Preferred stock |
|
| Common stock |
|
|
Common stock |
|
| Additional paid-in |
|
| Accumulated other comprehensive |
|
|
|
|
| Non -controlling |
|
| Total stockholders’ |
| ||||||||||||||||
|
| Number of shares |
|
| Amount $ |
|
| Number of shares |
|
| Amount $ |
|
| issuable $ | capital $ |
|
| income (loss) $ | Deficit $ |
|
| interest $ | deficit $ |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance, September 30, 2020 |
|
| - |
|
|
| - |
|
|
| 95,806,289 |
|
|
| 95,806 |
|
|
| 180,000 |
|
|
| 3,967,261 |
|
|
| 36,679 |
|
|
| (7,167,346) |
|
| (46,505) |
|
| (2,934,105) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of units for cash |
|
| - |
|
|
| - |
|
|
| 37,872,500 |
|
|
| 37,873 |
|
|
| - |
|
|
| 229,853 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 267,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred shares for cash |
|
| 10,000 |
|
|
| 10 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock pursuant to the conversion of convertible notes |
|
| - |
|
|
| - |
|
|
| 229,160,480 |
|
|
| 229,160 |
|
|
| (180,000) |
|
| 4,874,116 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,923,276 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services |
|
| - |
|
|
| - |
|
|
| 18,332,000 |
|
|
| 18,332 |
|
|
| - |
|
|
| 609,342 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 627,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (45,057) |
|
| - |
|
|
| - |
|
|
| (45,057) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,532,071) |
|
| (153) |
|
| (4,532,224) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021 |
|
| 10,000 |
|
|
| 10 |
|
|
| 381,171,269 |
|
|
| 381,171 |
|
|
| - |
|
|
| 9,680,572 |
|
|
| (8,378) |
|
| (11,699,417) |
|
| (46,658) |
|
| (1,692,700) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services |
|
| - |
|
|
| - |
|
|
| 36,100,000 |
|
|
| 36,100 |
|
|
| - |
|
|
| 423,800 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 459,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of units for cash |
|
| - |
|
|
| - |
|
|
| 25,650,000 |
|
|
| 25,650 |
|
|
| - |
|
|
| 161,350 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 187,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issuable for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,130 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock returned and cancelled |
|
| - |
|
|
| - |
|
|
| (660,300) |
|
| (660) |
|
| - |
|
|
| (3,945) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,605) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 102,131 |
|
|
| - |
|
|
| - |
|
|
| 102,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (875,478) |
|
| (27) |
|
| (875,505) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2022 |
|
| 10,000 |
|
|
| 10 |
|
|
| 442,260,969 |
|
|
| 442,261 |
|
|
| 1,130 |
|
|
| 10,261,777 |
|
|
| 93,753 |
|
|
| (12,574,895) |
|
| (46,685) |
|
| (1,822,649) | |||
(The accompanying notes are an integral part of these consolidated financial statements)
| 13 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
|
| Year ended September 30, 2022 |
|
| Year ended September 30, 2021 |
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
| ||
OPERATING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Net loss |
|
| (875,505 | ) |
|
| (4,532,224 | ) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Accretion of discount on convertible notes |
|
| 18,465 |
|
|
| 88,264 |
|
Financing fees and default penalties (recovery) |
|
| (57,613 | ) |
|
| 680,714 |
|
Gain on settlement of convertible note |
|
| - |
|
|
| (237,940 | ) |
Loss on change in fair value of derivative liabilities |
|
| (215,620 | ) |
|
| 3,257,122 |
|
Common stock issued or issuable for services |
|
| 461,030 |
|
|
| 627,674 |
|
|
|
|
|
|
|
|
|
|
Changes in non-cash operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| (93 | ) |
|
| 5 |
|
Prepaid expenses and deposits |
|
| 146,920 |
|
|
| (343,737 | ) |
Accounts payable and accrued liabilities |
|
| 65,439 |
|
|
| 147,658 |
|
Due to related parties |
|
| 30,409 |
|
|
| 106,383 |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
| (426,568 | ) |
|
| (206,081 | ) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible note |
|
| 30,000 |
|
|
| - |
|
Proceeds from issuance of units |
|
| 187,000 |
|
|
| 267,726 |
|
Proceeds from issuance of preferred shares |
|
| - |
|
|
| 10 |
|
Proceeds from loans from related party |
|
| 111,554 |
|
|
| 33,646 |
|
Repayment of loans from related parties |
|
| (14,846 | ) |
|
| (43,884 | ) |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
| 313,708 |
|
|
| 257,498 |
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash |
|
| 95,576 |
|
|
| (38,313 | ) |
|
|
|
|
|
|
|
|
|
Change in cash |
|
| (17,284 | ) |
|
| 13,104 |
|
|
|
|
|
|
|
|
|
|
Cash, beginning of year |
|
| 25,300 |
|
|
| 12,196 |
|
|
|
|
|
|
|
|
|
|
Cash, end of year |
|
| 8,016 |
|
|
| 25,300 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for consulting fees included in prepaid expenses |
|
| 111,722 |
|
|
| 347,491 |
|
Issuance of common stock pursuant to conversion of convertible notes |
|
| - |
|
|
| 5,103,276 |
|
Common stock issuable pursuant to conversion of convertible notes |
|
| - |
|
|
| (180,000 | ) |
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
|
| - |
|
|
| - |
|
Income taxes paid |
|
| - |
|
|
| - |
|
(The accompanying notes are an integral part of these consolidated financial statements)
| 14 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Consolidated Financial Statements
Years Ended September 30, 2022, and 2021
(Expressed in U.S. dollars)
1. | Nature of Business and Continuance of Operations |
Pharmagreen Biotech Inc. (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on November 26, 2007, under the name Azure International, Inc. On October 30, 2008, and effective as of the same date, the Company filed Articles of Merger (“Articles”) with the Secretary of State of the State of Nevada, to effect a merger by and between Air Transport Group Holdings, Inc., a Nevada corporation and Azure International, Inc. As a result of the merger, the Company changed its name to Air Transport Group Holdings, Inc. The Company was previously in the business of providing technical advisory and appraisals to the aircraft and aviation business as well as providing sourcing for aircraft leases and parts. Pursuant to a Share Exchange Agreement with WFS Pharmagreen Inc. (“WFS”) on May 2, 2018, the Company changed its name to Pharmagreen Biotech Inc. and changed its principal business to the production of starter plantlets for the North American high CBD hemp and medical cannabis industries through the application of the proprietary plant tissue culture in vitro process called “Chibafreen”. This proprietary process will produce plantlets that will be genetically identical and free of pests and disease free with consistent and certifiable constituent properties. Going Concern These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at September 30, 2022, the Company has not earned any revenues from operations, has a working capital deficit of $1,703,176 (2021 – $1,653,334), and has an accumulated deficit of $12,574,895 (2021 – $11,699,417). During the year ended September 30, 2022, the Company incurred a net loss of $875,478 (2021 - $4,532,071) and used cash flows for operations of $426,568 (2021 – $206,081). Furthermore, the Company has defaulted on other convertible notes. These factors raise substantial doubt upon the Company’s ability to continue as a going concern. These consolidated financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern. The outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Company’s supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Company’s operations and the operations of the Company’s suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. Specifically, the Company attributes the pandemic to a delay in a planned financing which was to be used for the construction of the biotech complex, resulting in an impairment of the capitalized construction-in-progress at September 30, 2020. The extent to which the COVID-19 pandemic further impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company’s customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources, and financial results. |
2. | Significant Accounting Policies |
(a) | Basis of Presentation | |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, WFS Pharmagreen Inc. (“WFS”), and its 89.7% owned subsidiary 1155097 BC Ltd. (“115BC”), companies incorporated in British Columbia, Canada. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is September 30. |
| 15 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
2. | Significant Accounting Policies (continued) |
(b) | Use of Estimates and Judgments | |
The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the equity component of convertible notes, fair value of derivative liabilities, fair value of stock-based payments, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The Company applies judgment in the application of the going concern assumption which requires management to take into account all available information about the future, which is at least, but not limited to 12 months from the end of the reporting period. |
(c) | Cash and Cash Equivalents | |
The Company considers all highly liquid investments with a maturity of three months or less at the time of issuance to be cash equivalents. |
(d) | Property and Equipment | |
Property and equipment is measured at cost less accumulated depreciation, residual values, and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for the intended use and borrowing costs on qualifying assets. During their construction, items of property, plant, and equipment are classified as construction in progress. When the asset is available for use, it is transferred from construction in progress to the appropriate category of property, plant, and equipment and depreciation on the item commences. The Company capitalizes borrowing costs on capital invested in projects under construction. Upon the asset becoming available for use, capitalized borrowing costs, as a portion of the total cost of the asset, are depreciated over the estimated useful life of the related asset. |
(e) | Long-lived Assets | |
In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. |
| 16 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
2. | Significant Accounting Policies (continued) |
(f) | Fair Value Measurements | |
The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows: | ||
Level 1 – quoted prices for identical instruments in active markets. Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and. Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. | ||
Financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, advances from Alliance Growers Corp., amounts due to related parties, loans payable, convertible notes and derivative liabilities. The fair value of cash is determined based on Level 1 inputs and the fair value of derivative liabilities is determined based on Level 3 inputs. The recorded values of all other financial instruments, with the exception of non-current convertible notes, approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The following table presents assets and liabilities that are measured and recognized at fair value as of September 30, 2022, on a recurring basis: September 30, 2022 |
|
| Level 1 $ |
|
| Level 2 $ |
|
| Level 3 $ |
|
| Total Gains (Losses) $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative liabilities |
|
| - |
|
|
| - |
|
|
| 271,394 |
|
|
| 215,620 |
|
(g) | Foreign Currency Translation | |
The Company’s functional and reporting currency is the U.S. dollar. Transactions may occur in foreign currencies and management has adopted ASC 830, “Foreign Currency Translation Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the consolidated statement of operations. The Company uses the current rate method to translate the accounts of its wholly-owned subsidiary into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period. The resulting exchange gains or losses are recognized in accumulated other comprehensive income. |
(h) | Sequencing Policy | |
Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company’s employees or directors are not subject to the sequencing policy. |
| 17 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
2. | Significant Accounting Policies (continued) |
(i) | Stock-based Compensation | |
The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations and comprehensive loss over the requisite service period. |
(j) | Loss Per Share | |
The Company computes loss per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at September 30, 2022, there were 218,657,662 (2021 – 326,045,132) potentially dilutive shares outstanding. |
(k) | Comprehensive Loss | |
ASC 220, “Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. As at September 30, 2022 and 2021, comprehensive loss consists of foreign currency translation gains and losses. |
(l) | Income Taxes | |
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred income tax assets to the amount that is believed more likely than not to be realized. As of September 30, 2022 and 2021, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2014 to 2022. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not examined any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above. |
(m) | Recently Adopted Accounting Pronouncements | |
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
| 18 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
3. | Accounts Payable and Accrued Liabilities |
Accounts payable and accrued liabilities consists of the following: |
|
| September 30, 2022 $ |
|
| September 30, 2021 $ |
| ||
|
|
|
|
|
|
| ||
Accounts payable |
|
| 644,970 |
|
|
| 579,851 |
|
Accrued interest payable |
|
| 79,906 |
|
|
| 79,586 |
|
|
|
|
|
|
|
|
|
|
|
|
| 724,876 |
|
|
| 659,437 |
|
4. | Loans Payable |
(a) | On November 22, 2019, the Company entered into a promissory note with an unrelated party for $40,000 in connection with an equity purchase agreement. The promissory note is unsecured, was due on November 30, 2020, and bears interest on the unpaid principal balance at a rate of 10% per annum. At September 30, 2022, the Company has recorded accrued interest payable of $11,408 (2021 - $7,410) and the promissory note is in default. Refer to Note 12(b). | |
(b) | On April 22, 2020, the Company received a loan for Cdn$40,000 from the Government of Canada under the Canada Emergency Business Account program (“CEBA”). As at September 30, 2022, the balance owing is $29,252 (Cdn$40,000) (2021 - $31,532 (Cdn$40,000)). These funds are interest free until December 31, 2023, at which time the remaining balance will convert to a 2-year term loan at an interest rate of 5% per annum. If the Company repays the loan prior to December 31, 2023, there will be loan forgiveness of 25% of the principal balance repaid, up to a maximum of Cdn$10,000. | |
(c) | On August 2, 2022, a lender of the Company was ordered to surrender all common stock of the Company for cancellation, and surrender conversion rights for all remaining convertible notes pursuant to a judgement filed by the Securities and Exchange Commission with the United States District Court, Southern District of New York against the lender. As a result, the Company received and cancelled 660,300 shares of common stock and the conversion rights embedded in the convertible note in Note 5(e) was relinquished. As a result, the convertible note in Note 5(e) of $59,077 was reclassified from a convertible note payable to loans payable and its derivative liability of $163,760 was derecognized. In addition, the derecognition of the default penalty of $53,007 that was previously recognized and the fair value of the 660,300 shares of common stock of $4,606 were recognized as a recovery of default penalties during the year ended September 30, 2022. | |
As at September 30, 2022, the principal balance owing is $59,077 (2021 - $112,084, carrying value of convertible note) and the Company has recorded interest payable of $23,664 (2021 - $19,446) |
5. | Convertible Notes | |
(a) | On April 4, 2018, the amount of $32,485 owed to related parties was converted to Series A convertible notes, which are unsecured, non-interest bearing, and due on April 4, 2023. These notes are convertible in whole or in part, at any time until maturity, to common shares of the Company at $0.0001 per share. The outstanding balance remaining at maturity shall bear interest at 12% per annum until fully paid. The Company evaluated the convertible notes for a beneficial conversion feature in accordance with ASC 470-20 Debt with Conversion and Other Options. The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $32,485 as additional paid-in capital and reduced the carrying value of the convertible note to $nil. The carrying value will be accreted over the term of the convertible notes up to their face value of $32,485. | |
During the year ended September 30, 2018, the Company issued 31,475,000 shares of common stock upon the conversion of $3,175 of Series A convertible notes, which included 18,000,000 common shares to the President of the Company and 5,320,000 common shares to family members of the President of the Company. Upon conversion, the Company immediately recognized the related remaining debt discount of $3,112 as accretion expense. During the year ended September 30, 2019, the Company issued 3,900,000 shares of common stock upon the conversion of $390 of Series A convertible notes. Upon conversion, the Company immediately recognized the related remaining debt discount of $375 as accretion expense. | ||
| 19 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
5. | Convertible Notes (continued) | |
During the year ended September 30, 2020, the Company issued 18,525,000 shares of common stock upon the conversion of $1,853 of Series A convertible notes. Upon conversion, the Company immediately recognized the related remaining debt discount of $1,670 as accretion expense. As of September 30, 2022, the carrying value of the convertible notes was $17,799 (2021 - $7,834) and had an unamortized discount of $9,269 (2021 - $19,233). During the year ended September 30, 2022, the Company recorded accretion expense of $9,965 (2021 - $4,386). | ||
(b) | On October 1, 2019, the Company entered into a convertible note with an unrelated party for $78,000, of which $3,255 was paid directly to third parties for financing costs, resulting in net proceeds to the Company of $74,745. The note is due on October 1, 2020, and bears interest on the unpaid principal balance at a rate of 10% per annum, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to lower of: (i) the lowest trading price during the 10-trading day period prior to the issuance date; or (ii) 61% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $70,744. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $74,245 and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $78,000. |
| On July 22, 2020, the Company received a preliminary statement of claim from the note holder for failure of the Company to deliver shares of common stock upon receipt of notices of conversion. Pursuant to the claim, the note holder requested receipt of all shares of common stock requested in the notices of conversion, and also damages in an amount to be determined at trial but in any event in excess of principal in the sum of $180,000, including without limitation the balance of any portion of the convertible note that ultimately is not converted into shares of common stock, along with default interest, liquidated damages, and damages as provided for in the convertible note. Upon default, the Company recognized the remaining debt discount of $46,904 as accretion expense. | ||
| The financing costs were netted against the convertible note and were being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $77,500 and a default penalty of $85,864. During the year ended September 30, 2021, the Company recorded an additional $253,855 of default penalties. During the year ended September 30, 2021, the Company issued 133,226,100 shares of common stock upon the conversion of $417,719 of the convertible note and $11,000 of conversion fees, decreasing the carrying value to $nil. | ||
| On March 12, 2021, the Company entered into a settlement agreement with the noteholder. Pursuant to the agreement, the Company was required to honour various conversion notices and the noteholder agreed to waive all principal, interest and penalties incurred. | ||
(c) | On October 17, 2019, the Company entered into a convertible note with an unrelated party for $63,000, of which $3,000 was paid directly to third parties for financing costs, resulting in net cash proceeds to the Company of $60,000. The note is due on October 17, 2020, and bears interest on the unpaid principal balance at a rate of 10% per annum, which increases to 22% per annum upon default of the note. The note may be converted at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. | |
| On June 17, 2020, the Company entered into a settlement agreement with the lender, whereby the Company and the lender agreed on repayment terms for the remaining principal balance of $63,000, and accrued interest owing on the note of $5,775 which was due on September 30, 2020. Upon entering into the settlement agreement, the Company immediately recognized the remaining debt discount of $1,657. On September 30, 2020, the Company failed to meet the repayment terms within the settlement agreement which resulted in a default penalty of $63,000 and the resumption of the convertibility feature at a conversion price equal to 61% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. |
| 20 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
5. | Convertible Notes (continued) |
| On September 30, 2020, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $112,822. | ||
| The financing costs were netted against the convertible note and were being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $3,000 and a default penalty of $63,000. | ||
| During the year ended September 30, 2021, the Company issued 7,730,486 shares of common stock upon the conversion of $126,000 of the convertible note, decreasing the carrying value to $nil. | ||
(d) | On January 2, 2020, the Company entered into a convertible note with an unrelated party for $53,000, of which $3,000 was paid directly to third parties for financing costs, resulting in cash proceeds to the Company of $50,000. The note is due on January 2, 2021, and bears interest on the unpaid principal balance at a rate of 10% per annum, which increases to 22% per annum upon default of the note. The note may be converted at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. | |
| On June 17, 2020, the Company entered into a settlement agreement with the lender, whereby the Company and the lender agreed on repayment terms for the remaining principal of $53,000 and accrued interest owing on the note. Upon entering into the settlement agreement, the Company immediately recognized the remaining debt discount of $2,286. Effective September 30, 2020, the Company failed to meet the repayment terms of the settlement agreement and defaulted on the convertible note. On September 30, 2020, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $139,702. | ||
| The financing costs were netted against the convertible note and were being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $3,000 and a default penalty of $53,000. | ||
| During the year ended September 30, 2021, the Company issued 16,994,905 shares of common stock upon the conversion of $106,000 of the convertible note, decreasing the carrying value to $nil. | ||
(e) | On January 14, 2020, the Company entered into a convertible note with an unrelated party for $78,000, of which $3,000 was paid for financing costs, resulting in net proceeds to the Company of $75,000. The note was due on January 14, 2021, and bears interest on the unpaid principal balance at a rate of 12% per annum, which increases to 15% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to lower of: 65% of the lowest trading price during the 20-trading day period prior to the issuance date; or (ii) 65% of the lowest trading price during the 20-trading day period prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $76,330. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $74,500, resulting in a loss on change in fair value of derivative liabilities of $1,830, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $78,000. | |
| The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $16,447. |
| 21 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
5. | Convertible Notes (continued) |
| During the year ended September 30, 2021, the Company issued 2,600,000 shares of common stock upon the conversion of $18,923 of the convertible note and $4,500 of conversion fees. On January 14, 2021, the Company failed to repay the note upon maturity and recorded additional default principal of $53,007. | ||
| In relation to the judgement in Note 4(c), the Company derecognized the additional default principal of $53,007 during the year ended September 30, 2022. | ||
| In accordance to the judgement, the note’s conversion feature was relinquished. The Company derecognized the related derivative liability and reclassified the note as a loans payable. As at September 30, 2022, the carrying value of the convertible note was $nil (2021 - $112,084), and the fair value of the derivative liability was $nil (2021 - $264,481). | ||
(f) | On January 15, 2020, the Company entered into a convertible note with an unrelated party for $61,000, of which $7,400 was paid directly to third parties for financing costs and an original issue discount of $3,000, resulting in proceeds to the Company of $50,600. The note is due on January 15, 2021, and bears interest on the unpaid principal balance at a rate of 10% per annum, payable in common stock, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal 65% of the lowest trading price during the 20-trading day period prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $67,846. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $50,100, resulting in a loss on change in fair value of derivative liabilities of $17,746, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $61,000. | |
| On July 23, 2020, the Company entered into a settlement agreement with the note holder, wherein the Company and the lender agreed to settle a convertible note and accrued interest for a total of $63,440 on a non-convertible basis, of which $15,000 was payable on or before July 24, 2020 (paid), followed by 6 monthly instalment payments of $8,073. Upon entering into the settlement agreement, the Company immediately recognized the remaining debt discount of $56,566. Effective August 24, 2020, the Company failed to meet the repayment terms and defaulted on the settlement agreement. | ||
| The financing costs were netted against the convertible note and were being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $60,500. | ||
| During the year ended September 30, 2021, the Company issued 3,601,718 shares of common stock upon the conversion of $46,000 of the convertible note, $5,586 of accrued interest and $500 of conversion fees, decreasing the carrying value to $nil. | ||
(g) | On January 15, 2020, the Company entered into a convertible note with an unrelated party for $55,000, of which $2,500 was paid directly to third parties for financing costs, resulting in proceeds to the Company of $52,500. The note is due on January 15, 2021, and bears interest on the unpaid principal balance at a rate of 10% per annum, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to lower of: (i) the lowest trading price during the 20-trading day period ending on the latest complete trading day prior to the issuance date; or (ii) 65% of the lowest trading price during the 20 consecutive trading day period on which at least 100 shares of common stock were traded prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $61,173. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $52,000, resulting in a loss on change in fair value of derivative liabilities of $9,173, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $55,000. |
| 22 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
5. | Convertible Notes (continued) |
| During the year ended September 30, 2020, the Company defaulted on the convertible note which resulted in a default penalty of $27,500 and the amendment of the conversion rate from 65% to 50% of the lowest trading price during the 20 consecutive trading days prior to conversion. The Company recognized the remaining debt discount of $50,767 as accretion expense. | ||
| The financing costs were netted against the convertible note and were being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $54,500 and a default penalty of $27,500. | ||
| During the year ended September 30, 2021, the Company issued 17,557,925 shares of common stock upon the conversion of $82,500 of the convertible note, $7,693 of accrued interest and $3,000 of conversion fees, decreasing the carrying value to $nil. | ||
(h) | On January 21, 2020, the Company entered into a convertible note with an unrelated party for $66,150, of which $7,800 was paid directly to third parties for financing costs and an original issue discount of $3,150, resulting in proceeds to the Company of $55,200. The note is due on January 21, 2021, and bears interest on the unpaid principal balance at a rate of 8% per annum, payable in common stock, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal 60% of the lowest trading price during the 20-trading day period prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $71,278. | |
| The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $54,700, resulting in a loss on change in fair value of derivative liabilities of $16,578, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $66,150. | ||
| The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $13,202. | ||
| During the year ended September 30, 2021, the Company issued 4,431,963 shares of common stock upon the conversion of $66,150 of the convertible note and $3,907 of accrued interest, decreasing the carrying value to $nil. | ||
(i) | On January 22, 2020, the Company entered into a convertible note with an unrelated party for $78,750, of which $9,750 was paid directly to third parties for financing costs, resulting in proceeds to the Company of $69,000. The note is due on January 22, 2021, and bears interest on the unpaid principal balance at a rate of 10% per annum, payable in common stock, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 65% of the lowest trading price during the 20-trading day period ending on the latest complete trading day prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $75,179. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $68,500, resulting in a loss on change in fair value of derivative liabilities of $6,679, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $78,750. |
| 23 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
5. | Convertible Notes (continued) |
| The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company defaulted on the convertible note and recognized accretion expense of $78,250. On January 22, 2021, the Company failed to repay the note upon maturity. | ||
| As at September 30, 2022, the carrying value of the convertible note was $78,750 (2021 - $78,750) and the fair value of the derivative liability was $260,908 (2021 - $207,522). | ||
(j) | On February 4, 2020, the Company entered into a convertible note with an unrelated party for $100,000, of which $16,970 was paid directly to third parties for financing costs, resulting in proceeds to the Company of $83,030. The note is due on February 4, 2021, and bears interest on the unpaid principal balance at a rate of 12% per annum, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to lower of: (i) the lowest trading price during the 10-trading day period ending on the latest complete trading day prior to the issuance date; or (ii) 60% of the average of the two lowest trading prices during the 10-trading day period prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $125,640. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $82,530, resulting in a loss on change in fair value of derivative liabilities of $43,110, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $100,000. | |
| During the year ended September 30, 2020, the noteholder converted $24,175 of the convertible note for 2,000,000 common shares with a fair value of $180,000 and was issued on October 20, 2020. Upon the notice of conversion, the Company immediately recognized the related remaining debt discount of $23,136 as accretion expense. | ||
| The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $7,854. | ||
| During the year ended September 30, 2021, the Company issued 41,017,383 shares of common stock upon the conversion of $75,825 of the convertible note, $2,154 of accrued interest and $18,750 of fees, decreasing the carrying value to $nil. | ||
(k) | On March 11, 2022, the Company entered into a convertible note with an unrelated party for $30,000, with an advance on January 18, 2022 for the full amount. The note is due on January 18, 2023, and bears interest on the unpaid principal balance at a rate of 10% per annum. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to the closing price on the day of receiving the notice to convert. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $15,011, which reduced the carrying value of the convertible note to $14,989. The carrying value will be accreted over the term of the convertible note up to its face value of $30,000. | |
| As at September 30, 2022, the carrying value of the convertible note was $23,489, had an unamortized discount of $6,511, and the fair value of the derivative liability was $10,486. During the year ended September 30, 2022, the Company recorded accretion expense of $8,500. |
| 24 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
6. | Derivative Liabilities |
The embedded conversion option of the Company’s convertible notes described in Note 5 contain a conversion feature that qualifies for embedded derivative classification. The fair value of this liability will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on change in fair value of derivative liabilities. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities: |
Balance, September 30, 2020 | 1,380,957 | |||
Conversion of convertible notes | (4,166,076 | ) | ||
Change in fair value of embedded conversion option | 3,257,122 | |||
Balance, September 30, 2021 | 472,003 | |||
Additions | 15,011 | |||
Derecognition upon relinquishment of embedded conversion option | (163,760 | ) | ||
Change in fair value of embedded conversion option | (51,860 | ) | ||
Balance, September 30, 2022 | 271,394 |
The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using a binomial model based on various assumptions. Significant changes in any of and classification of
liabilities that might be necessarythese inputs in isolation would result in a significant change in the eventfair value measurement. As required, these are classified based on the Company cannot continuelowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in existence.
22
ITEMthe calculations:
|
| Expected volatility |
|
| Risk-free interest rate |
|
| Expected dividend yield |
|
| Expected life (in years) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
As at September 30, 2020 |
|
| 296 | % |
|
| 0.09 | % |
|
| 0 | % |
|
| 0.20 |
|
As at September 30, 2021 |
|
| 263 | % |
|
| 0.05 | % |
|
| 0 | % |
|
| 1.00 |
|
As at September 30, 2022 |
|
| 161 | % |
|
| 3.33 | % |
|
| 0 | % |
|
| 0.26 |
|
7. | Related Party Transactions |
(a) | As at September 30, 2022, the Company owed $588,165 (Cdn$804,285) (2021 - $547,079 (Cdn$693,998)) to the President of the Company, which is non-interest bearing, unsecured, and due on demand. During the year ended September 30, 2022, the Company incurred consulting fees of $93,964 (2021 - $94,980) to the President of the Company. | |
(b) | As at September 30, 2022, the Company owed $53,750 (Cdn$73,500) (2021 - $57,940 (Cdn$73,500)) to the father of the President of the Company, which is non-interest bearing, unsecured, and due on demand. | |
(c) | As at September 30, 2022, the Company owed $25,010 (Cdn$34,200) (2021 – $26,960 (Cdn$34,200)) to a company owned by the father of the President of the Company, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. | |
(d) | As at September 30, 2022, the Company owed $509,610 (Cdn$696,866) (2021 – $445,591 (Cdn$565,256)) to a company controlled by the Chief Financial Officer of WFS, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. During the year ended September 30, 2022, the Company incurred consulting fees of $93,964 (2021 - $94,980) to the company controlled by the Chief Financial Officer of WFS. | |
(e) | On June 1, 2022, the Company entered into a loan agreement with the father of the President of the Company with a principal of $50,000, which bears interest at 10% per annum, is unsecured and due on June 1, 2026. | |
(f) | On June 1, 2022, the Company entered into a loan agreement with the father of the President of the Company with a principal of $40,221 (Cdn$55,000), which bears interest at 10% per annum, is unsecured and due on June 1, 2026. |
| 25 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
8. | Common Stock |
Year ended September 30, 2022 | ||
(a) | On October 21, 2021, the Company issued 4,000,000 shares of common stock at $0.025 per share for proceeds of $100,000. In connection with the financing, the Company incurred commission fees of $8,000. | |
(b) | On January 19, 2022, the Company issued 650,000 units at $0.01 per unit for proceeds of $6,500. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
(c) | On January 19, 2022, the Company issued 800,000 shares of common stock at $0.025 per share for proceeds of $20,000. | |
(d) | On January 19, 2022, the Company issued 6,800,000 shares of common stock with a fair value of $136,000 for consultation communication and media services. | |
(e) | On January 19, 2022, the Company issued 1,800,000 shares of common stock with a fair value of $36,000 for strategic and business development advisory services. | |
(f) | On January 21, 2022, the Company issued 1,000,000 shares with a fair value of $19,700 for management consulting and strategic business advisory services. | |
(g) | On February 10, 2022, the Company issued 1,000,000 shares of common stock with a fair value of $17,000 for market awareness services. | |
(h) | On May 3, 2022, the Company issued 7,000,000 shares of common stock with a fair value of $84,700 for market awareness services (Note 12(d)). | |
(i) | On June 8, 2022, the Company issued 20,200,000 units at $0.0025 per unit for proceeds of $68,500. Each unit is comprised of one share of common stock and one purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
(j) | On August 22, 2022, the Company issued 9,000,000 shares of common stock with a fair value of $81,000 for public relations and communications services (Note 12(e)). | |
(k) | On September 13, 2022, the Company issued 9,500,000 shares of common stock with a fair value of $85,500 for corporate development, investor, media, and public relations, and marketing services (Note 12(f)). | |
(l) | On September 20, 2022, the Company received and cancelled 660,300 with a fair value of $4,606 due to a court judgement ordering the lender to surrender all common stock of the Company for cancellation and surrender conversion rights for all remaining convertible notes (Note 4(c)). | |
Year ended September 30, 2021 | ||
(m) | In December 2020, the Company issued 5,400,000 units at $0.005 per unit for proceeds of $27,000 in a private placement. Each unit is comprised of one share of common stock and one share purchase warrant exercisable into an additional share of common stock at an exercise price of $0.05 per share for a period of 24 months. | |
(n) | Between January 11 to February 16, 2021, the Company issued 16,800,000 units at $0.005 per unit for proceeds of $84,000 in a private placement. Each unit is comprised of one share of common stock and one share purchase warrant exercisable into an additional share of common stock at an exercise price of $0.05 per share for a period of 24 months. | |
(o) | On March 1, 2021, the Company issued 611,250 units at $0.01 per unit for proceeds of $6,112 in a private placement. Each unit is comprised of one share of common stock and one share purchase warrant exercisable into an additional share of common stock at an exercise price of $0.05 per share for a period of 24 months. | |
(p) | During the year ended September 30, 2021, the Company issued 133,226,100 shares of common stock upon the conversion of $417,719 of the convertible note and $11,000 of conversion fees (Note 5(b)). | |
(q) | During the year ended September 30, 2021, the Company issued 7,730,486 shares of common stock upon the conversion of $126,000 of the convertible note and $3,150 of accrued interest (Note 5(c)). | |
(r) | During the year ended September 30, 2021, the Company issued 16,994,905 shares of common stock upon the conversion of $106,000 of the convertible note and $2,650 of accrued interest (Note 5(d)). | |
(s) | During the year ended September 30, 2021, the Company issued 2,600,000 shares of common stock upon the conversion of $18,923 of the convertible note and $4,500 of conversion fees (Note 5(e)). | |
| 26 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
8. | Common Stock (continued) |
(t) | During the year ended September 30, 2021, the Company issued 3,601,718 shares of common stock upon the conversion of $46,000 of the convertible note, $5,586 of accrued interest and $500 of conversion fees (Note 5(f)). | |
(u) | During the year ended September 30, 2021, the Company issued 17,557,925 shares of common stock upon the conversion of $82,500 of the convertible note, $7,693 of accrued interest and $3,000 of conversion fees (Note 5(g)). | |
(v) | During the year ended September 30, 2021, the Company issued 4,431,963 shares of common stock upon the conversion of $66,150 of the convertible note, $3,907 of accrued interest (Note 5(h)). | |
(w) | During the year ended September 30, 2021, the Company issued 41,017,383 shares of common stock upon the conversion of $75,825 of the convertible note, $2,154 of accrued interest and $18,750 of fees (Note 5(j)). | |
(x) | On October 20, 2020, the Company issued 2,000,000 shares of common stock with a fair value of $180,000 pursuant to the conversion of $30,750 of a convertible note (see Note 5(j)), which was included in common stock issuable at September 30, 2020. | |
(y) | On November 1, 2020, the Company issued 22,500 shares of common stock with a fair value of $405 for management consulting and strategic business advisory services. | |
(z) | On November 26, 2020, the Company issued 45,000 shares of common stock with a fair value of $720 for management consulting and strategic business advisory services. | |
(aa) | On December 11, 2020, the Company issued 22,500 shares of common stock with a fair value of $225 for management consulting and strategic business advisory services. | |
(bb) | On February 2, 2021, the Company issued 150,000 shares of common stock with a fair value of $2,700 for management consulting and strategic business advisory services. | |
(cc) | On March 29, 2021, the Company issued 150,000 shares of common stock with a fair value of $4,650 for management consulting and strategic business advisory services. | |
(dd) | On May 14, 2021, the Company issued 6,961,250 units at $0.01 per unit for proceeds of $69,613. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
(ee) | On July 13, 2021, the Company issued 702,000 shares of common stock with a fair value of $17,550 for management consulting and strategic business advisory services. | |
(ff) | On August 25, 2021, the Company issued 150,000 shares of common stock with a fair value of $3,300 for management consulting and strategic business advisory services. | |
(gg) | On August 25, 2021, the Company issued 6,100,000 units at $0.01 per unit for proceeds of $61,000. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
(hh) | On September 22, 2021, the Company issued 2,000,000 units at $0.01 per unit for proceeds of $20,000. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
(ii) | On September 22, 2021, the Company issued 6,750,000 shares of common stock with a fair value of $236,250 pursuant to an infomercial production and broadcasting agreement. During the year ended September 30, 2022, the Company recognized consulting fees of $56,495 (2021 - $179,755) pursuant to the agreement. As at September 30, 2022, the Company has recognized $nil (2021 – $56,495) in prepaid expenses and deposits. | |
(jj) | On September 22, 2021, the Company issued 6,000,000 shares of common stock with a fair value of $210,000 pursuant to an infomercial production and broadcasting agreement. During the year ended September 30, 2022, the Company recognized consulting fees of $188,137 (2021 - $21,863) pursuant to the agreement. As at September 30, 2022, the Company has recognized $nil (2021 – $188,137) in prepaid expenses and deposits. | |
(kk) | On September 22, 2021, the Company issued 4,340,000 shares of common stock with a fair value of $151,874 for marketing consulting services. During the year ended September 30, 2022, the Company recognized consulting fees of $95,763 (2021 - $56,111) pursuant to the agreement. As at September 30, 2022, the Company has recognized $nil (2021 – $95,763) in prepaid expenses and deposits. |
| 27 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
9. | Preferred Stock |
On October 13, 2020. The Company filed a certificate of amendment to its articles of incorporation, whereby it increased the authorized capital to 2,000,000,000 shares of common stock with a par value of $0.001 per share and 1,000,000 preferred shares with a par value of $0.001. On October 14, 2020, the Company designated 10,000 preferred shares as Series A Super Voting Preferred Stock. The Series A Super Voting Preferred Stock has the following rights and restrictions: Dividends - Initially, there will be no dividends due or payable on the Series A Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed. Liquidation and Redemption Rights - Upon the occurrence of a Liquidation Event, the holders of Series A Super Voting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series A Super Voting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. Rank - All shares of the Series A Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par value $0.001 per share ( “Common Stock” ), and any other class or series of capital stock of the Corporation hereafter created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii) pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series A Super Voting Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. Voting Rights - If at least one share of Series A Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. Each individual share of Series A Super Voting Preferred Stock shall have the voting rights equal to: |
· | [twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A, Series A and any newly designated Preferred stock issued and outstanding at the time of voting}] Divided by: | ||
· | [the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting] | ||
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or By-laws. Protective Provisions - So long as any shares of Series A Super Voting Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series A Super Voting Preferred Stock, alter or change the rights, preferences or privileges of the Series A Super Voting Preferred so as to affect adversely the holders of Series A Super Voting Preferred Stock. On October 14, 2020, the Company issued 10,000 shares of Series A Super Voting Preferred Stock to a Director of the Company for proceeds of $10. In connection with the issuance of the Series A Super Voting Preferred Stock, the Company evaluated whether the preferred stock should be classified as a liability based on the guidance under ASC 480, Distinguishing Liabilities from Equity. The Series A Super Voting Preferred Stock are not considered mandatorily redeemable, are not settleable in a variable number of shares, and do not contain any features embedded that required a separate assessment. As a result, the Company determined the Series A Super Voting Preferred Stock were not a liability and classified the preferred stock within equity in the amount of the aggregate par value of the issued shares of preferred stock, with any excess attributed to additional paid-in capital. | |||
| 28 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
10. | Share Purchase Warrants |
The following table summarizes the continuity of the Company’s share purchase warrants:
|
| Number of warrants |
|
| Weighted average exercise price $ |
| ||
|
|
|
|
|
|
| ||
Balance, September 30, 2020 |
|
| 114,286 |
|
|
| 0.55 |
|
|
|
|
|
|
|
|
|
|
Issued |
|
| 37,872,500 |
|
|
| 0.05 |
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021 |
|
| 37,986,786 |
|
|
| 0.05 |
|
|
|
|
|
|
|
|
|
|
Issued |
|
| 20,850,000 |
|
|
| 0.05 |
|
Expired |
|
| (114,286 | ) |
|
| 0.55 |
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2022 |
|
| 58,722,500 |
|
|
| 0.05 |
|
As at September 30, 2022, the following share purchase warrants were outstanding:
Number of warrants |
|
| Exercise price |
|
| Expiry date | |||
|
|
|
|
|
|
| |||
| 400,000 |
|
| $ | 0.05 |
|
| December 2, 2022 | |
| 3,000,000 |
|
| $ | 0.05 |
|
| December 11, 2022 | |
| 2,000,000 |
|
| $ | 0.05 |
|
| December 30, 2022 | |
| 2,300,000 |
|
| $ | 0.05 |
|
| January 11, 2023 | |
| 13,500,000 |
|
| $ | 0.05 |
|
| January 30, 2023 | |
| 1,000,000 |
|
| $ | 0.05 |
|
| February 16, 2023 | |
| 611,250 |
|
| $ | 0.05 |
|
| March 1, 2023 | |
| 6,961,250 |
|
| $ | 0.05 |
|
| May 14, 2023 | |
| 6,100,000 |
|
| $ | 0.05 |
|
| August 25, 2023 | |
| 2,000,000 |
|
| $ | 0.05 |
|
| September 24, 2023 | |
| 650,000 |
|
| $ | 0.05 |
|
| January 19, 2024 | |
| 20,200,000 |
|
| $ | 0.05 |
|
| June 8, 2024 | |
|
|
|
|
|
|
|
|
| |
| 58,722,500 |
|
|
|
|
|
|
| |
11. | Memorandum of Understanding |
On July 25, 2021 the Company entered into a Memorandum of Understanding (“MOU”) to acquire all the assets and cannabis business operation, including 12 acres of property, structure and cannabis licenses, existing sales channels and distribution networks, from a private company situated in Northern California. Upon reaching a definitive agreement, the Company intends to further develop a state- of-the-art flowering greenhouse of approximately 12,000 square feet or the maximum allowed by California State and Regional County. The acquisition price is $2,400,000 to be paid through a combination of cash and shares. The Company also has an option from the seller to acquire an additional 120 acres or more of land for business expansion and development. As at September 30, 2022, the Company has advanced $88,850 (2021 - $nil) under the MOU, which will be applied against the final purchase price upon completion of a definitive agreement. This amount has been included in prepaid expenses and deposits. The Company currently lacks funds with which to consummate the contemplated transaction and has not negotiated a definitive agreement with respect to the contemplated transaction. Thus, there is no assurance that the Company will ever enter into, and consummate, a definitive agreement with respect to the contemplated transaction. |
| 29 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
12. | Commitments and Contingency |
(a) | Effective December 11, 2017, the Company entered into a binding Letter of Intent (“LOI”) with Alliance Growers Corp. (“Alliance”), whereby the Company will build a new cannabis biotech complex located in Deroche, British Columbia, through their subsidiary, 115BC. On January 25, 2019, the Company’s subsidiaries WFS and 115BC entered into an option agreement with Alliance, which superseded the LOI entered into on December 11, 2017. The option agreement grants an option to Alliance to purchase 10% equity interest in 115BC for Cdn$1,350,000 and previously granted a second option to purchase an additional 20% equity interest in 115BC for funding of 30% of the total construction and equipment costs for the biotech complex less Cdn$1,350,000. On January 25, 2019, 115BC issued 8 shares of common stock to Alliance upon exercise of the first option for consideration of $1,018,182 (Cdn$1,350,008), which was recognized as additional paid-in capital. The second option expired unexercised. As at September 30, 2022, the Company received advances of $54,847 (Cdn$75,000) (2021 - $59,122 (Cdn$75,000)) from Alliance, which is unsecured, non-interest bearing, and due on demand. | |
(b) | On November 22, 2019, the Company entered into an equity purchase agreement with an unrelated party, whereby the third party is to purchase up to $10,000,000 of the Company’s common stock. The equity purchase agreement is effective for a term of 2 years from the effective date of the registration statement. The purchase price would be 85% of the market price. In return, the Company issued a promissory note of $40,000 (Refer to Note 4(a)). In addition, the Company is required to pay an additional commitment fee of $10,000, of which $5,000 was paid upon signing the term sheet and the remaining $5,000 is due upon completion of the first tranche of the financing. | |
On | March 10, 2021, the noteholder filed a Notice of Motion for Summary Judgement in Lieu of Complaint (the “Notice”) with the State of New York Supreme Court, County of New York for $40,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs. On July 31, 2021, the Notice was dismissed without prejudice by the State of New York Supreme Court. On September 23, 2021, the noteholder filed a new Notice of Motion for Summary Judgement in Lieu of Complaint with the State of New York Supreme Court, County of New York for $44,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs. The plaintiff filed for an oral argument which was heard by the State of New York Supreme Court on September 15, 2022 and is pending a final decision. The Company believes that the claim has no merit and intends to defend its position vigorously. | |
(c) | Effective May 14, 2021, the Company entered into a Software as a Service Agreement with Novation Solutions Inc. (“DealMaker”) to effect the Company’s planned Regulation A offering, including the set-up of an automated tracking, signing, and reconciliation portal. The Company will pay DealMaker $3,000 upon signing the agreement, $7,000 30 days prior to launching the portal, and a post launch monthly fee of $1,000. The monthly fee will automatically renew each month for the shorter of the duration of the offering period, or one year. | |
(d) | On May 2, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 7,000,000 shares of common stock in exchange for market awareness services. On May 3, 2022, the Company issued 7,000,000 shares of common stock with a fair value of $84,700 pursuant to the agreement (Note 8(h)). As at September 30, 2022, the Company recognized $15,191 (2021 - $nil) in prepaid expenses and deposits. During the year ended September 30, 2022, the Company recognized consulting fees of $69,509 (2021 - $nil) pursuant to the agreement. | |
(e) | On May 20, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 9,000,000 shares of common stock in exchange for public relations and communications services. If both parties agree to continue the agreement for another 6 months, the Company will issue common stock of the Company with a fair value of $80,000. On August 22, 2022, the Company issued 9,000,000 shares of common stock with a fair value of $81,000 pursuant to the agreement (Note 8(j)). As at September 30, 2022, the Company recognized $21,481 (2021 - $nil) in prepaid expenses and deposits. During the year ended September 30, 2022, the Company recognized consulting fees of $59,519 (2021 - $nil) pursuant to the agreement. |
| 30 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
12. | Commitments and Contingency (continued) |
(f) | On September 8, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 9,500,000 shares of common stock in exchange for corporate development, investor, media, public relations, and marketing services. On September 13, 2022, the Company issued 9,500,000 shares of common stock with a fair value of $85,500 pursuant to the agreement (Note 8(k)). As at September 30, 2022, the Company recognized $75,050 (2021 - $nil) in prepaid expenses and deposits. During the year ended September 30, 2022, the Company recognized consulting fees of $10,450 (2021 - $nil) pursuant to the agreement. | |
(g) | On September 15, 2022, the Company entered into a consulting agreement with a twelve-month term. Pursuant to the agreement, the Company agreed to issue 2,500,000 shares of common stock in exchange for management consulting and strategic business advisory services. If the 2,500,000 shares are not issued within 30 days of the start of the agreement there is a 10,000 share a day penalty. As at September 30, 2022, the shares of common stock have not been issued and the Company recognized $1,130 (2021 - $nil) in common stock issuable. During the year ended September 30, 2022, the Company recognized consulting fees of $1,130 (2021 - $nil) pursuant to the agreement. On October 3, 2022, the Company issued 2,500,000 shares of common stock (Note 14). |
13. | Income Taxes |
The Company is subject to Canadian federal and provincial taxes at an approximate rate of 27% (2021 – 27%) and United States federal and state income taxes at an approximate rate of 21% (2021 – 21%). The reconciliation of the provision for income taxes at the federal statutory rate compared to the Company’s income tax expense as reported is as follows: |
|
| 2022 $ |
|
| 2021 $ |
| ||
|
|
|
|
|
|
| ||
Income tax recovery at statutory rate |
|
| (198,668 | ) |
|
| (965,087 | ) |
|
|
|
|
|
|
|
|
|
Permanent differences and other |
|
| 43,656 |
|
|
| 779,513 |
|
Change in valuation allowance |
|
| 155,012 |
|
|
| 185,574 |
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
| - |
|
|
| - |
|
The significant components of deferred income tax assets and liabilities are as follows:
|
| 2022 $ |
|
| 2021 $ |
| ||
|
|
|
|
|
|
| ||
Net operating losses carried forward |
|
| 2,032,256 |
|
|
| 1,877,243 |
|
Property and equipment |
|
| 52,954 |
|
|
| 52,954 |
|
Valuation allowance |
|
| (2,085,210 | ) |
|
| (1,930,197 | ) |
|
|
|
|
|
|
|
|
|
Net deferred income tax asset |
|
| - |
|
|
| - |
|
The 2017 Act reduced the corporate tax rate from 34% to 21% for tax years beginning after December 31, 2017. For net operating losses arising after December 31, 2017, the 2017 Act limits a taxpayer’s ability to utilize net operating losses carryforwards to 80% of taxable income. In addition, net operating losses arising after 2017 can be carried forward indefinitely, but carryback is generally prohibited. Net operating losses generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation. The 2017 Act would generally eliminate the carryback of all net operating losses arising in a tax year ending after 2017 and instead would permit all such net operating losses to be carried forward indefinitely.
| 31 |
| Table of Contents |
PHARMAGREEN BIOTECH INC. Notes to the Consolidated Financial Statements Years Ended September 30, 2022, and 2021 (Expressed in U.S. dollars) |
13. | Income Taxes (continued) |
The Company has net operating losses carried forward of $7,997,525 which may be carried forward to apply against future years’ taxable income, subject to the final determination by taxation authorities, expiring in the following years: |
|
| Canada $ |
|
| USA $ |
| ||
|
|
|
|
|
|
| ||
2029 |
|
| - |
|
|
| 54,040 |
|
2030 |
|
| - |
|
|
| 101,259 |
|
2034 |
|
| 401,530 |
|
|
| - |
|
2035 |
|
| 740,776 |
|
|
| 1,003 |
|
2036 |
|
| 1,008,613 |
|
|
| 1,000 |
|
2037 |
|
| 1,229,859 |
|
|
| - |
|
2038 |
|
| 1,575,665 |
|
|
| 91,177 |
|
2039 |
|
| 272,632 |
|
|
| 493,609 |
|
2040 |
|
| 182,216 |
|
|
| 356,102 |
|
2041 |
|
| 222,571 |
|
|
| 597,523 |
|
2042 |
|
| 245,731 |
|
|
| 422,219 |
|
|
|
|
|
|
|
|
|
|
|
|
| 5,879,593 |
|
|
| 2,117,932 |
|
14. | Subsequent Events |
(a) | On October 3, 2022, the Company issued 2,500,000 shares of common stock pursuant to the consulting agreement in Note 12(g). | |
(b) | On November 2, 2022, the Company entered into a convertible promissory note for $50,000, which is unsecured, and matures on May 1, 2023. A one-time interest charge of 10%, equal to $5,000, shall automatically accrue on the issuance date. Any amount of principal or interest on the note which is not paid when due shall bear interest at 22% per annum or the highest rate permitted by law. The note may be converted at any time after 120 days following the date of issuance into shares of Company’s common stock at a conversion price equal to 57.5% of the lowest trading price for the common stock for the 15 trading days prior to the conversion date. | |
(c) | On November 3, 2022, the Company entered into a consulting agreement for a term of 1 month, whereby the Company agreed to pay the consultant $5,000 upon the Company’s receipt of $50,000 in net proceeds from a promissory note, increasing to $10,000 upon the Company’s receipt of $100,000 in net proceeds from a promissory note. | |
(d) | On November 28, 2022, the Company entered into a Product Endorsement Agreement with Tyrell Crosby. The term of the agreement is 18 months and shall be renewed by mutual consent of both parties, for an additional year on the anniversary of the agreement, unless otherwise terminated. In consideration for the endorsement services, the Company agreed to issue 10,000,000 common shares. |
| 32 |
| Table of Contents |
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEMChanges in and Disagreements With Accountants on Accounting and Financial Disclosure.
None
Item 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
In connection with this quarterly report, as required by Rule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company’s management, including our company’s principal executive officer and principal financial officer. Based upon that evaluation, our company’s principal executive officer and principal financial officer concluded that as of September 30, 2022 our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal controls over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's
principal executiveCompany’s Principal Executive and principal financial officersPrincipal Financial officer and effected by the company'sCompany’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
-
1. | Pertains to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of assets; | |
2. | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America and | |
3. | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements. |
Management assessed the effectiveness of ourthe Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments as of the end of the period covered by this report. Management conducted the assessment based on certain criteria established in Internal Control--IntegratedControl - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate applicationin 2013. As of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation ofSeptember 30, 2022, management determined material weaknesses occurred over our internal controlscontrol over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
as discussed below.
The matters involving internal controls and procedures that ourthe Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of outside directors on ourthe Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and 23
(3)procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementionedDue to these material weaknesses were identified
bymanagement concluded that our Chief Executive Officer in connection with the review of ourinternal control over financial statementsreporting was not effective as of AprilSeptember 30, 2009.
2022.
| 33 |
| Table of Contents |
Material Weakness Discussion and Remediation
Management believes that the material weaknesses set forth in items (2), (3) and (3)(4) above did not have an effect on ourthe Company's previous reported financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on ourthe Company's board of directors, resultsresulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures which couldcan result in a material misstatement inthe Company's determination to its financial statements for the future periods.
We are committed to improving our financial statements in future periods.
This annual report does not include an attestation reportorganization. As part of the Corporation's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
Corporation's registered public accounting firm pursuant to temporary rules of
the SEC that permit the Corporation to provide only the management's report in
this annual report.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls,commitment, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to
appointthe Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to anthe audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures such as reviewingfor accounting and approving estimatesfinancial reporting with respect to the requirements and assumptions made by management when funds are available to us.
application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2009. Additionally, we plan to test our updatedinternal controls and remediate our deficiencies by December 31, 2009.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change inprocedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d)of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the period covered by this report, whichsmall business issuer’s last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal controlscontrol over financial reporting. 24
Item 9B. Other Information.
None
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None
| 34 |
| Table of Contents |
PART III
ITEM
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
The names, agesDirectors, Executive Officers and titlesCorporate Governance.
Identification of ourdirectors and executive officers
Our directors serve until their successor are elected and directorqualified. Our officers are as
follows:
Name and Address of Executive
Officer and/or Director Age Position
----------------------- --- --------
Andrey Deshin 47 Former President, Former Chief Executive
Officer, Former Secretary Former
Treasurer and Former Director
Larisa Etezova 36 Former Secretary
Darrell Richardson 62 Former Executive Vice President and
Former Director
Jamail Larkins 24 Vice President
Nathan Horne 42 Executive Vice President
Arnold Leonora 46 President, Secretary, and Director
ARNOLD LEONORA
From 1989 to the present, Mr. Leonora was the principal in a private company,
ATG LLC (see www.flyabl.com) whose business is aircraft leasing & finance and
aircraft management. Based in Atlanta, the private company, has offices in Fort
Lauderdale, Madrid, South Africa and Curacao.
Before 1989, Mr. Leonora was an investment banker with Bank of Boston and
Merrill Lynch. He accumulated extensive capital markets experience with public
companies, serving in various management capacities with client-companies. These
positions included Managing Director of regional commuter airlines in the
Caribbean and South America.
NATHAN HORNE
Nathan Horne, aged 42, is the Co-Founder and Chief Operation Officer of Jet
Black Oil, Inc. a privately held domestic oil company based in Las Vegas,
Nevada. He is also the Managing Partner and Executive Director of WiFi2Go, LLC,
a Georgia-based wireless company. Since 2003, Mr. Horne has managed a privately
held business consulting firm called NEH Enterprises.
JAMAIL LARKINS
Jamail Larkins, aged 24, is appointed Vice President of the Company. In 2008,
Jamail Larkins was appointed as Chairman ofelected by the Board of Careers in Aviation,Directors to a non-profit organization dedicatedterm of one (1) year and serve until their successor(s) is duly elected and qualified, or until they are removed from office. The Board of Directors has no nominating or compensation committees. The company’s current Audit Committee consists of our officers and directors.
Our directors serve until a successor is elected and qualified. Our officers are elected by the Board of Directors to encouraging young peoplea term of one (1) year and serves until their successor(s) is duly elected and qualified, or until they are removed from office. The Board of Directors has no nominating or compensation committees. The company’s current Audit Committee consists of our officers and directors.
The name, age and position of our present officers and directors is set forth below:
Management
Directors of the Company are elected by the shareholders to consider a career in aviation. Mr. Larkins wasterm of one year and serve until their successors are elected and qualified. Officers of the Company are appointed by the Board of Directors to a 2006term of one year and serve until their successors are duly appointed and qualified, or until the officer is removed from office. The Board of Directors has no nominating, auditing or compensation committees.
Management of Pharmagreen Biotech Inc.
Name | Age | Position | Director Since |
Peter Wojcik | 51 | President/Sole Director | February 2, 2018 |
Peter WojcikB.A. Adv., President / Sole Director
A graduate of Embry-Riddle Aeronautical
University. He joined Careersadvanced degree in Aviation in 2002 as national spokespersonEconomics from the University of Regina. Additionally, Mr. Wojcik has a natural compassion for the non-profit organization. In 2004, Mr. Larkins founded a nationwide tour
designedhealth and well-being of others, which has naturally led to educate students about their career opportunitieshis decade-plus experience in the aviation
industry,research and application of cannabis and its extracts as a therapeutic agent, specifically in their application in the DreamLaunch Tour. In 2005, FAA Administrator Marion C. Blakey
appointed Larkinstreatment of illness and disease for individuals.
Mr. Wojcik has been the President and Director of Pharmagreen Biotech, Inc. since May 2018.
Mr. Wojcik duties include making major corporate decisions, managing the overall operations and resources of a company, acting as the first ambassador for aviationmain point of communication between the board of directors and space education. In
this capacity, Larkins acts as an official representativecorporate operations, and being the public face of the FAA, promoting
aviation career opportunitiescompany.
Mr. Wojcik has held the offices/positions since February 2, 2018 to America's youth, as well as the benefits of
aviation to mainstream America.
25
TERM OF OFFICE
Our directorhis respective office/positions, is appointedexpected to hold officesaid office/position until the next annual meeting of our
stockholders orthe shareholders. The persons named above are the company’s only officers, directors, promoters and control persons.
Management of WFS Pharmagreen Inc. (wholly owned subsidiary of Pharmagreen Biotech Inc.)
Directors of the Company are elected by the shareholders to a term of one year and serve until his successor istheir successors are elected and qualified. Officers of the Company are appointed by the Board of Directors to a term of one year and serve until their successors are duly appointed and qualified, or until he
resigns orthe officer is removed in accordance with the provisions of the State of Nevada
Statutes. Our officer is appointed by ourfrom office. The Board of Directors has no nominating, auditing or compensation committees.
Name | Age | Position | Director Since |
Peter Wojcik | 51 | Chief Executive Officer / Director | December 19, 2013 |
Terry Kwan | 75 | Chief Financial Officer / Director | July 22, 2015 – May 1, 2022 |
Fawzia Afreen | 56 | Chief Operations Officer |
Mr. Wojcik has held the offices/positions since the inception of the Company and holds officeMr. Kwan was appointed on July 22, 2015 to his respective office/positions, both are expected to hold said offices/positions until removedthe next annual meeting of the shareholders. The persons named above are the company’s only officers, directors, promoters and control persons.
| 35 |
| Table of Contents |
WFS Pharmagreen Inc. (wholly owned subsidiary of Pharmagreen Biotech Inc.)
Peter WojcikB.A. Adv., Chief Executive Officer / Director
Mr. Wojcik has been the Chief Executive Officer of WFS Pharmagreen Inc. since December 2013. Mr. Wojcik duties for WFS include day to day management of the company, oversight for the construction project development, coordinating with Engineering firms and project manager, in charge of Health Canada cannabis license application process.
Terry Kwan B. Comm., CPA, CA, Chief Financial Officer
Terry is a graduate from the University of British Columbia with a Bachelor of Commerce and is a chartered professional accountant with the Institute of Chartered Professional Accountants of B.C. He brings more than four decades of significant finance related experience in both the private and public sectors.
2005 - 2015 Mr. Kwan worked for Global Securities Corp. and Global Securities Futures Corp., where he was CFO, a compliance officer and broker.
August 2013 to current Mr. Kwan is CFO of WFS Pharmagreen Inc.
His responsibilities include financial management and reporting and corporate structuring. He sits on the business development committee and the tissue culture complex planning, design and construction committees. He is the “Head of Security” for purposes of the application for the Cannabis license application with Health Canada. Additional responsibility will be to design and implement a reporting system that meets both Health Canada Guidelines and good corporate governance.
Fawzia AfreenPh.D., Chief Operations Officer
Fawzia has a Ph.D. in Botany from University of Hull (UK). She has achieved designation as a JSPS Fellow from Chiba University, Japan, teaching M.Sc. courses in (I) Protected Horticulture; (ii) Plant Tissue Culture, and (iii) Plant Production in Controlled Environment. In addition to holding three international patents, publishing over 40 articles in peer-reviewed international journals and publishing two books, Fawzia brings 16 years of experience in plant horticulture, plant tissue culture, plant production and an increase of secondary metabolites in a controlled environment to the Company.
Consulting role from June of 2014 to June of 2015 and on January 1, 2018 Dr. Fawzia Afreen became the Chief Operating Officer of WFS Pharmagreen Inc.
Dr. Afreen duties for WFS include, the head of the committee for facility design, assisting in building engineering plans, planning and selecting of equipment requirements, screening and hiring process of future facility employees, in charge of development of standard operating procedures, and quality control person for the cannabis license.
1155907 B.C. Ltd. (wholly owned subsidiary of WFS Pharmagreen Inc.)
Directors of the Company are elected by the Board.
SIGNIFICANT EMPLOYEES
Weshareholders to a term of one year and serve until their successors are elected and qualified. Officers of the Company are appointed by the Board of Directors to a term of one year and serve until their successors are duly appointed and qualified, or until the officer is removed from office. The Board of Directors has no nominating, auditing or compensation committees.
Name | Age | Position | Director Since |
Peter Wojcik | 51 | Chief Executive Officer / Director | March 2, 2018 |
Mr. Wojcik has held the offices/positions since March 2, 2018 to his respective office/positions, is expected to hold said office/position until the next annual meeting of the shareholders. The persons named above are the company’s only officers, directors, promoters and control persons.
This company will be used as an operating entity, once the Biotech Complex is built and occupied.
| 36 |
| Table of Contents |
Our directors and officers do not hold positions on the board of directors of any other U.S. reporting companies and have no significantaffiliation with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.
The Company believes that Mr. Wojcik’s business experience and his entrepreneurial success make him well suited to serve as our officer and director.
Our directors and officers do not hold positions on the board of directors of any other U.S. reporting companies and has no affiliation with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company.
Significant Employees
The Company does not, at present, have any employees other than ourthe current officer and directors who
devotes up to 20 hours per week to company matters.
Our officers and directorsdirector. We have not beenentered into any employment agreements, as we currently do not have any employees other than the subjectcurrent officer and director.
Family Relations
There are no family relationships among the Directors and Officers of any order, judgment,Pharmagreen Biotech Inc.
Involvement in Legal Proceedings
No executive Officer or decreeDirector of any court of competent jurisdiction, or any regulatory agency
permanently or temporarily enjoining, barring, suspending or otherwise limited
him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an
investment company, bank, savings and loan association, or insurance company or
from engaging in or continuing any conduct or practice in connection with any
such activity or in connection with the purchase or sale of any securities.
Our officers and directors have notCompany has been convicted in any criminal proceeding (excluding traffic violations) noror is hethe subject of a criminal proceeding that is currently pending.
No Executive Officer or Director of the Company is involved in any currently pending
criminal proceeding.
We conduct ourbankruptcy petition by or against any business through agreements with consultants and arms-length
third parties. We pay our consulting geologist the usual and customary rates
received by geologists performing similar consulting services.
CODE OF ETHICS
Our board of directors adopted our code of ethical conduct that applies to all
of our employees and directors, including our principalin which they are a general partner or executive officer principal financial officer, principal accountingat this time or within two years of any involvement as a general partner, executive officer, or controller,Director of any business.
Corporate Governance
The Company does not have a compensation committee and it does not have an audit committee financial expert. It does not have a compensation committee because its Board of Directors consists of only one director who is not independent as he is also an officer. There is no independent audit committee financial expert because it is believed the cost related to retaining a financial expert at this time is prohibitive in the circumstances of the Company. Further, because there are only minimal operations, at the present time, it is believed the services of a financial expert are not warranted.
Conflicts of Interest
The Company does not currently foresee any conflict of interest.
Section 16(a) Beneficial Ownership Reporting Compliance
16(a) of the Securities Exchange Act of 1934 requires the company directors and executive officers, and persons performing similar functions.
We believewho own more than ten percent of the adoption of our Code of Ethical Conduct is consistentCompany’s common stock, to file with the requirementsSecurities and Exchange Commission initial reports of ownership and reports of changes of ownership of its common stock. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Sarbanes-Oxley Actcompany with copies of 2002.
Our Code of Ethical Conduct is designedall Section 16(a) forms they file. The Company intends to deter wrongdoing and to promote:
* Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
* Full, fair, accurate, timely and understandable disclosure in reports
and documents that we file or submitensure to the Securities & Exchange
Commissionbest of its ability that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners are complied with in other public communications made by us;
* Compliance with applicable governmental laws, rules and regulations;
* The prompt internal reporting to an appropriate person or persons
identified in the code of violations of our Code of Ethical Conduct;
and
* Accountability for adherence to the Code.
26
ITEMa timely fashion.
| 37 |
| Table of Contents |
Item 11. EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
Executive Compensation.
The table below summarizes all compensation awarded to, earned by, or paid to our named executive officers by any personand director for all services rendered in all capacities to us for the past three years ending August 12, 2009:
Name and Principal Position |
| Fiscal Year Ended 09/30 |
| Salary and Bonus ($) |
|
| Stock Awards ($) |
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified Deferred Compensation Earnings ($) |
| All Other Compensation ($) |
| Total ($) |
| ||
Peter Wojcik (1)(2) |
| 2022 |
|
| 93,964 |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
| 93,964 |
|
President, CEO, Secretary, Treasurer and Director |
| 2021 |
|
| 94,980 |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
| 94,980 |
|
| ||||||||||||||||||||
Terry Kwan (1)(3) |
| 2022 |
|
| 93,964 |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
| 93,964 |
|
| Principal Accounting Officer |
| 2021 |
|
| 94,980 |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
| 94,980 |
|
| ||||||||||||||||||||
Fawzia Afreen (4) |
| 2022 |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| ||
COO |
| 2021 |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| ||
(1) Peter Wojcik and Terry Kwan, two Company’s officers and sole director currently devote approximately 45-55 hours per week to manage the affairs of the Company, including, but not limited to the upkeep of Pharmagreen Biotech Inc., and its subsidiaries.
(2) Mr. Wojcik is the President, CEO, Secretary, Treasurer and a sole Director of Pharmagreen Biotech Inc., he is the CEO, Director of the subsidiary WFS Pharmagreen Inc. and CEO, Director of the subsidiary 1155907 B.C. Ltd.
(3) Mr. Kwan is the CFO and was a Director (July 22, 2015 – May 1, 2022) of the WFS Pharmagreen Inc., wholly owned subsidiary of Pharmagreen Biotech Inc., since July 22, 2015. Mr Kwan is the Principal Accounting Officer of Pharmagreen Biotech Inc.
(4) Dr. Afreen has been an officer of WFS Pharmagreen Inc., wholly owned subsidiary of Pharmagreen Biotech Inc., since January 1, 2018. Dr. Afreen is employed by Botanical Research In Motion Inc., a British Columbia corporation owned by Peter Wojcik. Because of Dr. Afreen’s close association with Mr. Wojcik and her work at Botanical Research In Motion Inc., she volunteers a limited amount of time to act as COO of Pharmagreen Biotech, Inc. and WFS Pharmagreen Inc.
| 38 |
| Table of Contents |
Narrative Disclosure to Summary Compensation Table
There are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.
Outstanding Equity Awards at Fiscal Year-End
No executive officer received any equity awards, or holds exercisable or un-exercisable options, as of the year ended September 30, 2022.
Stock Awards Plan
The company has not adopted a Stock Awards Plan, but may do so in the future. The terms of any such plan have not been determined.
Compensation Committee
The Company currently does not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.
There have never been any grants of stock options to our officers or directors.
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until their successors are elected or appointed. Our officers are appointed by our board of directors and serve at the discretion of the board.
We believe Mr. Wojcik is qualified to act as director based upon his knowledge of business practices and, in particular, the regulations relating to public companies.
Mr. Wojcik is not independent as that term is defined in Section 803 of the NYSE MKT Company Guide.
We do not have a financial expert as that term is defined by the Securities and Exchange Commission.
Our Board of Directors does not have standing audit, nominating, or compensation committees, committees performing similar functions, or charters for such committees. Instead, the functions that might be delegated to such committees are carried out by our Directors, to the extent required. Our Directors believe that the cost of associated with such committees, has not been justified under our current employment agreements betweencircumstances.
Compensation of Directors
During the companyyears ended September 30, 2022, and 2021, we did not compensate any person for serving as a director.
There have never been any grants of stock options to our officers or directors.
Name |
|
Year |
| Fees earned or paid in cash 0($) |
| Stock awards ($) |
| Option awards ($) |
| Non-equity incentive plan compensation ($) |
| Nonqualified deferred compensation earnings ($) |
| All other compensation ($) |
| Total ($) |
|
Peter Wojcik |
| 2022 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
|
| 2021 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
Terry Kwan |
| 2022 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
|
| 2021 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
Fawzia Afreen |
| 2022 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
|
| 2021 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
| 39 |
| Table of Contents |
Director Independence
The Board of Directors is currently composed of one member. Peter Wojcik does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of the Company’s employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, the board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had the board of directors made these determinations, the board of directors would have reviewed and discussed information provided by the directors and the Company with regard to each director’s business and personal activities and relationships as they may relate to the Company and its officer/director.
There are no annuity, pension or retirement benefits proposed to be paid to the
officer or director or employees in the eventmanagement.
Item 12. Security Ownership of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Ownership and Management and Related Stockholder Matters.
The following table sets forth certain information Beneficial Name of Owner Number of Series A Preferred Stock Percentage of Ownership as at September 30, 2022 Number of Common Shares After Offering Percentage of Ownership as at September 30, 2022 Peter Wojcik(2)(7) Terry Kwan(3) Fawzia Afreen(4) All Officers and Directors as a Group(5) Harvey Larochelle Wlaydyslaw Wojcik(6) (1) Under Rule 13d-3 promulgated under the Exchange Act, aconcerningat September 30, 2022, with respect to the numberbeneficial ownership of shares of our common stock owned beneficially as of April 12, 2009 by:Common Stock by (i) each person (including any group) known to us to ownthe Company who owns beneficially more than five percent (5%)5% of any classthe outstanding shares of our voting securities,Common Stock (based upon reports which have been filed and other information known to the Company), (ii) our director,each of the Directors, (iii) each of the Executive Officers and or (iii) our officer.(iv) all of the Executive Officers and Directors as a group. Unless otherwise indicated, theeach stockholder listed possesseshas sole voting and investment power with respect to the shares shown. 27
Shares of Percent of
Title of Class Name of Beneficial Owner Common Stock Class
- -------------- ------------------------ ------------ -----
Common Arnold Leonora 30,000,000 55.97%
7453 Woodruff Way
Stone Mountain, GA 30087
Directors and Officers asAs of September 30, 2022, the Company had 442,260,969 shares of common stock and 10,000 Series A Super Voting preferred stock issued and outstanding.10,000 100 % 35,077,500 7.93 % - - 5,000,000 1.13 % - - 2,000,000 0.45 % 10,000 100 % 42,077,500 9.51 % - - 29,926,786 6.67 % - - 12,730,000 2.88 % group consisting of
one person 30,000,000 55.97%
- ----------
(1) A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As
(2) Peter Wojcik has 31,077,500 shares in his name and his group includes, Jordan Wojcik, son of Peter Wojcik, residing at same residence who has 1,000,000 shares, Jessica Wojcik, daughter of Peter Wojcik, residing at same residence, who has 1,000,000 shares and Leonna Wojcik, wife of Peter Wojcik, residing at same residence, who has 2,000,000, who collectively hold 35,077,500 shares. The residence is located at 2987 Blackbear Court, Coquitlam, B.C., Canada, V3E 3A2.
(3) Terry Kwan is the current officer and director of WFS Pharmagreen Inc., the wholly owned subsidiary of Pharmagreen Biotech Inc. The 5,000,000 shares are held in TK Investments Ltd., and he may be deemed to have voting and investment power over the shares held thereby.
(4) Fawzia Afreen is the current Chief Operating Officer of WFS Pharmagreen Inc., the wholly owned subsidiary of Pharmagreen Biotech Inc.
| 40 |
| Table of Contents |
(5) All officers and directors as a result,group includes the percentageofficer and director of outstandingPharmagreen Biotech Inc. and its wholly owned subsidiary WFS Pharmagreen Inc.
(6) Wladyslaw Wojcik has 5,830,000 shares in his name that he controls and he also has 6,900,000 in W. Wojcik Medical Professional Corporation, which he controls.
(7) The shares of any person as shown in this table does not necessarily reflect
the person's actual ownership or voting power with respectSeries A Super Voting Preferred Stock have 20 times that number of votes on all matters submitted to the numbershareholders that each shareholder of our common stock is entitled to vote at each meeting of shareholders. The shares of Series A Super Voting Preferred Stock vote together with the holders of the Company’s common stock actually outstanding on March 9, 2009.
ITEMas a single class. Peter Wojcik, our sole officer and director, holds 100% of the Series A Super Voting Preferred Stock.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NoneCertain Relationships and Related Transactions, and Director Independence.
· | As at September 30, 2022, the Company owed $588,165 (Cdn$804,285) (2021 - $547,079 (Cdn$693,998)) to the President of the Company, which is non-interest bearing, unsecured, and due on demand. During the year ended September 30, 2022, the Company incurred consulting fees of $93,964 (2021 - $94,980) to the President of the Company. | |
· | As at September 30, 2022, the Company owed $53,750 (Cdn$73,500) (2021 - $57,940 (Cdn$73,500)) to the father of the President of the Company, which is non-interest bearing, unsecured, and due on demand. | |
· | As at September 30, 2022, the Company owed $25,010 (Cdn$34,200) (2021 – $26,960 (Cdn$34,200)) to a company owned by the father of the President of the Company, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. | |
· | As at September 30, 2022, the Company owed $509,610 (Cdn$696,866) (2021 – $445,591 (Cdn$565,256)) to a company controlled by the Chief Financial Officer of WFS, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. During the year ended September 30, 2022, the Company incurred consulting fees of $93,964 (2021 - $94,980) to the company controlled by the Chief Financial Officer of WFS. | |
· | On June 1, 2022, the Company entered into a loan agreement with the father of the President of the Company with a principal of $50,000, which bears interest at 10% per annum, is unsecured and due on June 1, 2026. | |
· | On June 1, 2022, the Company entered into a loan agreement with the father of the President of the Company with a principal of $40,221 (Cdn$55,000), which bears interest at 10% per annum, is unsecured and due on June 1, 2026. |
Common Stock
Year ended September 30, 2022
· | On October 21, 2021, the Company issued 4,000,000 shares of common stock at $0.025 per share for proceeds of $100,000. In connection with the financing, the Company incurred commission fees of $8,000. | |
· | On January 19, 2022, the Company issued 650,000 units at $0.01 per unit for proceeds of $6,500. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
· | On January 19, 2022, the Company issued 800,000 shares of common stock at $0.025 per share for proceeds of $20,000. | |
· | On January 19, 2022, the Company issued 6,800,000 shares of common stock with a fair value of $136,000 for consultation communication and media services. | |
· | On January 19, 2022, the Company issued 1,800,000 shares of common stock with a fair value of $36,000 for strategic and business development advisory services. | |
· | On January 21, 2022, the Company issued 1,000,000 shares with a fair value of $19,700 for management consulting and strategic business advisory services. |
| 41 |
| Table of Contents |
· | On February 10, 2022, the Company issued 1,000,000 shares of common stock with a fair value of $17,000 for market awareness services. | |
· | On May 3, 2022, the Company issued 7,000,000 shares of common stock with a fair value of $84,700 for market awareness services. | |
· | On June 8, 2022, the Company issued 20,200,000 units at $0.0025 per unit for proceeds of $68,500. Each unit is comprised of one share of common stock and one purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
· | On August 22, 2022, the Company issued 9,000,000 shares of common stock with a fair value of $81,000 for public relations and communications services. | |
· | On September 13, 2022, the Company issued 9,500,000 shares of common stock with a fair value of $85,500 for corporate development, investor, media, and public relations, and marketing services. | |
· | On September 20, 2022, the Company received and cancelled 660,300 with a fair value of $4,606 due to a court judgement ordering the lender to surrender all common stock of the Company for cancellation and surrender conversion rights for all remaining convertible notes. |
Year ended September 30, 2021 | ||
· | In December 2020, the Company issued 5,400,000 units at $0.005 per unit for proceeds of $27,000 in a private placement. Each unit is comprised of one share of common stock and one share purchase warrant exercisable into an additional share of common stock at an exercise price of $0.05 per share for a period of 24 months. | |
· | Between January 11 to February 16, 2021, the Company issued 16,800,000 units at $0.005 per unit for proceeds of $84,000 in a private placement. Each unit is comprised of one share of common stock and one share purchase warrant exercisable into an additional share of common stock at an exercise price of $0.05 per share for a period of 24 months. | |
· | On March 1, 2021, the Company issued 611,250 units at $0.01 per unit for proceeds of $6,112 in a private placement. Each unit is comprised of one share of common stock and one share purchase warrant exercisable into an additional share of common stock at an exercise price of $0.05 per share for a period of 24 months. | |
· | During the year ended September 30, 2021, the Company issued 133,226,100 shares of common stock upon the conversion of $417,719 of the convertible note and $11,000 of conversion fees. | |
· | During the year ended September 30, 2021, the Company issued 7,730,486 shares of common stock upon the conversion of $126,000 of the convertible note and $3,150 of accrued interest. | |
· | During the year ended September 30, 2021, the Company issued 16,994,905 shares of common stock upon the conversion of $106,000 of the convertible note and $2,650 of accrued interest. | |
· | During the year ended September 30, 2021, the Company issued 2,600,000 shares of common stock upon the conversion of $18,923 of the convertible note and $4,500 of conversion fees. | |
· | During the year ended September 30, 2021, the Company issued 3,601,718 shares of common stock upon the conversion of $46,000 of the convertible note, $5,586 of accrued interest and $500 of conversion fees. | |
· | During the year ended September 30, 2021, the Company issued 17,557,925 shares of common stock upon the conversion of $82,500 of the convertible note, $7,693 of accrued interest and $3,000 of conversion fees. | |
· | During the year ended September 30, 2021, the Company issued 4,431,963 shares of common stock upon the conversion of $66,150 of the convertible note, $3,907 of accrued interest. | |
· | During the year ended September 30, 2021, the Company issued 41,017,383 shares of common stock upon the conversion of $75,825 of the convertible note, $2,154 of accrued interest and $18,750 of fees. | |
· | On October 20, 2020, the Company issued 2,000,000 shares of common stock with a fair value of $180,000 pursuant to the conversion of $30,750 of a convertible note, which was included in common stock issuable at September 30, 2020. | |
· | On November 1, 2020, the Company issued 22,500 shares of common stock with a fair value of $405 for management consulting and strategic business advisory services. | |
| 42 |
| Table of Contents |
· | On November 26, 2020, the Company issued 45,000 shares of common stock with a fair value of $720 for management consulting and strategic business advisory services. | |
· | On December 11, 2020, the Company issued 22,500 shares of common stock with a fair value of $225 for management consulting and strategic business advisory services. | |
· | On February 2, 2021, the Company issued 150,000 shares of common stock with a fair value of $2,700 for management consulting and strategic business advisory services. | |
· | On March 29, 2021, the Company issued 150,000 shares of common stock with a fair value of $4,650 for management consulting and strategic business advisory services. | |
· | On May 14, 2021, the Company issued 6,961,250 units at $0.01 per unit for proceeds of $69,613. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
· | On July 13, 2021, the Company issued 702,000 shares of common stock with a fair value of $17,550 for management consulting and strategic business advisory services. | |
· | On August 25, 2021, the Company issued 150,000 shares of common stock with a fair value of $3,300 for management consulting and strategic business advisory services. | |
· | On August 25, 2021, the Company issued 6,100,000 units at $0.01 per unit for proceeds of $61,000. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
· | On September 22, 2021, the Company issued 2,000,000 units at $0.01 per unit for proceeds of $20,000. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
· | On September 22, 2021, the Company issued 6,750,000 shares of common stock with a fair value of $236,250 pursuant to an infomercial production and broadcasting agreement. | |
· | On September 22, 2021, the Company issued 6,000,000 shares of common stock with a fair value of $210,000 pursuant to an infomercial production and broadcasting agreement. | |
· | On September 22, 2021, the Company issued 4,340,000 shares of common stock with a fair value of $151,900 for marketing consulting services. |
Item 14. Principal Accounting Fees and Services.
Our independent registered public accounting firm is Sadler, Gibb & Associates, LLC, Draper, Utah, PCAOB ID No. 3627.
During the fiscal year ended September 30, 2022, we incurred $29,515 in fees to our principal independent accountants for professional services rendered in connection with the audit of financial statements for the fiscal year ended September 30, 2022, and reviews of our directors,financial statements for the quarters ended December 30, 2021, March 31, 2022, and June 30, 2022.
During the fiscal year ended September 30, 2021, we incurred $33,500 in fees to our principal independent accountants for professional services rendered in connection with the audit of financial statements for the fiscal year ended September 30, 2021, and reviews of our financial statements for the quarters ended December 30, 2020, March 31, 2021, and June 30, 2021 and $1,850 in other fees relating to prospectus filings.
During the fiscal years ended September 30, 2022, and 2021, we did not incur any other fees for professional services rendered by our principal independent accountants for all other non-audit services which may include, but not limited to, tax related services, actuarial services or officers, any proposed nominee for electionvaluation services.
| 43 |
| Table of Contents |
PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following documents are filed as a director, any person who beneficially owns, directlypart of this report or indirectly, shares
carrying more than 10% of the voting rights attachedare incorporated by reference to all of our outstanding
shares, any promoter, or any relative or spouse of any of the foregoing persons
has any material interest, direct or indirect,previous filings, if so indicated:
Exhibit Number | Description | |
(3) | Articles of Incorporation; and (ii) Bylaws | |
(10) | Material Contracts | |
(31) | Rule 13a-14(a)/15d-14(a) Certifications | |
(32) | Section 1350 Certifications | |
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document). | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Included in any transaction since our
incorporation orExhibit 31.1
** Included in any presently proposed transaction which, in either case,
has or will materially affect us other then the transactions described below.
Our management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. In the event that a
conflict of interest arises at a meeting of our directors, a director who has
such a conflict will disclose his interest in a proposed transaction and will
abstain from voting for or against the approval of such transaction.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
For the year ended April 30, 2009, the total fees charged to the company for
audit services, including quarterly reviews, were $4,500.
28
PART IV
ITEM 15. EXHIBITS
Exhibit Number Description
------ -----------
3(i) Articles of Incorporation* 3(ii) Bylaws*
31.1 Sec. 302 Certification of Chief Executive Officer
31.2 Sec. 302 Certification of Chief Financial Officer
32.1 Sec. 906 Certification of Chief Executive Officer
32.2 Sec. 906 Certification of Chief Financial Officer
SIGNATURES
| 44 |
| Table of Contents |
SIGNATURES*
Pursuant to the requirements of Section 13(a)13 or 15(d) of the Securities and Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
August 12, 2009 Air Transport Group Holdings, Inc
By: /s/ Arnold Leonora
------------------------------------------------------
Arnold Leonora, President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
August 12, 2009 Air Transport Group Holdings, Inc
By: /s/ Arnold Leonora
-------------------------------------------------------
Air Transport Group Holdings, Inc, President, Treasurer
and Chief Financial Officer (Principal Executive
Officer and Principal Accounting Officer)
29
Pharmagreen Biotech Inc. | |||
Dated January 16, 2023 | By: | /s/ Peter Wojcik | |
Peter Wojcik | |||
President and Director Principal Executive Officer | |||
By: | /s/ Terry Kwan | ||
Terry Kwan | |||
Principal Accounting Officer |
| 45 |