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)

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

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

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.

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

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)

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.

(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)

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

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

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

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

The accompanying notes are an integral part of these 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:

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.

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:

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.

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:

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:

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:

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:

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:

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

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.

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.

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 8 – In 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 9 – In 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 10 – In 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 11 – In 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 12 – In 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.

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.

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.