United States

Securities and Exchange Commission

Washington, D.C. 20549


Form 10-Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarter ended: JanuaryOctober 31, 2018

Commission file no.: 000-55519


Force Protection Video Equipment Corp.


(Name of Small Business Issuer in its Charter)


Florida45-1443512

Florida

45-1443512

(State or other jurisdiction of

(I.R.S.Employer

incorporation or organization)

Identification No.)

1600 Olive Chapel Road, Suite 248

Apex, NC

 

27502


27502

(Address of principal executive offices)

(Zip Code)

Issuer’s telephone number: (919) 780-7897


Securities registered under Section 12(b) of the Act:


Title of each class

Name of each exchange on which registered

None

None

None


Securities registered under Section 12(g) of the Act:


Common Stock, $0.0001 par value per share



(Title of class)


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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ] No [X]


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


Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer (Do not check if a smaller reporting company)

[  ]

Smaller reporting company

[X]

Emerging growth company

[  ]

[X]






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. [X][  ]


Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act).

Yes [  ] No [X]


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 80,658,196841,184,289 shares of common stock, par value $0.0001, were outstanding on February 27, 2018.as of January 23, 2020.







FORCE PROTECTION VIDEO EQUIPMENT CORP.


CORP

FORM 10-Q

TABLE OF CONTENTS

 

PAGE

PAGE
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets as of October 31, 2018 (Unaudited) and April 30, 2018 (audited)3
Condensed Consolidated Statements of Operations for the Three and Six Months Ended October 31, 2018 and 2017 (Unaudited)4

Statements of Stockholders’ Deficit for the Three and Six Months Ended October 31, 2018 and 2017 (Unaudited)

5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended October 31, 2018 and 2017 (Unaudited)

7
Notes to Condensed Consolidated Financial Statements8
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations25
Item 4.Controls and Procedures  28
PART II - OTHER INFORMATION
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.28
Item 5.Other Information28
Item 6.Exhibits29
Signatures32

2

PART I - FINANCIAL INFORMATION


Item 1. Financial Statements.

Financial Statements


Force Protection Video Equipment Corp  

Condensed Consolidated Balance Sheets as of January 31, 2018
(Unaudited)

and April 30, 2017 (audited)

  October 31,  April 30, 
  2018  2018 
  (unaudited)   (audited) 
ASSETS        
Current assets        
Cash and cash equivalents $5,511  $6,320 
Accounts receivable  3,112   9,235 
Inventory  -   117,889 
Prepaid inventory  -   8,798 
Total current assets  8,623   142,242 
         
Property and equipment, net of accumulated depreciation of $11,049 and $7,922, respectively  13,542   16,669 
Operating lease right of use asset  37,371   45,001 
Deposits  1,650   1,650 
Total assets $61,186  $205,562 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)        
         
Current liabilities        
Accounts payable and accrued expenses $171,622  $99,702 
Shareholder advance  13,500   7,500 
Operating lease liability – current portion  16,731   15,440 
Short-term Loans  24,472   - 
Convertible promissory notes, net of discount of $0 and $21,225, respectively  380,256   459,398 
Total current liabilities  606,581   582,040 
         
Long-term liabilities        
Warranty  147   143 
Operating lease liability – less current portion  21,190   29,811 
Total liabilities  627,918   611,994 
         
Commitments and Contingencies (Note 5)        
Redeemable Preferred Stock        
Preferred stock, $0.0001 par value; 20,000,000 authorized; 5,000,000 and 5,000,000 issued and outstanding, respectively        
Total Temporary Equity  5,000   5,000 
         
Stockholders’ equity (deficit)        
Common stock, $0.0001 par value; 20,000,000,000 authorized; 764,867,622 and 194,415,754 issued and outstanding, respectively.  76,487   19,441 
Additional paid-in capital  3,744,452   3,598,589 
Accumulated deficit  (4,392,671)  (4,029,462)
Total stockholders’ equity (deficit)  (571,732)  (411,432)
Total liabilities and stockholders’ equity (deficit) $61,186  $205,562 

1


Condensed Consolidated Statements of Operations for the Three and Nine Months Ended

January 31, 2018 and 2017 (Unaudited)

2


Condensed Consolidated Statements of Cash Flows for the Nine Months Ended

January 31, 2018 and 2017 (Unaudited)

3


Notes to Condensed Consolidated Financial Statements

4


Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20


Item 4.

Controls and Procedures

23



PART II - OTHER INFORMATION


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

25


Item 5.

Other Information

25


Item 6.

Exhibits

26


Signatures

28





PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.


Force Protection Video Equipment Corp.

 

 

 

 

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

January 31,

 

April 30,

 

 

 

 

2018

 

2017

ASSETS

 

(Unaudited)

 

(Audited)

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

56,674 

 

$

188,773 

 

Accounts receivable

 

17,053 

 

1,738 

 

Inventory

 

121,450 

 

104,128 

 

Prepaids

 

8,798 

 

28,153 

 

 

Total current assets

 

203,975 

 

322,792 

 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $9,421 and $5,272, respectively

 

22,893 

 

18,796 

 

Operating lease ROU asset

 

48,672 

 

 

Deposits

 

2,400 

 

1,945 

 

 

Total assets

 

$

277,940 

 

$

343,533 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued expenses

 

$

84,145 

 

$

69,177 

 

Operating lease liability

 

14,840 

 

 

Convertible promissory notes net of discount of $85,426 and $286,159, respectively

 

423,442 

 

140,969 

 

 

Total current liabilities

 

522,427 

 

210,146 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

Warranty

 

113 

 

515 

 

 

Operating lease liability

 

33,933 

 

 

 

Total liabilities

 

556,473 

 

210,661 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit)

 

 

 

 

 

Preferred stock, $0.0001 par value 15,000,000 shares authorized; issued and outstanding 5,000,000 and 1,000,000 at January 31, 2018 and April 30, 2017, respectively.

500 

 

100 

 

Common stock, $0.0001 par value 2,000,000,000 shares authorized; issued and outstanding 54,035,496 and 1,698,494 at January 31, 2018  and April 30, 2017, respectively.

5,403 

 

170 

 

Additional paid-in capital

 

3,530,980 

 

3,124,998 

 

Accumulated deficit

 

(3,815,416)

 

(2,992,396)

 

 

Total stockholders' equity (deficit)

 

(278,533)

 

132,872 

 

 

Total liabilities and stockholders' equity (deficit)

 

$

277,940 

 

$

343,533 


(The accompanying notes are an integral part of these condensed consolidated financial statements)statements.



Force Protection Video Equipment Corp

Condensed Statements of Operations

For the Three and Six Months Ended October 31, 2018 and 2017 (Unaudited)

  Three Months Ended  Six Months Ended 
  October 31,  October 31, 
  2018  2017  2018  2017 
Income                
Net revenue $45,130  $74,798  $115,352  $88,513 
Cost of goods sold  136,067   24,456   164,984   30,867 
Gross profit (loss)  (90,937)  50,342   (49,632)  57,646 
                 
Operating expenses                
General and administrative  72,770   132,494   156,231   239,617 
Sales and marketing  1,703   53,149   7,184   69,934 
Total operating expenses  74,473   185,643   163,415   309,551 
Loss from operations $(165,410) $(135,301) $(213,047) $(251,905)
                 
Other (expense)                
Interest expense  (23,406)  (9,823)  (36,740)  (18,913)
Accretion of debt discount  (53,595)  (150,690)  (113,422)  (380,637)
Total other (expense)  (77,001)  (160,513)  (150,162)  (399,550)
Loss before taxes  (242,411)  (295,814)  (363,209)  (651,455)
Provision for income taxes  -   -   -   - 
Net loss $(242,411) $(295,814) $(363,209) $(651,455)
                 
Net (loss) per common share basic and diluted $(0.00) $(0.03) $(0.00) $(0.08)
                 
Weighted average common shares outstanding basic and diluted  732,860,564   11,746,854   563,638,135   7,842,065 

The accompanying notes are an integral part of these consolidated financial statements.

Force Protection Video Corp

Statements of Changes in Stockholders’ Deficit for the three and six months ended October 31, 2018

(Unaudited)

  

Common

Shares

  

Par

Value

  

Additional

Paid in

Capital

  Accumulated Deficit  

Total

Deficit

 
Balance as of April 30, 2018  194,415,754  $19,441  $3,598,589  $(4,029,462) $(411,432)
                     
Shares issued in satisfaction of loan debt and interest  412,001,868   41,201   58,380   -   99,581 
                     
Discount on convertible promissory note due to beneficial conversion feature  -   -   48,729   -   48,729 
                     
Net loss for the three months  -   -   -   (120,798)  (120,798)
                     
Balance as of July 31, 2018  606,417,622  $60,642  $3,705,698  (4,150,260) $(383,920)
                     
Shares issued in satisfaction of loan debt and interest  158,450,000   15,845   (4,715)  -   11,130 
                     
Discount on convertible promissory note due to beneficial conversion feature  -   -   43,469   -   43,469 
                     
Net loss for the three months  -   -   -   (242,411)  (242,411)
                     
Balance as of October 31, 2018  764,867,622  $76,487  $3,744,252  $(4,392,671) (571,732)

The accompanying notes are an integral part of these consolidated financial statements.


5

Force Protection Video Equipment Corp

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations (Unaudited)

 

 

 

 

 

 

For the Three and Nine Months Ended January 31, 2018 and 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

January 31,

 

January 31,

 

 

 

2018

 

2017

 

2018

 

2017

Income

 

 

 

 

 

 

 

 

Net revenue

$

50,669 

 

$

44,489 

 

$

139,182 

 

$

77,666 

 

Cost of goods sold

29,510 

 

29,805 

 

60,377 

 

53,582 

 

 

Gross profit

21,159 

 

14,684 

 

78,805 

 

24,084 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

General and administrative

108,662 

 

122,512 

 

348,279 

 

444,819 

 

Sales and marketing

4,483 

 

28,088 

 

74,417 

 

117,294 

 

 

Total operating expenses

113,145 

 

150,600 

 

422,696 

 

562,113 

 

 

Loss from operations

(91,986)

 

(135,916)

 

(343,891)

 

(538,029)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense)

 

 

 

 

 

 

 

 

Interest expense

(11,843)

 

(7,175)

 

(30,756)

 

(21,307)

 

Accretion of debt discount

(67,736)

 

(144,753)

 

(448,373)

 

(567,647)

 

 

Total other (expense)

(79,579)

 

(151,928)

 

(479,129)

 

(588,954)

Loss before taxes

(171,565)

 

(287,844)

 

(823,020)

 

(1,126,983)

Provision for income taxes

 

 

 

Net loss

$

(171,565)

 

$

(287,844)

 

$

(823,020)

 

$(1,126,983)

 

 

 

 

 

 

 

 

 

 

Net (loss) per common share basic and diluted

$

(0.01)

 

$

(0.35)

 

$

(0.05)

 

$

(1.99)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding basic and diluted

32,194,936 

 

813,129 

 

16,007,454 

 

566,217 

 

 

 

 

 

 

 

 

 

 

(The accompanying notes are an integral part of these condensed consolidated financial statements)


Force Protection Video Corp

Statements of Changes in Stockholders’ Deficit for the three and six months ended October 31, 2017

(Unaudited)

  

Common

Shares

  

Par

Value

  

Additional

Paid in

Capital

  Accumulated Deficit  

Total

Deficit

 
Balance as of April 30, 2017  1,698,494  $170  $3,124,098  $(2,992,396) $131,872 
                     
Shares issued in satisfaction of loan debt and interest  4,058,933   406   82,291   -   82,697 
                     
Discount on convertible promissory note due to beneficial conversion feature  -   -   66,000   -   66,000 
                     
Fractional shares issued in stock split  869   -   -   -   - 
                     
Net loss for the three months  -   -   -   (355,641)  (355,641)
                     
Balance as of July 31, 2017  5,758,296  $576  $3,272,389  $(3,348,037) $(75,072)
                     
Shares issued in satisfaction of loan debt and interest  13,274,700   1,327   63,991   -   65,318 
                     
Discount on convertible promissory notes due to beneficial conversion feature  -   -   89,560   -   89,560 
                     
Common shares issued for cash  100,000   10   590   -   600 
                     
Net loss for the three months  -   -   -   (295,814)  (295,814)
                     
Balance as of October 31, 2017  19,132,996  $1,913  $3,426,530  $(3,643,851) $(215,408)

The accompanying notes are an integral part of these consolidated financial statements.

Force Protection Video Corp
Condensed Consolidated Statements of Cash Flows
(Unaudited)

  Six Months Ended October 31, 
  2018  2017 
Cash flows from operating activities:        
Net (Loss) $(363,209) $(651,455)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and Amortization  3,127   2,717 
Accretion of debt discount and beneficial conversion feature  113,422   380,637 
Impairment of inventory  112,736   - 
Changes in assets and liabilities:        
Decrease/( Increase) in accounts receivable  6,123   (8,932)
Decrease/( Increase) in inventory  13,951   (24,211)
Decrease in operating lease right of use asset  7,630   9,553 
Increase in accounts payable and accrued expenses  76,769   14,275 
Operating lease liability  (7,330)  - 
Increase/(Decrease) in other liabilities  -   (382)
Net cash used in operating activities  (36,781)  (277,798)
         
Cash flows from investing activities:        
Purchase of equipment  -   (8,246)
Net cash used in investing activities  -   (8,246)
         
Cash flows from financing activities:        
Proceeds from shareholder advance  6,000   - 
Proceeds from short term loans  38,340   - 
Repayments of short term loans  (13,868)  - 
Proceeds from convertible promissory notes  5,500   171,300 
Proceeds from the issuance of common stock  -   600 
Net cash provided by financing activities  35,972   171,900 
         
Decrease in cash  (809)  (114,144)
Cash and cash equivalents at beginning of period  6,320   188,773 
Cash and cash equivalents at end of period $5,511  $74,629 
         
Supplemental disclosures of cash flow information:        
Cash paid for interest $1,060  $- 
Cash paid for income taxes $-  $- 
         
Non-cash operating activities:        
Conversion of notes payable and accrued interest into 570,451,868 and 17,333,633 shares of common stock, respectively $110,710  $146,821 

The accompanying notes are an integral part of these consolidated financial statements.


7

Force Protection Video Equipment Corp

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

 

For the Nine Months Ended January 31, 2018 and 2017

 

 

 

 

 

 

Nine Months Ended

 

 

 

January 31,

Cash flows from operating activities:

2018

 

2017

 

Net (Loss)

$

(823,020)

 

$

(1,126,983)

 

Adjustments to reconcile net loss to net cash provided (used in) operating activities:

 

 

 

 

 

 Depreciation and Amortization

4,149 

 

3,510 

 

 

Accretion of debt discount

448,373 

 

567,647 

 

 

Share based compensation expense

600 

 

 

Changes in assets and liabilities:

 

 

 

 

 

(Increase) decrease in accounts receivable

(15,315)

 

(20,143)

 

 

(Increase) decrease in inventory

(17,322)

 

(61,777)

 

 

(Increase) decrease in other assets

(29,772)

 

17,009 

 

 

Increase (decrease) in accounts payable and accrued expenses

22,183 

 

47,682 

 

 

Increase (decrease) in other liabilities

48,371 

 

(305)

 

 

Net cash (used) by operating activities

(361,753)

 

(573,360)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchase of equipment and vehicles

(8,246)

 

(16,480)

 

Net cash (used) by investing activities

(8,246)

 

(16,480)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from sale of common stock

600 

 

 

Proceeds from sale of preferred stock

4,000 

 

 

Proceeds from convertible promissory notes

233,300 

 

387,500 

 

Net cash provided by financing activities

237,900 

 

387,500 

 

 

 

 

 

 

Increase (decrease) in cash

(132,099)

 

(202,340)

Cash and cash equivalents at beginning of period

188,773 

 

227,273 

Cash and cash equivalents at end of period

$

56,674 

 

$

24,933 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid for interest

$

 

$

 

Cash paid for income taxes

$

 

$

 

 

 

 

 

 

 Non-cash operating activities:

 

 

 

 

Value of common stock issued in exchange for services

$

600 

 

$

 

Conversion of notes payable into 52,136,133 and 773,722 shares, respectively, of common stock

$

203,350 

 

$

467,987 

 

 

 

 

 

 

(The accompanying notes are an integral part of these condensed consolidated financial statements)




3




FORCE PROTECTION VIDEO EQUIPMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINESIX MONTHS ENDED JANUARYOCTOBER 31, 2018 AND 2017


NOTE 1 – ORAGNIZATIONORGANIZATION AND GOING CONCERNSUMMARYof significant accounting policies


Organization


Force Protection Video Equipment Corp., together with its wholly owned subsidiary, Cobraxtreme HD Corp. (collectively, the Company), is in the business of selling video and audio capture devices and accessories to consumers and law enforcement. Force Protection Video Equipment Corp. was incorporated on March 11, 2011, under the laws of the State of Florida. On February 2, 2015 the Company changed its name to Force Protection Video Equipment Corp.


Going Concern


The Company’s consolidatedaccompanying financial statements arehave been prepared usingin conformity with accounting principles generally accepted in the United States of America, and applicable towhich contemplate continuation of the Company as a going concern, which contemplatesconcern.

The Company incurred net losses of $363,209 for the realization of assets and satisfaction of liabilities in the normal course of business.


During the ninesix months ended JanuaryOctober 31, 2018 and year ended April 30, 2017,had net cash used in operating activities of $36,781 for the same period. Additionally, the Company recognized revenue of $139,182 and $86,075, respectively, and a net operating loss of $343,738 and $770,764, respectively. As of January 31, 2018, the Company had negative working capital of $318,299 andhas an accumulated deficit of $3,815,263.


$4,392,671 and a working capital deficit of $597,958 at October 31, 2018. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months after the date of issuance on these financial statements. In view of these conditions,matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to achieve a level of profitability and/or to obtain adequate financing through the issuance of debt or equity in order to finance its operations.

While the Company is attempting to produce revenues, the Company’s cash position is not significant enough to support the Company’s operations. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The key factors that are not within the Company’s control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company’s business plan, the ability to raise capital in the future, and the ability to expand its customer base. There may be other risks and circumstances that management may be unable to predict.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concernconcern.

Earnings Per Share

Basic income per common share is in doubt and dependentcomputed based upon achieving a profitable levelthe weighted average common shares outstanding as defined by FASB ASC No. 260,Earnings Per Share.

The computation of operations andbasic earnings per share (“EPS”) is based on the abilityweighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the Company to obtain necessary financing to fund ongoing operations. Historically,reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS, if the Company has relied upon funds from the sale of shares of stock, issuance of promissory notes and loans from its shareholders and private investors to finance its operations and growth. Management is planning to raise necessary additional funds for working capital through loans and/or additional sales of its common stock. However,experienced a loss, there is no assuranceinclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money).

Following is the computation of basic and diluted net loss per share for the six months ended October 31, 2018 and 2017:

  For 6 Months Ended 
  October 31,  October 31, 
  2018  2017 
Basic and Diluted EPS Computation        
Numerator:        
Loss available to common stockholders’ $(363,209) $(651,455)
         
Denominator:        
Weighted average number of common shares outstanding  563,638,135   7,842,065 
         
Basic and diluted EPS $(0.00) $(0.08)
         
Potentially dilutive securities are not included in the calculation of diluted net loss per share attributable to common stockholders, because to do so would be anti-dilutive. Common stock equivalents pertaining to the Company’s Convertible Notes are as follows: 
  
Convertible notes, principal and accrued interest  7,264,071,140   144,039,431 
Convertible notes, penalties potentially settled in common stock  1,670,438,195   - 
Total convertible note common stock equivalents  8,934,509,335   - 

Concentrations of risk

During the six months ended October 31, 2018, three customers accounted for 15.8% (4.4%, 5.0%, and 6.4%) of sales. During the six months ended October 31, 2017, one customer accounted for 51.5% of sales.

The Company relies on third parties for the supply and manufacture of its capture devices, some of which are sole-source suppliers. The Company believes that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change, the Company willperiodically evaluates the need and advisability of adding manufacturers to support its operations. In instances where a supply and manufacture agreement does not exist or suppliers fail to perform their obligations, the Company may be successful in raising additional capitalunable to find alternative suppliers or that such additional funds will be availablesatisfactorily deliver its products to its customers on acceptable terms,time, if at all. ShouldDuring the Company be unable to raise this amount of capital its operating plans will be limited to the amount of capital that it can access. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


The unaudited consolidated financial statements of Force Protection Video Equipment Corp. as of Januarysix months ended October 31, 2018, two suppliers accounted for 46.1% (31.4% and for14.7%) of our inventory purchases. During the three and ninesix months ended JanuaryOctober 31, 20182017, three suppliers accounted for 51.6% (19.0%, 17.1% and 2017, have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and include the Company’s wholly-owned subsidiary, Cobraxtreme HD Corp. Accordingly, they do not include all15.5%) of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended April 30, 2017, as filed with the Securities and Exchange Commission as partour inventory.

Summary of the Company’s Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.Significant Accounting Policies


Principles of Consolidation


These condensed consolidated financial statements have been prepared in accordance with US GAAP and include the accounts of the Company and its wholly owned subsidiary, Cobraxtreme HD Corp. All significant intercompany transactions and balances have been eliminated. Cobraxtreme HD Corp. was incorporated under the laws of the State of North Carolina on September 19, 2017.2017 and currently is non-operating.


Use of Estimates


The preparation of the Company’s consolidatedIn preparing financial statements requiresin conformity with generally accepted accounting principles, management is required to make estimates and use assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis,expenses during the Company evaluates its estimates.reported period. Actual results could differ from those estimates. Our most significant estimates are for stock based compensation; assumptions used in calculating derivative liabilities, and outcomesdeferred tax valuation allowances. We evaluate our estimates on an ongoing basis. Actual results may differ materially from these estimates and assumptions.under different assumptions or conditions.


9

Cash and Cash Equivalents


Cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with thean original maturitiesmaturity of three months or less to be cash equivalents. The Company had no cash equivalents at either October 31, 2018 or 2017.


Cash Flow Reporting

The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.

Inventory


OurThe Company’s inventory is comprised of finished goods and primarily includes cameras and recording equipment. The Company’s inventory is stated at the lower of cost or market and expensed to cost of goods sold upon sale using the average-cost method. The Company also makes prepayments against the future delivery of inventory classified as prepaid inventory. During the period ended October 31, 2018, the Company recorded an impaired loss of $112,736 for certain inventory that was considered obsolete in the marketplace. As of October 31, 2018 and April 30, 2018, the balance of inventory was $0 and $126,687, respectively.


Accounts Receivable


Accounts receivable are reported at the customers'customers’ outstanding balances. The Company does not have a history of significant bad debt and has not recorded any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The Company evaluates receivables on a regular basis for potential reserve.reserve with none this period.




Leases

In February 2016, the FASB issued ASU No. 2016-02 (“ASC 842”), Leases, to require lessees to recognize all leases, with certain exceptions, on the balance sheet, while recognition on the statement of operations will remain similar to current lease accounting. Subsequently, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Targeted Improvements, ASU No. 2018-20, Narrow-Scope Improvements for Lessors, and ASU 2019-01, Codification Improvements, to clarify and amend the guidance in ASU No. 2016-02. ASC 842 eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. This standard is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted.

The Company elected to early adopt ASC 842 using the cumulative effect adjustment approach. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows us to carry forward the historical determination of contracts as leases, lease classification and not reassess initial direct costs for historical lease arrangements. Accordingly, previously reported financial statements, including footnote disclosures, will not been recast to reflect the application of the new standard to all comparative periods presented. The adoption of this Standard did not have a material effect on its financial statements.

The Company recognizes lease assets and liabilities with terms in excess of twelve months on its balance sheet. The Company capitalizes operating lease obligations as a right-of-use asset with a corresponding liability based on the present value of future operating leases.

Property and Equipment


Fixed assets are carried at cost, less accumulated depreciation and amortization. Major improvements are capitalized, while repair and maintenance are expensed when incurred. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.


For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. Depreciation for financial statement purposes is computed on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:


Estimated

Estimated

Useful Lives

Vehicles

Useful Lives

5 years

 Vehicles

     5 years

Office Equipment

3 - 5 years

Furniture & equipment

5 - 7 years


Long-Lived Assets

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.

Income Taxes


The Company accounts for income taxes usingunder Section 740-10-30 of the asset and liability method. Under the asset and liability method, deferredFASB Accounting Standards Codification. Deferred income tax assets and liabilities are recognized for the future tax consequences attributed todetermined based upon differences between the financial statement carrying amountsreporting and tax bases of existing assets and liabilities and their respectiveare measured using the enacted tax basesrates and laws that will be in effect when the differences are expected to reverse. Deferred tax credits and loss carry-forwards.assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in incomethe statements of operations in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.


Revenue Recognition


The Company recognizesOur revenue is generated from the sale of products consisting primarily of video and audio capture devices and accessories. We recognize revenue when (a) pervasive evidencecontrol of our products is transferred to our customers in an arrangement exists (b) products are delivered or servicesamount that reflects the consideration we expect to receive from our customers in exchange for those products. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been rendered (c)satisfied. We consider a performance obligation satisfied once we have transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. We recognize revenue for satisfied performance obligations only when we determine there are no uncertainties regarding payment terms or transfer of control. Revenue from product sales price is fixedgenerally recognized upon shipment to the end customer, which is when control of the product is deemed to be transferred. Payment or determinable,invoicing typically occurs upon shipment and (d) collectionthe term between invoicing and when payment is reasonably assured.due is not significant. Revenue is recorded net of discounts and promotions.


Marketing and Advertising Costs


Marketing and advertising costs are expensed as incurred. The Company recognized $1,703 and $53,149 in marketing and advertising costs of $150 and $16,979, during the three months ended JanuaryOctober 31, 2018 and 2017, respectively, and $60,355$7,184 and $85,854$69,934 during the ninesix months ended JanuaryOctober 31, 2018 and 2017, respectively.


11

Stock Based Compensation


Under ASC 718,Compensation – Stock Compensation,companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

In July 2019, the FASB released Accounting Standards Update (ASU) No. 2018-09,Codification Improvements. ASU 2018-09 that affect a wide variety of Topics in the FASB Accounting Standards Codification including the guidance in paragraph 718-740-35-2, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting is unclear on whether an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s tax return. The amendment to paragraph 718-740-35-2 in this update clarifies that an entity should recognize excess tax benefits (that is, the difference in tax benefits between the deduction for tax purposes and the compensation cost recognized for financial statement reporting) in the period in which the amount of the deduction is determined. This includes deductions that are taken on the entity’s return in a different period from when the event that gives rise to the tax deduction occurs and the uncertainty about whether (1) the entity will receive a tax deduction and (2) the amount of the tax deduction is resolved.

Critical Accounting Estimates

The Company accounts for equitypreparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that have a significant impact on the results that we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Certain of these significant accounting policies require us to make critical accounting estimates, as defined below.

A critical accounting estimate is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:

we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and
different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Many of our financial instruments are issued in exchange forconjunction with the receiptissuance of goods or services from other than employees in accordance with FASB ASC 718-10debt. At the time of issuance we allocate the proceeds received to the various financial instruments and this involves the conclusions reached by FASB ASC 505-50. Costs are measured atdetermination of fair value. From time to time, the estimated fair market value of the consideration received or the estimated fair value of these financial instruments exceeds the equityproceeds received. When this occurs, we critically evaluate the validity of the fair value computation.

Financial Instruments

The Company’s balance sheets include the following financial instruments: cash, accrued expenses, notes payable and payables to a stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments issued, whichever is more reliably measurable.and their expected realization. The carrying values of the notes payable and amounts due to stockholder approximates fair value of equitybased on borrowing rates currently available to the Company for instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by with similar terms and remaining maturities.

FASB ASC 505-50.




FairAccounting Standards Codification (ASC) topic, “Fair Value Measurements


Fair and Disclosures”, defines fair value is defined as the exchange price that would be received to sellfor an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants aton the measurement date. The Company utilizesASC 820 also establishes a three-tier fair value hierarchy which prioritizesthat distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the inputs usedbest information available in measuringthe circumstances (unobservable inputs). The fair value. Thevalue hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement)(Level 1) and the lowest priority to unobservable inputs (level 3 measurements)(Level 3). These tiers include:


Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;


Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and


Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.


AsThe three levels of January 31, 2018 and April 30, 2017, the Company did not have any assets or liabilities that were required to be measured at fair value onhierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Beneficial Conversion Features

ASC 470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a recurring basischoice in settling the obligation in either stock or on a non-recurring basis.  


Fair Value of Financial Instruments


The Company’s financial instruments consist of cash and cash equivalents and accounts payable and accrued expenses. The carrying amounts ofcash. ASC 470-20 requires that the Company’s financial instruments approximate fair value because of the short term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannotbeneficial conversion feature should be determined with precision. Changes in assumptions could significantly affect those estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.


Net Income (Loss) Per Share


The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuablevalued at the end ofcommitment date as the reporting period. The computation of diluted EPS is based ondifference between the number of basic weighted-average shares outstanding plusconversion price and the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS, if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the averagefair market pricevalue of the common stock duringinto which the period exceedssecurity is convertible, multiplied by the exercise pricenumber of shares into which the security is convertible. This amount is recorded as a debt discount and amortized over the life of the options or warrants (they are indebt. ASC 470-20 further limits this amount to the money).proceeds allocated to the convertible instrument.




Following is the computation of basic and diluted net loss per share for the three and nine months ended January 31, 2018 and 2017:


 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

January 31,

 

January 31,

 

 

 

2018

 

2017

 

2018

 

2017

Basic and Diluted EPS Computation

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

Loss available to common stockholders'

 

$

(171,565)

 

$

(287,844)

 

$

(823,020)

 

$

(1,126,983)

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

32,194,936 

 

813,129 

 

16,007,454 

 

566,217 

 

 

 

 

 

 

 

 

 

 

Basic and diluted EPS

 

$

(0.01)

 

$

(0.35)

 

$

(0.05)

 

$

(1.99)

 

 

 

 

 

 

 

 

 

 

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

 

 

 

 

 

 

 

 

 

 

 

Convertible promissory notes

 

297,910,788

 

405,160

 

297,910,788

 

405,160


Concentrations of risk


During the three months ended January 31, 2018, two customers accounted for 46.2% (32.7% and 13.5%) of sales. During the three months ended January 31, 2017, two customers accounted for 64.0% (50.1% and 13.9%) of sales. During the nine months ended January 31, 2018, two customers accounted for 39.6% (11.9% and 27.7%) of sales. During the nine months ended January 31, 2017, one customer accounted for 28.7% of sales.


The Company relies on third parties for the supply and manufacture of its capture devices, some of which are sole-source suppliers. The Company believes that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change, the Company periodically evaluates the need and advisability of adding manufacturers to support its operations. In instances where a supply and manufacture agreement does not exist or suppliers fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all. During the three months ended January 31, 2018, two suppliers accounted for 39.9% (27.9% and 12.0%) of our inventory purchases. During the nine months ended January 31, 2018, four suppliers accounted for 64.0% (19.5%, 19.2%, 13.9% and 11.4%) of our inventory purchases. During the three months ended January 31, 2017, three suppliers accounted for 86.3% (60.8%, 15.0% and 10.5%) of our inventory purchases. During the nine months ended January 31, 2017, two suppliers accounted for 82.9% (71.8% and 11.1%) of our inventory purchases. 




Recent Accounting Pronouncements


We have reviewed all FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11,Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterizere-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company does not expect adoption of ASU 2017-11 to have a material impact on its condensed consolidated financial statements.


In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment awards require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in anyThe Company implemented ASU 2017-09 for the interim period, for public business entities forand annual reporting periods forof 2019, which financial statements have not yet been issued. The Company does not expect adoption of ASU 2017-09 to have a materialresulted in no impact on its condensed consolidated financial statements.


In March 2016,May 2014, the FASB issuedauthoritative guidance underASU No. 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and Accounting (Topic 718)”Standards Codification (“ASC”) Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”), which is intended to simplify several aspects(collectively, “Topic 606”). On May 1, 2018, the Company adopted Topic 606 by applying the modified retrospective method of adoption for all contracts that were not substantially completed as of the accounting for share-based payment award transactions.adoption date. ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. The guidance will be effectiveCompany implemented ASU 2014-09 for the fiscal year beginning after December 15, 2016, including interim and annual reporting periods within that year. of 2019, which resulted in no changes to how we recognize revenue.

The Company does not expect adoption of ASU 2016-09 to have a material impact on its consolidated financial statements.


In February 2016, the FASB issued authoritative guidance under ASU 2016-02, Leases (Topic 842). ASU 2016-02 provides new comprehensive lease accounting guidance that supersedes existing lease guidance. Upon adoption of ASU 2016-02, the Company will be required to recognize leases with terms in excess of twelve months on its balance sheet at the beginning of the earliest comparative period presented with a corresponding adjustment to stockholders’ equity (deficit). ASU 2016-02 requires the Company to capitalize most current operating lease obligations as right-of-use assets with a corresponding liability based on the present value of future operating leases. Criteria for distinguishing leases between finance and operating are substantially similar to criteria for distinguishing between capital leases and operating leases in existing lease guidance. The Company is required to adopt this new guidance in the first quarter of fiscal 2020. The Company plans to implement ASU 2016-02 for all new leases.




We reviewreviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of ourthe Company’s previous fiscal year may be applicable to us, we havethe Company, the Company has not identified any standards that we believeit believes merit further discussion. We believeThe Company believes that none of the new standards will have a significant impact on ourits condensed consolidated financial statements.


NOTE 3 - FIXED ASSETS2 – PROPERTY AND EQUIPMENT


Fixed assetsProperty and Equipment consisted of the following:


 

January 31,

 

April 30,

 October 31, April 30, 

 

2018

 

2017

 2018  2018 

Vehicles

 

15,376

 

15,376 

  7,654   7,654 

Furniture and fixtures

 

10,936 

 

6,212 

  10,936   10,936 

Computers and office equipment

 

4,227 

 

2,480 

  4,226   4,226 

Leasehold improvements

 

1,775 

 

  1,775   1,775 

Total fixed assets

 

32,314 

 

24,068 

Total  24,591   24,591 

Accumulated depreciation

 

(9,421)

 

(5,272)

  (11,049)  (7,922)

Total fixed assets

 

$

22,893 

 

$

18,796 

Total $13,542  $16,669 


During the threesix months ended JanuaryOctober 31, 2018 and 2017, the Company recognized $1,432$3,127 and $1,286,$2,717, respectively in depreciation expense. During the nine months ended January 31, 2018 and 2017, the Company recognized $4,149 and $3,510, respectively, in depreciation expense. During the nine months ended January 31, 2018 and 2017, the Company purchased $8,246 and $16,480, respectively, of leasehold improvements and furniture and fixtures.




NOTE 43 – CONVERTIBLE PROMISSORY NOTES


Following is a summary of our outstanding convertible promissory notes as of January 31, 2018:


 

 

 

 

 

 

Current Balances

Lender

 

Issue Date

 

Maturity

 

Principle

 

Interest

 

Total

RDW Capital, LLC Note 3

 

3/10/2016

 

9/10/16

 

$

792 

 

$

-

 

$

792

RDW Capital, LLC Note 4

 

5/13/2016

 

11/13/16

 

 

4,540

 

4,540

RDW Capital, LLC Note 5

 

5/20/2016

 

11/20/16

 

 

2,742

 

2,742

RDW Capital, LLC Note 6

 

8/22/2016

 

2/22/17

 

 

889

 

889

RDW Capital, LLC Note 7

 

9/1/2016

 

2/1/18

 

25,701 

 

14,276

 

39,977

RDW Capital, LLC Note 8

 

2/6/2017

 

2/1/18

 

48,412 

 

4,633

 

53,045

RDW Capital, LLC Note 9

 

3/30/2017

 

2/1/18

 

78,750 

 

5,559

 

84,309

RDW Capital, LLC Note 10

 

4/26/2017

 

2/1/18

 

77,338 

 

6,932

 

84,270

RDW Capital, LLC Note 11

 

5/30/2017

 

2/1/18

 

81,375 

 

4,572

 

85,947

RDW Capital, LLC Note 12

 

8/7/2017

 

2/7/18

 

52,500 

 

2,106

 

54,606

Power Up Lending Gp Note 1

 

10/20/2017

 

7/30/18

 

70,000 

 

2,411

 

72,411

Power Up Lending Gp Note 2

 

11/16/2017

 

8/30/18

 

36,000 

 

911

 

36,911

Power Up Lending Gp Note 3

 

1/5/2018

 

10/10/18

 

38,000 

 

326

 

38,326

   Totals

 

 

 

 

 

$

508,868 

 

$

49,897

 

$

558,765

Debt discount balance

 

 

 

 

 

(85,426)

 

 

 

 

   Balance sheet balances

 

 

 

 

 

$

423,442 

 

 

 

 





Following is a summary of our outstanding convertible promissory notes as of April 30, 2017:


 

 

 

 

 

 

Current Balances

Lender

 

Issue Date

 

Maturity

 

Principle

 

Interest

 

Total

RDW Capital, LLC Note 3

 

3/10/2016

 

9/10/16

 

$

792 

 

$

-

 

$

792

RDW Capital, LLC Note 4

 

5/13/2016

 

11/13/16

 

 

4,540

 

4,540

RDW Capital, LLC Note 5

 

5/20/2016

 

11/20/16

 

 

2,742

 

2,742

RDW Capital, LLC Note 6

 

8/22/2016

 

2/22/17

 

31,674 

 

8,291

 

39,965

RDW Capital, LLC Note 7

 

9/1/2016

 

3/1/17

 

157,500 

 

8,664

 

166,164

RDW Capital, LLC Note 8

 

2/6/2017

 

8/5/17

 

48,412 

 

1,477

 

49,889

RDW Capital, LLC Note 9

 

3/30/2017

 

9/29/17

 

78,750 

 

544

 

79,294

RDW Capital, LLC Note 10

4/26/2017

 

10/26/17

 

110,000 

 

98

 

110,098

   Totals

 

 

 

 

 

$

427,128 

 

$

26,356

 

$

453,484

Debt discount balance

 

 

 

 

 

(286,159)

 

 

 

 

   Balance sheet balances

 

 

 

 

 

$

140,969 

 

 

 

 


The company determined that each convertible promissory notesnote conversion feature is indexed to the Company’s stock, which is an input to a fair value measurement of a fixed-for-fixed option on equity shares. Thus, the conversion feature of the notes meets the scope exception under FASB Accounting Standards Codification ("ASC"(“ASC”) 815-40-15-7 and treatment under ASC 470-20– Debt with Conversion and Other Options is appropriate.


As of October 31, 2018, ten of the Company’s convertible promissory notes remain outstanding beyond their respective maturity dates; triggering an event of technical default under the respective agreements. Consequently, the Company is accruing interest on these notes at their respective default rates. As a result of being in default on these notes, the Holders could, at their sole discretion, call these Notes in their entirety, including all associated penalties provided for under the respective agreements. In this event, the Company may not have sufficient authorized shares to absolve itself of the defaulted Notes through the issuance of common shares of the Company. The Company is working with the current noteholders in order that it may resolve these outstanding issues as soon as practicable.

As of October 31, 2018, the Company owed $380,256 in principal (before a debt discount of $4,078) and $83,001 in accrued interest on its remaining outstanding convertible promissory notes. As of April 30, 2018, the Company owed $480,623 in principal (before a debt discount of $21,225) and $62,281 in accrued interest on its remaining outstanding convertible promissory notes.

  October 31, 2018  April 30, 2018 
Convertible promissory notes, various lending institutions, maturing at variable dates ranging from 180 days to one year from origination date, 8-12% interest and default interest of 12-24%, convertible at discount to trading price (60-61%) based on various measurements of prior trading, at face value of remaining original note principal balance, net of unamortized debt discounts and attributable deferred financing costs in the amount of $4,078 and $21,225, respectively.        
Principal $380,256  $480,623 
Debt discount  (4,078)  (21,225)
Total Principal $376,178  $459,398 

Summary of Convertible Note Transactions: October 31, 2018  April 30, 2018 
       
Convertible notes, May 1 $480,623  $427,128 
Additional notes, face value  5,789   363,375 
Conversions of debt  (106,156)  (309,880)
Unamortized debt discounts  (4,078)  (21,225)
Convertible notes, balance $376,178  $459,398 

RDW Capital, LLC


The RDW Notes have identical terms and conditions, including convertibility into common stock at the holder’s option, at a price for each share of common stock equal to 60% of the lowest traded price during the twenty (20) trading days immediately preceding the applicable conversion, and subject to anti-dilution and market adjustments set forth in the Agreement. The Notes mature in six months and bear an interest rate of 8%. In no event shall RDW effect a conversion if such conversion results in RDW beneficially owning in excess of 4.99% of the outstanding common stock of the Company. The Notes and accrued interest may be prepaid in whole or in part at any time with ten (10) days written notice to the holder for the sum of the outstanding principal and interest multiplied by one hundred and thirty percent (130%). Any principal and interest unpaid when due shall bear interest at 24% and RDW may accelerate the outstanding principal, plus accrued and unpaid interest, and other amounts owing through the date of acceleration and the amount due will be one hundred thirty percent (130%) of the outstanding principal amount of the Note and accrued and unpaid interest. In the event the Company defaults on the accelerated balance, and at the request of the Holder, the Company must pay one hundred fifty percent (150%) of the outstanding balance plus accrued interest and default interest. The Company is required to reserve three (3) times the amount of shares necessary for the issuance of common stock upon conversion.

As of October 31, 2018, the Company is in default of all RDW Notes; however, the penalty provision election has not been made by the Holder of the Note. In the event and at any time this election is made, additional default penalties would need to be accrued and due immediately for all notes in the amount of approximately $144,182.

15

Note 3 - On November 12, 2015,March 10, 2016, the Company entered into a Securities Purchase Agreement (“RDW SPA 1”)and amendments thereto, with RDW Capital, LLC, (“RDW”), a Florida limited liability company. On November 12, 2015,pursuant to which the Company and RDW entered intoreceived $210,000 in financing through the First Amended Securities Purchase Agreement. On November 12, 2015, the Company and RDW entered into the Second Amended Securities Purchase Agreement. On February 17, 2016, the Company and RDW entered into the Third Amended Securities Purchase Agreement. On February 17, 2016, the Company and RDW entered into the Fourth Amended Securities Purchase Agreement. On May 9, 2016, the Company and RDW entered intoexecution of a Securities Purchase Agreement (“RDW SPA 2”). On August 22, 2016, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 3”). On September 1, 2016, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 4”). On March 31, 2017, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 5”). On August 8, 2017, the Company and RDW entered into a Securities Purchase Agreement (“RDW SPA 6”). RDW SPA 1, amendments thereto, RDW SPA 2, RDW SPA 3, RDW SPA 4, RDW SPA 5 and RDW SPA 6 may hereinafter be referred to collectively as, the “RDW SPAs”.


RDW Note 3 - In connection with RDW SPA 1 and amendments thereto, on March 10, 2016, the Company issued to RDW a convertible note (“RDW Note 3”) due on September 10, 2016 in the principal amount of $210,000 of which theConvertible Promissory Note. The Company received proceeds of $180,000 after payment of a $10,000$30,000 in legal fees.

The principal was discounted for the OID, and due diligence fees, stock issued to an advisor in connection with the note totaling $20,000.$18,000, and the intrinsic value of the beneficial conversion feature. The calculated intrinsic value was $227,391. As this amount resulted in a total debt discount that exceeded the note principal, the discount recorded for the beneficial conversion feature was limited to the principal amount of the note.




AsThe Note became due and payable on September 10, 2016 and the Company is in default of April 30, 2016, RDWits obligations under the Note 3 was paid down to a principal balanceand the default interest rate of $792.24% per annum is being accrued beginning on September 11, 2016.


During the three and ninesix months ended JanuaryOctober 31, 2018 and 2017, respectively, the Company recognizedissued no common shares for payment on the note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $792 and $792 in principle and $0 and $151,793$0 in interest, respectively.

As of accretion relatedOctober 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the debt discount.Note is 13,196,334. The number of common shares the Company is required to have in reserve on the note is 39,589,002.


RDW Note 4 - In connection with RDW SPA 2, onOn May 13, 2016, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC pursuant to RDWwhich the Company received $105,000 in financing through the execution of a convertible note (“RDWConvertible Promissory Note 4”) due on November 13, 2016 in the principal amount of $105,000 of which the(RDW Note 4). The Company received proceeds of $82,500 after payment of a $5,000 OID $7,500and $17,500 of legal fees and $10,000 of due diligence fees.


RDW Note 4The principle was discounted for the value of the OID, legal feesand due diligence fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $70,000. As this amount resulted in a total BCF debt discount that was less than RDW Note 4note principal, the full $70,000 discount was recognized. The resulting $92,500 discount was accreted over the 6 month term of RDWthe Note.

The Note 4 throughbecame due and payable on November 13, 2016 and the Company is in default of its obligations under the Note. The default interest rate of 24% per annum is being accrued beginning on November 14, 2016.


During the three and ninesix months ended JanuaryOctober 31 2018, the Company issued no common shares for payment on the Note. During the six months ended October 31, 2017, the Company recognized $750issued 71,341,227 common shares for a value of $105,000, satisfying the note principal, and leaving a balance due of $4,540 in accrued interest.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $0 in principle and $4,540 respectively,and $4,540 in interest, respectively.

As of interest expense and $6,535 and $92,500, respectively,October 31, 2018, the equivalent number of accretion relatedcommon shares the Company would be required to issue to satisfy the debt discount.Note is 75,664,694. The number of common shares the Company is required to have in reserve on the note is 226,994,082.


RDW Note 5 - In connection with RDW SPA 2, onOn May 20, 2016, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC pursuant to RDWwhich the Company received $52,500 in financing through the execution of a convertible note (“RDW Note 5”) due on November 20, 2016 in the principal amount of $52,500 of which theConvertible Promissory Note. The Company received proceeds of $45,000 after payment of a $2,500 OID and $5,000 of due diligence fees.


RDW Note 5The principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $35,000. As this amount resulted in a total BCF debt discount that was less than RDW Note 5note principal, the full $35,000 discount was recognized. The resulting $42,500 discount was accreted over the 6 month term of RDWthe Note.

The Note 5 throughbecame due and payable on November 20, 2016.


2016 and the Company is in default of its obligations under the Note. The default interest rate of 24% per annum is being accrued beginning on November 21, 2018.

During the three and ninesix months ended JanuaryOctober 31 2018, the Company issued no common shares for payment on the Note. During the six months ended October 31, 2017, the Company recognized $775issued 80,769 common shares for a value of $52,500, satisfying the note principal, and leaving a balance due of $2,743 in accrued interest.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $0 in principle and $2,742 respectively,and $2,742 in interest, respectively.

As of interest expense and $4,620 and $42,500, respectively,October 31, 2018, the equivalent number of accretion relatedcommon shares the Company would be required to issue to satisfy the debt discount.Note is 45,706,301. The number of common shares the Company is required to have in reserve on the note is 137,118,903.


RDW Note 6 - In connection with RDW SPA 3, onOn August 22, 2016, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC pursuant to RDWwhich the Company received $157,500 in financing through the execution of a convertible note (“RDW Note 6”) due on February 22, 2017 in the principal amount of $157,500 of which theConvertible Promissory Note. The Company received proceeds of $130,000 after payment of a $7,500 OID and $20,000 of legal and due diligence fees totaling $20,000.fees.


RDW Note 6The principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $105,000. As this amount resulted in a total BCF debt discount that was less than RDW Note 6note principal, the full $105,000 discount was recognized. The resulting $132,500 discount was accreted over the 6 month term of RDWthe Note.

The Note 6 throughbecame due and payable on February 22, 2017 and the Company is in default of its obligations under the Note. The default interest rate of 24% per annum is being accrued beginning on February 23, 2017.


During the threesix months ended JanuaryOctober 31 2018, the Company issued no common shares for payment on the Note. During the six months ended October 31, 2017, the Company issued 579,733 common shares for a value of $31,674, satisfying the note principal, and leaving a balance due of $8,398 in accrued interest.

As of October 31, 2018 and 2017,April 30, 2018, respectively, the Company recognized -$293owed $0 and $3,304, respectively,$0 in principle and $889 and $889 in interest, respectively.

As of interest expense. During the nine months ended JanuaryOctober 31, 2018, and 2017,the equivalent number of common shares the Company recognized -$186 and $5,773, respectively,would be required to issue to satisfy the Note is 14,817,664. The number of interest expense. During the three months ended January 31, 2018 and 2017,common shares the Company recognized $0 and $66,250, respectively, of accretion relatedis required to have in reserve on the debt discount. During the nine months ended January 31, 2018 and 2017, the Company recognized $0 and $132,500, respectively, of accretion related to the debt discount. RDW began converting the RDW Note 6 principal into shares of common stock beginning in March 2017. During the three months ended January 31, 2018, RDW converted $7,216 of unpaid interest into 4,340,000 shares. During the nine months ended January 31, 2018, RDW converted $39,183 into 4,919,733 shares.note is 44,452,992.




RDW Note 7 – In connection with RDW SPA 4 under which RDW agreed to purchase an aggregate of up to $367,500 in principal amount of notes, on September 1, 2016, the Company issued to RDW a convertible note (“RDW Note 7”) due on March 1, 2017 in the principal amount of $157,500 of which the Company received proceeds of $130,000 after payment of a $7,500 OID and legal and due diligence fees totaling $20,000. The second tranche for $210,000 will occur on the date that is two trading days from the date a registration statement is declared effective by the SEC. On November 30, 2017,March 16, 2018, the Company and RDW agreed to amend RDWthe Note 7 to extend the Maturity Date to February 1,October 31, 2018.


RDW Note 7The principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $105,000. As this amount resulted in a total BCF debt discount that was less than RDW Note 7note principal, the full $105,000 discount was recognized. The resulting $132,500 discount was accreted over the 6 month term of RDWthe Note.

The Note 7 through Marchbecame due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default interest rate of 24% per annum will be accrued beginning on November 1, 2017.2018.


During the threesix months ended JanuaryOctober 31 2018, and 2017, the Company recognized $879 and $3,296, respectively, of interest expense.issued no common shares for payment on the Note. During the ninesix months ended January 31, 2018 and 2017, the Company recognized $5,612 and $8,664, respectively, of interest expense. During the three and nine months ended JanuaryOctober 31, 2017, the Company recognized $67,348issued 16,753,900 common shares for a value of $115,148, and 111,271, respectively, of accretion relatedwas applied to the debt discount which was fully accreted asNote principal.

As of October 31, 2018 and April 30, 2017. RDW began converting2018, respectively, the RDW Note 7 principal into sharesCompany owed $25,700 and $25,700 in principle and $16,776 and $13,397 in interest, respectively.

As of October 31, 2018, the equivalent number of common stock beginningshares the Company would be required to issue to satisfy the Note is 707,937,309. The number of common shares the Company is required to have in May 2017. Duringreserve on the three and nine months ended January 31, 2018, RDW converted $16,652 into 7,832,000 shares and $131,800 into 24,585,900 shares, respectively.note is 2,123,811,927.


RDW Note 8In connection with RDW SPA 4, onOn February 6, 2017, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant to RDWwhich the Company received $210,000 in financing through the execution of a convertible note (“RDW Note 8”) due on August 5, 2017 in the principal amount of $210,000 of which theConvertible Promissory Note. The Company received proceeds of $180,000 after payment of a $10,000 OID and legal and due diligence fees totaling $20,000. On November 30, 2017,March 16, 2018, the Company and RDW agreed to amend RDWthe Note 8 to extend the Maturity Date to February 1,October 31, 2018.


RDW Note 8The principle was discounted for the value of the OID, legal and due diligence fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $217,000. As this amount resulted in a total debt discount that exceeded RDW Note 8the principal, the discount recorded for the beneficial conversion featureBCF was limited to the principal amount of RDW Note 8.the Note. The resulting $210,000 discount is beingwas accreted over the 6 month term of RDWthe Note.

The Note 8 through August 5, 2017.became due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default interest rate of 24% per annum will begin accruing on November 1, 2018.


During the three and ninesix months ended JanuaryOctober 31, 2018, the Company recognized $1,073issued 57,100,000 common shares for a value of $14,754, and $3,155, respectively, of interest expense and $0 and $113,167, respectively, of accretion relatedwas applied to the debt discount. RDW began convertingNote principal. During the RDW Note 8 principal intosix months ended October 31 2017, the Company issued no common shares for payment on the Note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $1,221 and $15,975 in principle and $5,964 and $5,512 in interest, respectively.

As of October 31, 2018, the equivalent number of common stock beginningshares the Company would be required to issue to satisfy the Note is 119,756,048. The number of common shares the Company is required to have in February 2017 through year end in April 2017. RDW has not converted any of RDW Note 8 duringreserve on the nine months ended January 31, 2018.note is 359,268,144.


RDW Note 9In connection with RDW SPA 5, onOn March 30, 2017, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant to RDWwhich the Company received $78,750 in financing through the execution of a convertible note (“RDW Note 9”) due on September 29, 2017 in the principal amount of $78,750 of which theConvertible Promissory Note. The Company received proceeds of $62,500 after payment of a $3,750 OID and legal and due diligence fees totaling $12,500. On November 30, 2017,March 16, 2018, the Company and RDW agreed to amend RDWthe Note 9 to extend the Maturity Date to February 1,October 31, 2018.


RDW Note 9The principle was discounted for the value of the OID, fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $72,000. As this amount resulted in a total debt discount that exceeded RDW Note 9the principal, the discount recorded for the beneficial conversion featureBCF was limited to the principal amount of RDW Note 9.the Note. The resulting $78,750 discount is beingwas accreted over the 6 month term of RDWthe Note.

The Note 9 through September 29, 2017.became due and payable on October 31, 2018 and the Company is in default of its obligations under the Note. The default interest rate of 24% per annum will be accrued beginning on November 1, 2018.


During the three and ninesix months ended JanuaryOctober 31 2018, the Company recognized $1,706issued 130,800,000 common shares for a value of $16,322, and $5,015, respectively, of interest expense and $0 and $65,410, respectively, of accretion relatedwas applied to the debt discount.principal on the Note. During the six months ended October 31, 2017, the Company issued no common shares for payment on the Note.




As of October 31, 2018 and April 30, 2018, respectively, the Company owed $62,428 and $78,750 in principle and $10,459 and $7,243 in interest, respectively.

As of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 1,214,790,559. The number of common shares the Company is required to have in reserve on the note is 3,644,371,677.

RDW Note 10In connection with RDW SPA 5, onOn April 26, 2017, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant to RDWwhich the Company received $110,000 in financing through the execution of a convertible note (“RDW Note 10”) due on October 26, 2017 in the principal amount of $110,000 of which theConvertible Promissory Note. The Company received proceeds of $90,000 after payment of a $10,000 OID and legal fees totaling $10,000. On November 30, 2017,March 16, 2018, the Company and RDW agreed to amend RDWthe Note 10 to extend the Maturity Date to February 1,October 31, 2018.


RDW Note 10The principle was discounted for the value of the OID, fees and intrinsic value of the beneficial conversion feature.BCF. The calculated intrinsic value was $134,000. As this amount resulted in a total debt discount that exceeded RDW Note 10the principal, the discount recorded for the beneficial conversion featureBCF was limited to the principal amount of RDW Note 10.the Note. The resulting $110,000 discount is beingwas accreted over the 6 month term of RDWthe Note.

The Note 10 throughbecame due and payable on October 26, 2017.31, 2018 and the Company will be in default of its obligations under the Note. The default interest rate of 24% per annum will be accrued beginning on November 1, 2018.


During the three and ninesix months ended JanuaryOctober 31 2018 and 2017, the Company issued no shares on the Note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $7,510 in accrued interest.

As of October 31, 2018, the Company recognized $2,240 and $6,835, respectively, of interest expense and $0 and $107,582, respectively, of accretion related to the debt discount. RDW began converting the RDW Note 10 principal into sharesequivalent number of common stock beginningshares the Company would be required to issue to satisfy the Note is 125,169,335. The number of common shares the Company is required to have in December 2017. Duringreserve on the three and nine months ended January 31, 2018, RDW converted $32,662 into 22,630,500 shares.note is 375,508,005.


RDW Note 11In connection with RDW SPA 5, onOn May 30, 2017, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant to RDWwhich the Company received $81,375 in financing through the execution of a convertible note (“RDW Note 11”) due on November 30, 2017 in the principal amount of $81,375 of which theConvertible Promissory Note. The Company received proceeds of $65,000 after payment of a $3,875 OID and legal and due diligence fees totaling $12,500.$9,875. On November 30, 2017,March 16, 2018, the Company and RDW agreed to amend RDWthe Note 11 to extend the Maturity Date to February 1,October 31, 2018.


RDW Note 11The principle was discounted for the value of the OID fees and intrinsic value of the beneficial conversion feature.issuance fees. The calculatedBCF intrinsic value was $102,000. As this amount resulted in a total debt discountBCF that exceeded RDWthe Note 11 principal,proceeds, accretion of the discount recorded for the beneficial conversion featureBCF was limited to the principal amount of RDW Note 11. The resulting $81,375 discount is being$65,000 which was accreted over the 6 month term of RDWthe Note.

The Note 11 throughbecame due and payable on October 31, 2018 and the Company will be in default of its obligations under the Note. The default interest rate of 24% per annum is being accrued beginning on November 30, 2017.1, 2018.


During the three and ninesix months ended JanuaryOctober 31 2018, the Company recognized $1,739issued 138,791,667 common shares for a value of $9,050 and $4,572, respectively,was applied against the principal on the Note. During the six months ended October 31, 2017, the Company issued no shares on the Note.

As of interest expenseOctober 31, 2018 and $13,267April 30, 2018, the Company owed $81,375 and $81,375 respectively,in principal and $9,947 and $6,288 in accrued interest, respectively.

As of accretion relatedOctober 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the debt discount.Note is 1,522,028,613. The number of common shares the Company is required to have in reserve on the note is 4,566,085,839.


RDW Note 12In connection with RDW SPA 6, onOn August 7, 2017, the Company issuedentered into a Securities Purchase Agreement with RDW Capital, LLC, pursuant to RDWwhich the Company received $52,500 in financing through the execution of a convertible note (“RDW Note 12”) due on February 7, 2018 in the principal amount of $52,500 of which theConvertible Promissory Note. The Company received proceeds of $46,000 after payment of a $2,500 OID and legal and due diligence fees totaling $4,000. On March 16, 2018, the Company and RDW agreed to amend the Note to extend the Maturity Date to October 31, 2018.


RDW Note 12The principle was discounted for the value of the OID fees and intrinsic value of the beneficial conversion feature.issuance fees. The calculatedBCF intrinsic value was $107,283. As this amount resulted in a total debt discountBCF that exceeded RDWthe Note 12 principal,proceeds, accretion of the discount recorded for the beneficial conversion featureBCF was limited to the principal amount of RDW Note 12. The resulting $52,500 discount is beingwhich was accreted over the 6 month term of RDWthe Note.

The Note 12 through February 7, 2018.


During the three and nine months ended January 31, 2018, the Company recognized $1,105 and $2,106, respectively, of interest expense and $26,250 and $50,503, respectively, of accretion related to the debt discount.


RDW Note 1 through RDW Note 12 may hereinafter be referred to collectively as, the RDW Notes.




15




The RDW Notes have the following terms and conditions:


·The principal amount outstanding accrues interest at a rate of eight percent (8%) per annum.

·Interest isbecame due and payable on each conversion dateOctober 31, 2018 and on the Maturity Date.

·At any time, atCompany will be in default of its obligations under the optionNote. The default interest rate of the holder, the RDW notes are convertible, into shares of our common stock at a conversion price equal to sixty percent (60%) of the lowest traded price of our common stock in the twenty (20) days prior to the conversion date, at any time, at the option of the holder (the “Conversion Price”).

· TheRDW Notes are unsecured obligations.

·We may prepay the RDW Notes in whole or in part at any time with ten (10) days written notice to the holder for the sum of the outstanding principal and interest multiplied by one hundred and thirty percent (130%).  RDW may continue to convert the notes from the date of the notice of prepayment until the date of prepayment.

· Default interest of twenty-four percent (24%) per annum.

·Interest on overdue accrued and unpaid interest will incur a late fee of the lower of eighteen percent (18%)24% per annum oris being accrued beginning on November 1, 2018.

During the maximum rate permitted by law.

·Upon an event of default, RDW may accelerate the outstanding principal, plus accrued and unpaid interest, and other amounts owing through the date of acceleration (Acceleration).

·Upon Acceleration, the amount due will be one hundred thirty percent (130%) of the outstanding principal amount of the Note and accrued and unpaid interest, together with payment of all other amounts, costs, expenses and liquidated damages.

·In the event of our default, at the request of the holder, we must pay one hundred fifty percent (150%) of the outstanding balance plus accrued interest and default interest.

·We must reserve three (3) times the amount of shares necessary for the issuance of common stock upon conversion. 

·Conversions of the RDW Notes shall not be permitted if such conversion will result in the holder owning more than four point ninety-nine percent (4.99%) of our common shares outstanding after giving effect to such conversion.


In total, during the threesix months ended JanuaryOctober 31 2018 and 2017, respectively, the Company recognized $8,449 and $7,175, respectively,issued no shares against the Note.

As of interest expense and $39,517 and $144,753, respectively, of accretion related to the debt discount of the RDW Notes. In total, during the nine months ended JanuaryOctober 31, 2018 and 2017,April 30, 2018, respectively, the Company recognized $27,109owed $52,500 and $21,307, respectively,$52,500 in principal and $5,521 and $3,197 in accrued interest.

As of interest expense and $418,037 and $549,914, respectively, of accretion related to the debt discount of the RDW Notes.


In total, during the three months ended JanuaryOctober 31, 2018, RDW converted $56,529 of RDW Note principal and interest into 34,802,500 sharesthe equivalent number of common stock. In total, duringshares the nine months ended January 31, 2018, RDW converted $203,350 of RDWCompany would be required to issue to satisfy the Note principal and interest into 52,136,133 sharesis 967,013,810. The number of common stock.shares the Company is required to have in reserve on the note is 2,901,041,430.


Power Up Lending Group Ltd.


Power Up Note 1 – On October 20, 2017 the Company sold and Power Up Lending Group, Ltd. (“Power Up”) purchased a 12% convertible note in the principal amount of $70,000 (the “Power Up Note 1”) of which the Company received $60,300 after payment of legal fees. The Power Up Note 1 matures on July 30, 2018.




The intrinsic value of the beneficial conversion feature was computed as the difference between the fair value of the common stock issuable upon conversion of the Power Up Note 1 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $44,754. This Power Up Note 1 has been discounted by $44,754 which is being accreted over the 10 month term of the Power Up Note 1.


During the three and nine months ended January 31, 2018, the Company recognized interest expense of $2,157 and $2,411, respectively, and $17,702 and $19,819, respectively, of debt discount accretion.


Power Up Note 2 – On November 16, 2017 the Company sold and Power Up purchased a 12% convertible note in the principal amount of $36,000 (the “Power Up Note 2”) of which the Company received $30,000 after payment of legal fees. The Power Up Note 2 matures on August 30, 2018.


The intrinsic value of the beneficial conversion feature was computed as the difference between the fair value of the common stock issuable upon conversion of the Power Up Note 2 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $23,016. This Power Up Note 2 has been discounted by $44,754 which is being accreted over the 10 month term of the Power Up Note.


During the three and nine months ended January 31, 2018, the Company recognized interest expense of $911 and $7,684 of debt discount accretion.


Power Up Note 3 – On January 5, 2018 the Company sold and Power Up Lending Group, Ltd. (“Power Up”) purchased a 12% convertible note in the principal amount of $38,000 (the “Power Up Note 3”) of which the Company received $32,000 after payment of legal fees. The Power Up Note 3 matures on October 10, 2018.


The intrinsic value of the beneficial conversion feature was computed as the difference between the fair value of the common stock issuable upon conversion of the Power Up Note 3 and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $24,295. This Power Up Note 3 has been discounted by $30,295 which is being accreted over the 10 month term of the Power Up Note.


During the three and nine months ended January 31, 2018, the Company recognized interest expense of $326 and $2,833 of debt discount accretion.


Power Up Note 1 through Power Up Note 3 may hereinafter be referred to collectively as, the “Power Up Notes”.


The Power Up Notes have identical terms and conditions, including convertibility into common stock, at Power Up’sthe holder’s option any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Power Up Note, at a price for each share of common stock equal to 61% of the average of the lowest two (2) trading prices during the twenty (20) trading days immediately preceding the applicable conversion. In no event shall Power Up effect a conversion if such conversion results in Power Up beneficially owning in excess of 4.99% of the outstanding common stock of the Company. The Power Up Notes and accrued interest may be prepaid within the 180 day period following the issuance date at an amount equal to 115% - 140% of the outstanding principle and unpaid interest. After expiration of the 180 days, the Power Up Note may not be prepaid. Any principal and interest unpaid when due shall bear interest at 22%. Upon the occurrence of an event of default the balance of principle and interest shall become immediately due at the default amount which is equal to the sum of the unpaid principal and unpaid interest multiplied by 150%.



Power Up Note 1 – On October 20, 2017 the Company sold a 12% convertible note in the principal amount of $70,000 of which the Company received $60,300 after payment of legal fees of $9,700. The Note matured on July 30, 2018 and bears a default interest rate of 22% as of July 31, 2018.

The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $44,754 and is being accreted over the 10 month term of the Note.

During the six months ended October 31 2018, the Company issued 243,760,201 common shares for a value of $70,230; whereby $66,030 was applied against the principal and $4,200 was applied against the accrued interest. During the six months ended October 31 2017, the Company issued 9,232,558 common shares for a value of $3,970, which was applied against the principal on the Note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $0 and $66,030 in principal and $0 and $4,554 in accrued interest.

Power Up Note 2 – On November 16, 2017 the Company sold a 12% convertible note in the principal amount of $36,000 of which the Company received $30,000 after payment of legal fees of $6,000.

The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $23,016 and is being accreted over the 9.5 month term of the Note.

The Note became due and payable on August 30, 2018 and the Company is in default of its obligations under the Note. The default interest rate of 22% per annum is being accrued beginning on August 31, 2018.

During the six months ended October 31, 2018, the Company issued 138,791,667 common shares for a value of $9,050, which was applied against the principal on the Note. During the six months ended October 31, 2017, the Company issued no shares against the balance on the Note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $26,950 and $5,113 in principal and $36,000 and $2,006 in accrued interest.

As of October 31, 2018, the equivalent number of common shares the Company would be required to hold in its reserves is equal to the amount required to satisfy the Note, which is 525,615,677.

Power Up Note 3 – On January 5, 2018 the Company sold a 12% convertible note in the principal amount of $38,000 of which the Company received $32,000 after payment of legal fees.

The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $24,295 and is being accreted over the 10 month term of the Note.

The Note became due and payable on October 10, 2018 and the Company is in default of its obligations under the Note. The default interest rate of 22% per annum is being accrued beginning on October 11, 2018.

During the six months ended October 31, 2018 and 2017, the Company issued no shares against the balance on the Note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $38,000 and $38,000 in principal and $4,109 and $1,464 in accrued interest.

As of October 31, 2018, the equivalent number of common shares the Company would be required to hold in its reserves is equal to the amount required to satisfy the Note, which is 690,305,539.

Power Up Note 4 – On January 5, 2018 the Company sold a 12% convertible note in the principal amount of $33,000 of which the Company received $27,500 after payment of legal fees. The Note matures on December 15, 2018 and bears interest at 12%.

The intrinsic value of the BCF was computed as the difference between the fair value of the common stock issuable upon conversion of the Note and the total price to convert based on the effective conversion price on the date of issuance. The calculated intrinsic value was $21,098 and is being accreted over the 9 month term of the Note.

During the six months ended October 31, 2018 and 2017, the Company issued no shares against the balance on the Note.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $33,000 and $33,000 in principal and $2,709 and $613 in accrued interest.

As of October 31, 2018, the equivalent number of common shares the Company would be required to hold in its reserves is equal to the amount required to satisfy the Note, which is 585,391,069.

Power Up Settlement

On October 8, 2019, the Company and the assignee of Power Up, “Recovery”, agreed to settle the amount of all outstanding Notes, in final settlement of all related claims for the aggregate sum of $146,925. At closing, the Company was obligated to pay the first installment of $30,000; the second installment of $15,000 due on October 22, 2019, and the third and final amount of $15,000 by November 5, 2019. Should the Company fail to pay the settlement amount by the deadline, Recovery shall have all rights under the Notes and SPA’s to convert the debt amount into common stock of the Company pursuant to the terms and provisions of the Notes. Recovery, in addition, is entitled to obtain an affirmative injunction from the Court which injunction shall remain in full force and effect until Recovery has converted the debt obligation. Recovery will also have the right to enter a money judgement and have immediate execution thereon for the default amount together with accrued and unpaid interest and full default interest against the Company, giving the Company credit for all sums received by Recovery prior to enforcement.


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Adar Bays, LLC

The Adar Notes bear interest at the rate of 8% per annum. All interest and principal must be repaid on or before March 5, 2019. After six months, the Adar Notes are convertible into common stock, at Adar’s option, at a conversion price equal to 60% of the lowest trading price of our common stock during the 20 prior trading days prior to conversion. The Company is required to reserve three (3) times the amount of shares necessary for the issuance of common stock upon conversion. The two Adar Collateralized Notes may only be converted by Adar in the event they are paid in full. In addition, the Note contains pre-payment penalties. The Company is only required to make payments on the Back End Notes if Adar funds the Collateralized Notes.

Adar has agreed to restrict its ability to convert the Adar Notes and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The Adar Notes are a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. The Adar Notes also provides for penalties and rescission rights if the Company does not deliver shares of its common stock upon conversion within the required timeframes. In the event of default, the note interest rate increases to 24%.

Adar Note 1 - On March 5, 2018 the Company entered into a Securities Purchase Agreement with Adar Bays, LLC providing for the purchase of a Convertible Promissory Note in the principal amount of $52,500; and two Collateralized Secured Promissory Notes also in the amount of $52,500 each (the “Adar Collateralized Notes”) and the delivery by the Company of two Back End Notes payable to Adar each in the principal amount of $52,500. The first $52,500 financing closed on March 5, 2018 with the Company receiving net proceeds of $43,500 after payment of legal fees of $6,500 and a 5%, or $2,500 original issue discount. On May 24, 2018 Adar funded $5,789 under one of the Adar Collateralized Notes with the Company receiving net proceeds of $5,500 after payment of a 5% original issue discount.

The intrinsic value of the Adar Notes beneficial conversion feature exceeded their proceeds thereby limiting the accretion of the BCF to $43,500 and $5,500 for Adar Note 1 and the Adar Collateralized Note, respectively. Accretion is over the 12 month term of the Adar Notes.

As of October 31, 2018 and April 30, 2018, respectively, the Company owed $58,289 and $52,500 in principal and $6,722 and $648 in accrued interest.

As of October 31, 2018, the equivalent number of common shares the Company would be required to issue to satisfy the Note is 656,678,188. The number of common shares the Company is required to have in reserve is 1,970,034,564, which is equal to three times the amount sufficient to satisfy the note at each measurement date.

Adar Settlement

On October 3, 2019, the Company and Adar Bays, LLC agreed to enter into a Payment Agreement to settle the amounts outstanding on two previously outstanding Notes, whereby the Company would repay the debt in three installments; $37,000 by October 4, 2019, $18,750 by October 23, 2019, and $18,750 by November 23, 2019. The Company subsequently met all the terms of the final settlement.

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NOTE 4 - Short Term Loans

On September 25, 2018, the Company repaid the then outstanding balance of the ACH Loan totaling $13,372 with funds received from Strategic Funding Source, Inc.

On September 25, 2018, the Company borrowed $38,340 from Strategic Funding Source, Inc. under the Loan Agreement. Pursuant to the terms of the Loan Agreement, the Company received $13,233 of proceeds after deductions for $395 of service fees and $11,340 related to interest. Repayment is achieved through 246 daily bank account withdrawals of $156. The Loan Agreement is secured by all current and future assets of the Company.

NOTE 5 – COMMITMENTS AND CONTINGENCIES


Product Warranties


OurThe Company’s manufacturer(s) provide the Company with a 2 year warranty. The Company products are sold with a 1 year manufacturer’s warranty. The Company offers a 1 year extended warranty for a fee. The extended warranty expires at the end of the second year from the date of purchase with warranty costs during the two year period being born by the manufacturer. As a result, the Company has no, or limited warranty liability exposure.


Operating Leases


On November 15, 2017, the Company entered into a lease of office space at 1600 Olive Chapel Road, Apex, North Carolina 27502. The lease expires on November 30, 2020 and includes an option to extend the lease an additional term or three years. Rent is $1,650 per month and is increased each anniversary by 3%. The Company paid a $1,650 security deposit. TheAs of April 30, 2018, the Company hashad adopted ASC 2016-2; Leases (Topic 842). As a result, Thethe Company iswas required to estimate and record the right of use asset (“ROU Asset”) and lease liability on the face of Thethe Company’s balance sheet. The Company determined the ROU Asset and lease liability to be $51,063 which compares to the total payments of the initial three year term of $61,200. The company determined that there was no discount rate implicit in the lease. Thus, the Company used its incremental borrowing rate of 12% to discount the lease payments in the determination of the ROU asset and lease liability.


On March 21, 2015, the Company entered into a lease of office space at 130 Iowa Lane, Suite 102, Carry, North Carolina 27511. During the three months ended January, 31, 2018, the Company moved and this lease was terminated with no further obligationsobligations.


The Company has no other noncancelablenon-cancelable operating leases. Future minimum lease payments under thisThe following is a maturity analysis of the annual undiscounted cash flows of the operating lease with an initial term in excess of one yearliabilities as of JanuaryOctober 31, 2018:

Fiscal Year    
2019  $10,148 
2020  $20,649 
2021  $12,253 
   $43,050 

As of October 31, 2018, aretotal operating lease liability was as follows:


Total undiscounted cash flows $43,050 
Less unamortized interest  (5,129)
Total operating lease liability $37,921 

Fiscal Year

2018

$4,950

2019

$20,048

2020

$20,649

2021

$12,253

Thereafter

$0


During the threesix months ended JanuaryOctober 31, 2018 and 2017, operating lease expense for rent expense for office space totaled $4,192$10,200 and $3,658,$7,388, respectively. During the nine months ended January

NOTE 6 –REDEEMABLE PREFERRED STOCK ANDStockholder’s Equity

Redeemable Preferred Stock

As ofOctober 31, 2018 and 2017, rent expense for office space totaled $11,580 and $11,234, respectively.


NOTE 6 – STOCKHOLDER'S EQUITY


As of January 31, 2018 and April 30, 2017, there were 54,035,496 and 1,698,494 shares of common stock outstanding, respectively. As of January 31, 2018, and April 30, 2017 there were 5,000,000 and 1,000,000 shares of par value $0.0001, Series A Preferred Stock outstanding, respectively.




On January 19, 2016, we amended our Articlesoutstanding. The Preferred Stock pays no dividends and has no conversion rights into common stock. Each share of Incorporation to increase our authorized common stock from 50,000,000 shares to 250,000,000 shares and authorized the creation of 1,000,000 shares of Series A preferred stock with each share beingPreferred Stock is entitled to 200,000 (i.e., 200:1)200 votes per share and with no rightis redeemable in whole, but not in part, at the option of conversion into shares of common stock.the holder for $0.0001 per share. Accordingly, this preferred stock is reflected as temporary equity.


On September 8, 2016, we amended our Articles of Incorporation to increase our authorized common stock from 250,000,000 shares to 750,000,000 shares and to increase our authorized Series A Preferred Stock from 1,000,000 shares to 5,000,000 shares.


On March 31, 2017, we amended our Articles of Incorporation to effect a 1:250 reverse stock split which became effective on April 24, 2017.


On December 8, 2017, we amended our Articles of Incorporation to increase our authorized common stock from 750,000,000 shares to 2,000,000,000 shares and to increase our authorized Series A Preferred Stock from 5,000,000 shares to 15,000,000 shares.


During the nine monthsyear endedJanuary 31,April 30, 2018, wethe Company issued 1) 52,136,133 shares of common stock in exchange for convertible notes totaling $203,350; 2) 100,000 shares in exchange for $600; 3) 100,000 shares in exchange for services valued at $600; and 4) 4,000,000 shares of Series A Preferred Stock to Paul Feldman, CEO in exchange for $4,000. Each Series A preferred share is entitled to 200,000 (i.e., 200:1) votes per share and carries no right of conversion into shares of common stock.


During the year endedCommon Stock

As ofOctober 31, 2018 andApril 30, 20172018, there were 764,867,622 and 194,415,754 shares of common stock outstanding, respectively.

On September 20, 2018, the Company amended its Articles of Incorporation to affect a 1:1,000 reverse stock split. As of the date of this filing, the Company is waiting for FINRA to approve this corporate action. All share amounts included in this quarterly report have not been updated to reflect the reverse split.

On May 17, 2018, the Company filed its Amended Articles of Incorporation which increased its authorized common stock to 20,000,000,000 shares and it Series A Preferred to 20,000,000 shares, with no changes in par value. The increase in the common stock was made necessary because of the reserves required by the Company’s holders of convertible notes.

During the six months ended October 31, 2018, wethe Company issued 1,527,931an aggregate of 570,451,868 shares of common stock in exchange for convertible notes totaling $755,401, and$110,710.

During the year endedApril 30, 2018, the Company issued 8,423192,516,391 shares of common stock in exchange for convertible notes totaling $317,096. In addition, a total of 100,000 common shares were issued for cash in the amount of $600, and 100,000 common shares were issued for services and valued at $20,000 as fees related to the issuance of certain RDW Notes.$600.


NOTE 7 – SUBSEQUENT EVENTS


ManagementOn November 28, 2018, the Company has reviewed material events subsequentissued 76,316,667 common shares for a value of $4,578, as payment on its convertible notes payable.

On March 15, 2019 the quarterly period ended January 31, 2018 andCompany received a Notice of Default from 111 Recovery Corp, as Assignee from Power Up Lending Group, Ltd. The Notice stated that the Company was in default of one or more Convertible Promisory Notes which, prior to the filingdefault, had aggregate and outstanding principal balances of financial statements$97,950. The Notice stated that as a result of the default, 111 Recovery Corp is demanding immediate payment of $146,925.

On October 3, 2019, the Company and Adar Bays, LLC agreed to enter into a Payment Agreement to settle the amounts outstanding on two previously outstanding Notes, whereby the Company would repay the debt in accordancethree installments; $37,000 by October 4, 2019, $18,750 by October 23, 2019, and $18,750 by November 23, 2019. The Company subsequently met all the terms of the final settlement.

On October 8, 2019, the Company and the assignee of Power Up, “Recovery”, agreed to settle the amount of all outstanding Notes, in final settlement of all related claims for the aggregate sum of $146,925. At closing, the Company was obligated to pay the first installment of $30,000; the second installment of $15,000 due on October 22, 2019, and the third and final amount of $15,000 by November 5, 2019. Should the Company fail to pay the settlement amount by the deadline, Recovery shall have all rights under the Notes and SPA’s to convert the debt amount into common stock of the Company pursuant to the terms and provisions of the Notes. Recovery, in addition, is entitled to obtain an affirmative injunction from the Court which injunction shall remain in full force and effect until Recovery has converted the debt obligation. Recovery will also have the right to enter a money judgement and have immediate execution thereon for the default amount together with FASB ASC 855 “Subsequent Events”.  accrued and unpaid interest and full default interest against the Company, giving the Company credit for all sums received by Recovery prior to enforcement. The Company subsequently met all the terms of the final settlement.


Subsequent toJanuary 31, 2018 and through February 28, 2018, RDW converted $30,490 of convertible note principal into 26,622,700  shares of common stock.




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


Forward Looking Statements

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our April 30, 20172018 Annual Report on Form 10-K.

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our estimates of our financial results and our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission (the “SEC”) with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

As used herein, the “Company,” “our,” “we,” or “us” and similar terms refers to Enhance-Your-Reputation.com, Inc. unless the context indicates otherwise.


Overview


The Company is in the business of selling video and audio capture devices initially targeted to law enforcement agencies. The Company has established a web site at www.forceprovideo.com whereby customers can view the Company’s products and place orders. We believe that given recent current events between law enforcement agencies and the public, which has been widely reported by the media, there is a significant market opportunity for the Company’s products.


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Products

20




Products


Our video and audio capture devices are compact, ergonomic, tamperproof and designed to capture HD video and/or audio on demand enabling our customers to capture content while engaged in a wide range of activity. We also sell accessories that enhance the functionality and versatility of our products, including mounts, such as the helmet, handlebar, roll bar and tripod mounts, as well as mounts that enable users to wear the camera on their bodies, such as the wrist housing, chest harness and head strap. Other accessories include spare batteries, charging accessories and memory drives. Our products are marketed primarily to law enforcement due to their unique need to capture important events in the course of their duties.


Our primary hardware products consist of our undercover surveillance devices which are restricted sales items to law enforcement agencies, the LE10 Law Enforcement Video Recorder, the LE15 and LE50 and the Recon 2000 HD Body Cam,Cams and evidence software as well as the SC1 Sunglass Camera and Citadel 3G Solar Security CameraCamera.


Distribution


Customers purchase products from our website and by telephone order. All products are shipped from our manufacturer to our facility in North Carolina where we process and ship product to our customers using Federal Express or United Parcel Services. Customers pay all shipping charges.


Marketing


Currently, our sales and marketing efforts include print marketing brochurescatalogs featuring our products to state and local law enforcement agencies. We create and deliver brochures and catalogs to state and local law enforcement, every four (4) weeks, using U.S. Mail.


Cobraxtreme HD Corp.


On September 19, 2017, the Company caused to be incorporated Cobraxtreme HD Corp., a North Carolina corporation as a wholly owned subsidiary. The purpose of the subsidiary will be to sell HD video sports cameras and accessories which are similar to those sold by GoPro. Cobraxtreme will also sell goggles and sunglass cameras. We expect this subsidiary to be operational in our third fiscal quarter.  


Results of Operations


As of October 31January 31,, 2018, we had total assets of $278,093$61,186 and total liabilities of $556,473.$627,918. Since our inception to OctoberJanuary 31, 2018, we have accumulated a deficit of $3,815,263.$4,392,671. We anticipate that we will continue to incur losses for the foreseeable future. Our consolidated financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through the sale of equity or debt securities.


For the Three and nineSix Months Ended October 31, 2018 Compared to the Three and Six months ended JanuaryOctober 31, 2018 compared with the three and nine months ended January 31, 2017


Revenue


Revenue is generated from the sale of our video and audio capture devices and related accessories. For the three months endedJanuary October 31, 2018 and October 31, 2017 $45,130 and $74,798 respectfully. Forthe six months ended October 31, 2018, the Company recognized $50,669$115,352 of revenue growing 13.9% year-over-year from $44,489 in the third quarter of fiscal 2017. For the nine months endedJanuary 31, 2018, the Company recognized $139,182 of revenue growing 79.2% year-over-year from $77,666compared to $88,513 during the first ninesix months ended October 31, 2017. Sales increased due to an increase of fiscal 2017. In ordermore accessories sold and less discounts provided to improve sales, earlier in fiscal 2017, the Company released a 30 page catalog that includes surveillance products not previously offered.our customer base.




Gross profit


Gross (loss)/profit was $21,159($90,937) and $14,684$50,342 during the three months ended JanuaryOctober 31, 2018 and 2017, respectively. Gross respectively; and gross (loss)/profit was $78,805 and $24,084 duringfor the ninesix months ended JanuaryOctober 31, 2018 and 2017 was ($49,632) and $57,646, respectively. Our Grossgross margin for the three months ended JanuaryOctober 31, 2018 and 2017 was 41.8%(201.50)% and 33.0%67.3%, respectively. Our Gross marginrespectively; and for the ninesix months ended JanuaryOctober 31, 2018 and 2017, the gross margin was 56.6%(43.03)% and 31.0%65.1%, respectively. The year-over-year increasedecrease in gross margin was due to increaseddecreased volumes of higher margin product.product and due to the write-down of obsolete inventory in the amount of $112,736. The Company anticipates fluctuations in the mix of product sales and cannot meaningfully determine at this early stage if our gross margin will increase or decrease with any degree of accuracy.


OperatingExpenses


General and administrative costs include costs related to personnel, professional fees, travel and entertainment, public company costs, product development, insurance and other office related costs. General and administrative costs decreased by $13,850$59,723 to $108,662$72,770 during the three months endedJanuaryOctober 31, 2018 compared to $122,512$132,494 during the three months endedJanuaryOctober 31, 2017. During the six months General and administrative cost decreased $83,386 to $156,231 during the six months ended October 31, 2018 compared to $239,617. General and administrative costs decreased by $96,540 to $348,279 during the nine months endedJanuary 31, 2018 compared to $444,819 during the nine months endedJanuary 31, 2017. General and administrative costs decreased during the three and nine months ended January 31, 2018 compared to the three and nine months endedJanuary 31, 2017primarily due to decreased professional, service fees, duespersonnel and insurance offset by slightly higher travel costs.


Sales and marketing costs include costs to promote and sell our products. Sales and marketing costs decreased by $23,605$51,446 to $4,483$1,703 during the three months ended JanuaryOctober 31, 2018 compared to $28,088 during$53,149 for the three months ended October 31January 31,, 2017.Sales and marketing costs decreased by $42,877$22,750 to $74,417$7,184 during the ninesix months ended JanuaryOctober 31, 2018 compared to $117,294 during$69,934 for the ninesix months ended October 31January 31,, 2017.Sales and marketing costs decreased during the three and ninesix months ended JanuaryOctober 31, 2018 compared to the three and ninesix months endedJanuary October 31, 2017 due to more targeted marketing efforts.


Other Income (Expense)


All the elements of other income (expense) relate to our convertible promissory notes. During the three months ended JanuaryOctober 31, 2018 and 2017, the Company incurred $11,843$77,001 and $7,175,$160,513, respectively, of interest expense and $67,736 and $144,753, respectively, of debt discount accretion.expense. During the ninesix months ended JanuaryOctober 31, 2018 and 2017, the Company incurred $30,756$150,162 and $21,307,$399,550, respectively, of interest expense. Interest expense increased due to higher debt levels and $448,373 and $567,647, respectively,accretion decreased due to the issuance of debt discount accretion.fewer notes.


Liquidityand Working Capital


Our principal source of liquidity is cash in the bank and salable inventory. As of JanuaryOctober 31, 2018 our current assets totaled $203,975$8,623 and werewas comprised primarily of $56,675 in cash, $17,053$3,112 of accounts receivable and $121,450cash on hand of inventory.$5,511. These conditions raise doubt about our ability to continue as a going concern. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We expect to raise additional funds through private or public equity investment in order to expand the range and scope of business operations. We will try to raise additional funds through private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.




For the ninesix months ended JanuaryOctober 31, 2018, net cash flows used in operating activities was $361,753,$36,781, compared to $573,360$277,798 for the ninesix months ended JanuaryOctober 31, 2017.


For the ninesix months ended JanuaryOctober 31, 2018, net cash flows used in investing activities was $8,246,$0, compared to $16,480$8,246 for the ninesix months ended JanuaryOctober 31, 2017. The cash used in investing activities was for the purchase of fixed assets.


For the ninesix months ended JanuaryOctober 31, 2018, we generated cash flows from financing activities of $237,900 primarily$35,972 from the issuance of fivea convertible promissory notesnote, short term loan and shareholder advance compared to $387,500$171,900 from the issuance of fourone convertible promissory notesnote for the ninesix months ended JanuaryOctober 31, 2017. To date, we have financed our operations primarily through the issuance of debt and equity.


Off­BalanceOff-Balance SheetArrangements


We have no off-balance sheet arrangements.


Recently Issued Accounting Pronouncements


See Note 21 to our Condensed Consolidated Financial Statements for more information regarding recent accounting pronouncements and their impact to our condensed consolidated results of operations and financial position.


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ITEM 4.CONTROLS AND PROCEDURES


Disclosure Controls and Procedures


As of JanuaryOctober 31, 2018, under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a — 15(e) under the Securities Exchange Act of 1934, as amended. Based on the evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been found to be ineffective.


The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.


Management’s assessment of ineffectiveness is due to the following:


(1)Lack of segregation of duties. Management has found it necessary to limit the Company’s administrative staffing in order to conserve cash, until the Company’s level of business activity increases. As a result, there is limited segregation of duties amongst the employees, and the Company has identified this as a material weakness in the Company’s internal controls. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of employees and limited segregation of duties, management believes that the Company is capable of following its disclosure controls and procedures effectively.




(2)Lack of in-house US GAAP Expertise. Our current accounting personnel perform adequately in the basic accounting and recordkeeping function. However, our operations and business practices include complex technical accounting issues that are outside the routine basic functions. These technical accounting issues are complex and require significant expertise to ensure that the accounting and reporting are accurate and in accordance with generally accepted accounting principles.


Changes in internal controls

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





PART II - OTHER INFORMATION


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


During the threesix months ended JanuaryOctober 31, 2018, the Company issued 1) 34,802,500570,451,868 shares of common stock to RDW Capital, LLC upon the conversionpursuant to convertible note conversions of debt totaling $56,529; and 2) 100,000 shares in exchange for services valued at $600.$110,710.


ITEM 5. OTHER INFORMATION


None.On March 15, 2019 the Company received a Notice of Default from 111 Recovery Corp, as Assignee from Power Up Lending Group, Ltd. The Notice stated that the Company was in default of one or more Convertible Promisory Notes which, prior to the default, had aggregate and outstanding principal balances of $97,950. The Notice stated that as a result of the default, 111 Recovery Corp is demanding immediate payment of $146,925.On October 8, 2018, the Company and the assignee of Power Up, “Recovery”, agreed to settle the amount of all outstanding Notes, in final settlement of all related claims for the aggregate sum of $146,925. At closing, the Company was obligated to pay the first installment of $30,000; the second installment of $15,000 due on October 22, 2019, and the third and final amount of $15,000 by November 5, 2019. Should the Company fail to pay the settlement amount by the deadline, Recovery shall have all rights under the Notes and SPA’s to convert the debt amount into common stock of the Company pursuant to the terms and provisions of the Notes. Recovery, in addition, is entitled to obtain an affirmative injunction from the Court which injunction shall remain in full force and effect until Recovery has converted the debt obligation. Recovery will also have the right to enter a money judgement and have immediate execution thereon for the default amount together with accrued and unpaid interest and full default interest against the Company, giving the Company credit for all sums received by Recovery prior to enforcement. The Company subsequently met all the terms of the final settlement.


On October 3, 2019, the Company and Adar Bays, LLC agreed to enter into a Payment Agreement to settle the amounts outstanding on two previously outstanding Notes, whereby the Company would repay the debt in three installments; $37,000 by October 4, 2019, $18,750 by October 23, 2019, and $18,750 by November 23, 2019. The Company subsequently met all the terms of the final settlement.



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ITEM 6. EXHIBITS


(a) The exhibits required to be filed herewith by Item 601 of Regulation S-K, as described in the following index of exhibits, are incorporated herein by reference, as follows:


Exhibit No.

Description of Exhibit

3.1

3.1Articles of Incorporation dated March 11, 2011(1)

3.2

Amendment to Articles of Incorporation dated March 28, 2011(1)

3.3

Amendment to Articles of Incorporation dated September 25, 2013(1)

3.4

Amendment to Articles of Incorporation dated January 30, 2015(1)

3.5

Amendment to Articles of Incorporation dated December 1, 2015(1)

3.6

Amendment to Articles of Incorporation filed on January 19, 2016 to increase the authorized common stock outstanding from 50,000,000 to 250,000,000; par value $0.0001 and to create a series of preferred stock consisting of 1,000,000 shares designated as Series A Preferred stock; par value $0.0001(12)

3.7

Amendment to Articles of Incorporation effective September 8, 2016 to increase the authorized common stock outstanding to 750,000,000; par value $0.0001 and increase Series A Preferred stock to 5,000,000; par value $0.0001(7)

3.8

Bylaws(1)

3.9


3.10

Amendment to Articles of Incorporation filed on March 31, 2017 to reduce the number of common shares outstanding in a 1:250 reverse stock split(8)

3.10Amendment to Articles of Incorporation effective December 8, 2017 to increase the authorized common stock outstanding to 2,000,000,000 and increase Series A Preferred stock to 15,000,000(12)

10.1

Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC(1)

10.2

First Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital LLC(1)

10.3

Second Amended Securities Purchase Agreement dated November 12, 2015 with RDW Capital, LLC(1)

10.4

Registration Rights Agreement dated November 12, 2015 with RDW Capital, LLC(1)

10.5

Convertible Promissory Note dated November 12, 2015 held by RDW Capital, LLC(1)

10.6

Convertible Promissory Note dated December 31, 2015 held by RDW Capital, LLC(2)

10.7

Convertible Promissory Note dated March 10, 2016 held by RDW Capital, LLC(5)

10.8

Third Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC(1)

10.9

Fourth Amended Securities Purchase Agreement dated February 17, 2016 with RDW Capital, LLC(3)

10.10

Securities Purchase Agreement dated May 9, 2016 with RDW Capital, LLC(4)

10.11

Convertible Promissory Note dated May 13, 2016 held by RDW Capital, LLC(4)

10.12

Convertible Promissory Note dated May 20, 2016 held by RDW Capital, LLC(5)

10.13

Registration Rights Agreement dated May 9, 2016 with RDW Capital, LLC(4)

10.14

Securities Purchase Agreement dated August 22, 2016 with RDW Capital, LLC(6)

10.15

Convertible Promissory Note dated August 22, 2016 held by RDW Capital, LLC(6)

10.16

Securities Purchase Agreement dated September 1, 2016 with RDW Capital, LLC(7)

10.17

Convertible Promissory Note dated September 1, 2016 held by RDW Capital, LLC(7)

10.18

Registration Rights Agreement dated September 1, 2016 with RDW Capital, LLC(7)

10.19

Convertible Promissory Note dated February 6, 2017 held by RDW Capital, LLC(9)

10.20

Securities Purchase Agreement dated March 31, 2017 with RDW Capital, LLC(8)

10.21

Convertible Promissory Note dated March 30, 2017 held by RDW Capital, LLC(8)




10.22

Convertible Promissory Note dated April 26, 2017 held by RDW Capital, LLC(9)

10.23

Convertible Promissory Note dated May 30, 2017 held by RDW Capital, LLC(9)

10.24

Securities Purchase Agreement dated August 8, 2017 with RDW Capital, LLC(10)

10.25

Convertible Promissory Note dated August 7, 2017 held by RDW Capital, LLC(10)

10.26

Securities Purchase Agreement dated October 20, 2017 with Power Up Lending Group, Ltd.(11)

10.27

Convertible Promissory Note dated October 20, 2017 with Power Up Lending Group, Ltd.(11)

10.29

Employment Agreement Paul Feldman(1)

10.30

Shenzen AE Technology Purchase Order(1)

10.31

Agreement with Carter, Terry & Company(1)

10.32*

Convertible Promissory Note dated November 16, 2017 with Power Up Lending Group, Ltd.

(13)

10.33*

Convertible Promissory Note dated January 5, 2018 with Power Up Lending Group, Ltd.

(13)

31.1 *

10.34

Form of Adar Securities purchase Agreement dated March 5, 2018 with Adar bays , LLC(14)

10.35Form of Convertible Promissory Note dated March 5, 2018 with Adar bays, LLC(14)
10.36Form of Back end Note 1 dated March 5, 2018 with Adar bays, LLC(14)
10.37Form of Back end Note 2 dated March 5, 2018 with Adar bays, LLC(14)
10.38Form of Collateralized Secured Promissory Note 1 dated March 5, 2018 with Adar bays, LLC(14)
10.39Form of Collateralized Secured Promissory Note 2 dated March 5, 2018 with Adar bays, LLC(14)
10.40Securities Purchase Agreement dated March 5, 2018 with Power Up Lending Group, Ltd.(15)
10.41Convertible Promissory Note dated October 20, 2017 with Power Up Lending Group, Ltd.(15)
10.42*ACH Total Receipts Agreement dated June 8, 2018 with Reliant Funding
10.43*Loan Agreement dated September 25, 2018 with Strategic Funding Source, Inc.
31.1 *Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 *

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS

XBRL Instance Document**

101.SCH

XBRL Taxonomy Extension - Schema Document**

101.CAL

XBRL Taxonomy Extension - Calculation Linkbase Document**

101.DEF

XBRL Taxonomy Extension - Definition Linkbase Document**

101.LAB

XBRL Taxonomy Extension - Label Linkbase Document**

101.PRE

XBRL Taxonomy Extension - Presentation Linkbase Document**

* Filed herewith

** Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


(1)Incorporated by reference to Form S-1 filed on February 22, 2016.

(2)Incorporated by reference to Form 8-K filed on January 4, 2016.

(3)Incorporated by reference to Form S-1/A filed on March 7, 2016.2016

(4)Incorporated by reference to Form 8-K filed on May 18, 2016.

(5)Incorporated by reference to Form 10-K filed on June 27, 2016.

(6)Incorporated by reference to Form 8-K filed on August 24, 2016.

(7)Incorporated by reference to Form S-1 filed on October 11, 2016.

(8)Incorporated by reference to Form 8-K filed on March 31, 2017.

(9)Incorporated by reference to Form 10-K filed on July 27, 2017.

(10)Incorporated by reference to Form 8-K filed on August 10, 2017.

(11)Incorporated by reference to Form 8-K filed on October 25, 2017.

(12)Incorporated by reference to Form 10-Q filed on December 14, 2017.



(13)Incorporated by reference to Form 10-Q filed on February 28, 2018.

27(14)Incorporated by reference to Form 8-K filed on March 5, 2018.


(15)Incorporated by reference to Form 8-K filed on March 8, 2018.



Signatures


In accordance with Section 13 or 15(d) of the Securities Act of 1933, as amended, the Company caused this report to be signed on its behalf by the undersigned, thereto duly authorized.


Force Protection Video Equipment Corp.

(Registrant)

February 28, 2018

18, 2020

By:

/s/ Paul Feldman

Paul Feldman

Chief Executive Officer, Chief Financial Officer and Director


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