Cover
Cover - shares | 9 Months Ended | |
Aug. 31, 2020 | Oct. 20, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Trident Brands Inc | |
Entity Central Index Key | 0001421907 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-30 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Aug. 31, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 32,311,887 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Aug. 31, 2020 | Nov. 30, 2019 |
Current Assets | ||
Cash and Cash Equivalents | $ 82,658 | $ 1,013,674 |
Accounts Receivable, net of allowance of $75,404 and $55,979 respectively | 264,137 | 280,347 |
Inventory | 1,572,699 | 2,082,826 |
Prepaid expenses and other current assets | 218,994 | 168,327 |
Total Current Assets | 2,138,488 | 3,545,174 |
Fixed Assets-Furniture & Fixtures, net | 0 | 4,413 |
Intangible Assets, net | 400,000 | 400,000 |
TOTAL ASSETS | 2,538,488 | 3,949,587 |
Current Liabilities | ||
Accounts Payable | 425,765 | 443,247 |
Accrued Liabilities | 6,157,319 | 3,605,175 |
Derivative Liability | 30,421,358 | 5,825,480 |
Convertible Debt, net of discount $0 and $334,988, respectively | 12,300,000 | 11,965,012 |
Total Current Liabilities | 49,304,442 | 21,838,914 |
PPP Loan Payable | 135,165 | 0 |
Convertible Debt, net of discount $1,363,876 and $3,352,894, respectively | 8,636,124 | 6,647,106 |
Total Liabilities | 58,075,731 | 28,486,020 |
Stockholders' Deficit | ||
Common stock, $0.001 par value, 300,000,000 shares authorized; 32,311,887 shares issued and outstanding as of August 31, 2020 and November 30, 2019 | 32,312 | 32,312 |
Additional paid-in capital | 5,964,268 | 9,945,488 |
Non-Controlling Interest in Subsidiary | (359,157) | (288,603) |
Accumulated Deficit | (61,174,666) | (34,225,630) |
Total Stockholders' Deficit | (55,537,243) | (24,536,433) |
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT | $ 2,538,488 | $ 3,949,587 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Aug. 31, 2020 | Nov. 30, 2019 |
Current Assets | ||
Allowances for account receivable | $ 75,404 | $ 55,979 |
Current Liabilities | ||
Debt discount, convertible debt current | 0 | 334,988 |
Non-current liabilities | ||
Debt discount, convertible debt non-current | $ 1,363,876 | $ 3,352,894 |
Stockholders' Deficit | ||
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 32,311,887 | 32,311,887 |
Common stock, shares outstanding | 32,311,887 | 32,311,887 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Consolidated Statements of Operations (Unaudited) | ||||
Revenues, net | $ 273,044 | $ 342,109 | $ 679,031 | $ 1,737,264 |
Cost of Sales | 165,316 | 239,647 | 417,485 | 1,136,473 |
Gross Profit | 107,728 | 102,462 | 261,546 | 600,791 |
General & Administrative Expenses | (962,341) | (1,499,845) | (3,395,631) | (5,511,730) |
Loss from Operations | (854,613) | (1,397,383) | (3,134,085) | (4,910,939) |
Other Income (Expenses) | ||||
Interest Expense, net | (833,040) | (983,745) | (3,280,847) | (2,965,106) |
Gain on Debt Forgiveness | 0 | 0 | 10,000 | 0 |
Derivative gain (loss) | (11,013,316) | 236,996 | (20,614,658) | (1,254,122) |
Total Other Income (Expenses) | (11,846,356) | (746,749) | (23,885,505) | (4,219,228) |
Net Loss | (12,700,969) | (2,144,132) | (27,019,590) | (9,130,167) |
Net loss attributable to Trident | (12,686,858) | (2,104,722) | (26,949,036) | (9,037,883) |
Net loss attributable to Non-Controlling Interests | $ (14,111) | $ (39,410) | $ (70,554) | $ (92,284) |
Loss per share - Basic and diluted | $ (0.39) | $ (0.07) | $ (0.83) | $ (0.28) |
Weighted average number of common shares outstanding - Basic and diluted | 32,311,887 | 32,311,887 | 32,311,887 | 32,311,887 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit [Member] | Non-Controlling Interest [Member] |
Balance, shares at Nov. 30, 2018 | 32,311,887 | ||||
Balance, amount at Nov. 30, 2018 | $ (12,699,391) | $ 32,312 | $ 9,564,737 | $ (22,125,441) | $ (170,999) |
Stock Options Expense | 283,899 | 0 | 283,899 | 0 | 0 |
Net loss | (3,231,950) | $ 0 | 0 | (3,214,574) | (17,376) |
Balance, shares at Feb. 28, 2019 | 32,311,887 | ||||
Balance, amount at Feb. 28, 2019 | (15,647,442) | $ 32,312 | 9,848,636 | (25,340,015) | (188,375) |
Balance, shares at Nov. 30, 2018 | 32,311,887 | ||||
Balance, amount at Nov. 30, 2018 | (12,699,391) | $ 32,312 | 9,564,737 | (22,125,441) | (170,999) |
Stock Options Expense | 380,751 | ||||
Net loss | (9,130,167) | ||||
Balance, shares at Aug. 31, 2019 | 32,311,887 | ||||
Balance, amount at Aug. 31, 2019 | (21,448,807) | $ 32,312 | 9,945,488 | (31,163,324) | (263,283) |
Balance, shares at Feb. 28, 2019 | 32,311,887 | ||||
Balance, amount at Feb. 28, 2019 | (15,647,442) | $ 32,312 | 9,848,636 | (25,340,015) | (188,375) |
Stock Options Expense | 96,852 | 0 | 96,852 | 0 | 0 |
Net loss | (3,754,085) | $ 0 | 0 | (3,718,587) | (35,498) |
Balance, shares at May. 31, 2019 | 32,311,887 | ||||
Balance, amount at May. 31, 2019 | (19,304,675) | $ 32,312 | 9,945,488 | (29,058,602) | (223,873) |
Net loss | (2,144,132) | $ 0 | 0 | (2,104,722) | (39,410) |
Balance, shares at Aug. 31, 2019 | 32,311,887 | ||||
Balance, amount at Aug. 31, 2019 | (21,448,807) | $ 32,312 | 9,945,488 | (31,163,324) | (263,283) |
Balance, shares at Nov. 30, 2019 | 32,311,887 | ||||
Balance, amount at Nov. 30, 2019 | (24,536,433) | $ 32,312 | 9,945,488 | (34,225,630) | (288,603) |
Net loss | (4,256,179) | 0 | 0 | (4,226,428) | (29,751) |
APIC reclassified to derivative liability | (3,981,220) | $ 0 | (3,981,220) | 0 | 0 |
Balance, shares at Feb. 29, 2020 | 32,311,887 | ||||
Balance, amount at Feb. 29, 2020 | (32,773,832) | $ 32,312 | 5,964,268 | (38,452,058) | (318,354) |
Balance, shares at Nov. 30, 2019 | 32,311,887 | ||||
Balance, amount at Nov. 30, 2019 | (24,536,433) | $ 32,312 | 9,945,488 | (34,225,630) | (288,603) |
Stock Options Expense | 0 | ||||
Net loss | (27,019,590) | ||||
Balance, shares at Aug. 31, 2020 | 32,311,887 | ||||
Balance, amount at Aug. 31, 2020 | (55,537,243) | $ 32,312 | 5,964,268 | (61,174,666) | (359,157) |
Balance, shares at Feb. 29, 2020 | 32,311,887 | ||||
Balance, amount at Feb. 29, 2020 | (32,773,832) | $ 32,312 | 5,964,268 | (38,452,058) | (318,354) |
Net loss | (10,062,442) | $ 0 | 0 | (10,035,750) | (26,692) |
Balance, shares at May. 31, 2020 | 32,311,887 | ||||
Balance, amount at May. 31, 2020 | (42,836,274) | $ 32,312 | 5,964,268 | (48,487,808) | (345,046) |
Net loss | (12,700,969) | $ 0 | 0 | (12,686,858) | (14,111) |
Balance, shares at Aug. 31, 2020 | 32,311,887 | ||||
Balance, amount at Aug. 31, 2020 | $ (55,537,243) | $ 32,312 | $ 5,964,268 | $ (61,174,666) | $ (359,157) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (27,019,590) | $ (9,130,167) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discount | 1,614,006 | 1,781,727 |
Depreciation expense | 4,413 | 6,286 |
Inventory write-off | 76,366 | 0 |
Derivative Loss | 20,614,658 | 1,254,122 |
Stock options expense | 0 | 380,751 |
Provision for bad debts | 19,425 | 0 |
Changes in operating assets and liabilities: | ||
Accounts Receivable | (3,215) | 131,236 |
Prepaid expenses and other current assets | (50,667) | 60,970 |
Inventory | 433,761 | (266,794) |
Accounts payable and accrued liabilities | 2,308,494 | 184,912 |
Cash used in operating activities | (2,002,349) | (5,596,957) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Sale of fixed assets | 0 | 18,869 |
Additions of intangible assets | 0 | (6,420) |
Cash provided by investing activities | 0 | 12,449 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from PPP loan | 135,165 | 0 |
Proceeds from convertible debt | 936,168 | 2,804,187 |
Cash provided by financing activities | 1,071,333 | 2,804,187 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (931,016) | (2,780,321) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,013,674 | 3,133,303 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 82,658 | 352,982 |
Cash paid for: | ||
Income taxes | 0 | 0 |
Interest | 0 | 380,352 |
NON-CASH TRANSACTIONS | ||
Debt discount related to derivative liability | $ 0 | $ 1,911,256 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 9 Months Ended |
Aug. 31, 2020 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS | Trident Brands Incorporated (“we”, “our”, “the Company”) was incorporated under the laws of the State of Nevada on November 5, 2007. The Company was formed to engage in the acquisition, exploration and development of natural resource properties. The Company is now focused on the development of high growth branded and private label consumer products and ingredients within the nutritional supplement, life sciences and food and beverage categories. The Company is in its early growth stage and has transitioned out of its shell status with its Form 10 style 8-K filing at the end of August, 2014. Activities to date have focused on capital formation, organizational development and execution of its branded and private label consumer products and ingredients business plan. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Aug. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2019 as reported in the Form 10-K have been omitted. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. The ultimate impact from COVID-19 on the Company’s operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company’s financial performance in 2020. Customer Concentration The Company had four major customers that accounted for approximately 59.3% of sales for the nine month period ended August 31, 2020 and 63.7% of the accounts receivable compared to four major customers that accounted for 79.2% of sales and 54.0% of the accounts receivable for the 12 month period ended November 30, 2019. Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable and note payable. The fair value of the Company’s long-term debt is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value. As of August 31, 2020 the Company did not have any financial assets or liabilities measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, except for a derivative liability, related to the embedded conversion option on the “2016” and “2018” convertible notes, with a fair value as of August 31, 2020 of $30,421,358. The derivative liability was fair valued using Level 3 inputs. The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs: Balance at November 30, 2019 $ 5,825,480 APIC reclassified to derivative liability 3,981,220 Unrealized derivative loss included in other expense 20,614,658 Balance at August 31, 2020 $ 30,421,358 During the nine months ended August 31, 2020, the embedded conversion option on the 2016 convertible notes qualified for derivative accounting. The beneficial conversion feature that was recorded to additional paid in capital (APIC) when the convertible notes were first issued amounting to $3,981,220 were reclassified to derivative liability when the conversion price on the notes were amended to a variable conversion rate (see Note 5). The fair value of the derivative liabilities are calculated at the time of issuance and the Company records a derivative liability for the calculated value. Changes in the fair value of the derivative liabilities are recorded in other income (expense) in the consolidated statements of operations. The following are the assumptions used for derivative instruments valued using the Black Scholes option pricing model as of August 31, 2020: Market value of stock on measurement date $ 0.288 Risk-fee interest rate 0.16 to 0.18 % Dividend yield 0 % Volatility factor 143.24 % Term 0.33 yr. and 1.25 yr. Recent Accounting Pronouncements The Company has evaluated recent accounting pronouncements through the date the financial statements were issued and filed with the Securities and Exchange Commission and believe that there are none that will have a material impact on the Company’s financial statements. |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Aug. 31, 2020 | |
GOING CONCERN | |
NOTE 3. GOING CONCERN | The accompanying interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board, or the FASB, Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. As of August 31, 2020, the Company had $82,658 in cash and a working capital deficit of $47,165,954. The Company also has generated losses and has an accumulated deficit as of August 31, 2020. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company completed additional long-term financing with the non-US institutional investor, receiving proceeds of $3,400,780 on November 30, 2018, $2,804,187 on April 13, 2019 and $3,795,033 (less $936,168 withheld for interest payments up to and including June 30, 2020) on November 6, 2019 through the issuance of secured convertible promissory notes. On March 5, 2020, the 2018 Convertible Note was amended to increase the amount of the 3rd tranche by $936,168 representing the amount previously withheld as interest payment. The payment was received on March 12, 2020. However, unless management is able to obtain additional financing, the Company may not be able to meet its funding requirements during the next 12 months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
WARRANTS AND OPTIONS
WARRANTS AND OPTIONS | 9 Months Ended |
Aug. 31, 2020 | |
WARRANTS AND OPTIONS | |
NOTE 4. WARRANTS AND OPTIONS | The following table represents stock option activity for the period ended August 31, 2020: Number of Options Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding - November 30, 2019 3,215,000 $ 0.40 2.42 Exercisable - November 30, 2019 3,215,000 $ 0.40 2.42 $ -0- Granted -0- Exercised or Vested -0- Forfeited or Expired 750,000 Outstanding - August 31, 2020 2,465,000 $ 0.40 2.27 Exercisable - August 31, 2020 2,465,000 $ 0.40 2.27 $ -0- As of August 31, 2020, the Company has no outstanding warrants. All the outstanding warrants have expired. |
CONVERTIBLE DEBT
CONVERTIBLE DEBT | 9 Months Ended |
Aug. 31, 2020 | |
CONVERTIBLE DEBT | |
NOTE 5. CONVERTIBLE DEBT | On January 29, 2015, the Company entered into a securities purchase agreement with a non-US institutional investor whereby it agreed to sell an aggregate principal amount of $2,300,000 of senior secured convertible debentures, convertible into shares of the company’s common stock. The Company received $1,800,000 of the funds from the transaction on February 5, 2015. The balance of $500,000 was received on May 14, 2015. These convertible notes were subsequently acquired by Fengate Trident, LP (“Fengate”) on April 28, 2017. The convertible debentures are convertible into shares of the Company’s common stock at an initial conversion price of $0.71 per share, for an aggregate of up to 3,239,437 shares. The debentures originally accrued interest at 6% per annum. On September 26, 2016 the Company entered into an amendment agreement related to these convertible debentures whereby the applicable interest rate was increased from 6% to 8% and provisions added to allow the investor to transfer, sell or hypothecate the convertible notes subject to applicable securities laws. The maturity date of the notes was also extended through September 30, 2019. We considered ASC Topic 470-50, Debt Modifications and Extinguishments, and determined that the modification was not deemed substantial. On September 26, 2016, the Company entered into a securities purchase agreement with a non-US institutional investor, pursuant to which, in consideration for proceeds of $4,100,000, the Company issued a secured convertible promissory note in the amount of $4,100,000. Pursuant to the securities purchase agreement, the investor had agreed, from time to time after January 1, 2017, to make additional investments at the Company’s request of up to $5,900,000 ($10,000,000 in the aggregate) in one or more tranches of not less than one tranche during any 60 day period. On May 9, 2017, the Company received the second tranche of funding with proceeds of $4,400,000 and on May 16, 2018 the third tranche of $1,500,000 for a total investment by the investor of $10,000,000. The Company used the proceeds of the secured convertible note for general working capital purposes including settlement of accounts payable and repayment of mature loans. In consideration of each advance made by the investor pursuant to the securities purchase agreement, the Company issued to the investor a convertible promissory note of equal value, maturing on September 30, 2019, and bearing interest at the rate of 8% per annum. Each note is secured in first priority against the present and after acquired assets of the Company and is convertible in whole or in part at the option of the holder into common shares of the Company at a conversion price of $0.60 per share, for an aggregate of up to 16,666,667 shares. These convertible notes were subsequently acquired by Fengate on April 28, 2017. Due to the notes being convertible to common shares of the Company, a beneficial conversion feature analysis was performed. The intrinsic value of the conversion feature of the notes amounted to $3,333,334 and was recognized as a debt discount. As of August 31, 2020, $3,333,334 of the debt discount was amortized to interest of which $334,988 was amortized during the current nine month period compared to $689,409 for the nine month period in the prior year. As of August 31, 2020, the debt discount was fully amortized. On November 30, 2018 the Company and Fengate entered into a Securities Purchase Amendment Agreement pursuant to which the Company agreed to issue to Fengate an additional convertible promissory note (the “2018 Convertible Note”) of up to $10,000,000, subject to certain terms and conditions. Each portion of the principal amount advanced pursuant to the 2018 Convertible Note will bear interest at the rate of twelve percent (12%) per annum and will be payable monthly in arrears to Fengate. Outstanding principal and interest will continue to be secured by the general security agreement dated September 26, 2016, which forms a part of the Agreement. The holder of the note may also elect from time to time to convert all or a portion of the outstanding principal and interest into common shares of the Company at a 25% discount to the average closing price of the common shares during the 10 trading days immediately prior to the applicable conversion date. On November 30, 2018 the Company received the first tranche of funding with proceeds of $3,400,780. The 2nd tranche of $2,804,187 was received on April 13, 2019. The 3rd tranche of $3,795,033 less $936,168 withheld for interest payments up to and including June 30, 2020 was received on November 6, 2019. The withheld interest was recorded as debt discount. On March 5, 2020, the 2018 Convertible Note was amended to increase the amount of the 3rd tranche by $936,168 representing the amount previously withheld as interest payment. The withheld interest was subsequently received on March 12, 2020. As of August 31, 2020, $936,168 of the debt discount was reversed and the full amount was recorded as accrued interest. On January 9, 2020 the 2018 Convertible Notes were extended and will mature on December 1, 2021. The Company analyzed the embedded conversion option on the convertible notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option on the 2018 Convertible Note qualified for derivative accounting. The Company used the Black-Scholes model to value the embedded conversion option at $892,000 on the issuance date of November 30, 2018, $1,911,256 on the issuance date of April 13, 2019 and $1,696,933 on the issuance date of November 6, 2019. The assumptions used were a discount rate of 2.80%, 1.96% and 1.96%; volatility rate of 79.57%, 104.70% and 107.3%; and a term of 1.50, 1.13 and 0.57 years respectively. The Company used the Black-Scholes model to re-value the embedded conversion options at $15,302,213 as of August 31, 2020. The change of $9,476,733 during the nine month period ended August 31, 2020 was recorded as derivative loss expense. The assumptions used were a discount rate of 0.16%, volatility of 143.24% and a term of 1.25 year. The fair value of the embedded conversion options were recorded as debt discount and will be amortized over the term of the 2018 Convertible Notes. The amortization recognized in the current nine month period was $1,279,018 compared to $1,092,318 for the nine month period in the prior year. The unamortized discount as of August 31, 2020 was $1,363,876. On January 9, 2020 the Company and Fengate entered into an Amendment to Convertible Promissory Notes Agreement to amend the terms of certain convertible promissory notes issued pursuant to a Securities Purchase Agreement by and between the Company and the Purchaser dated September 26, 2016 and previously amended on November 30, 2018 and March 11, 2019. The Amendment affects the convertible notes issued February 5, 2015 (US$1,800,000), May 14, 2015 (US$500,000), September 26, 2016 (US$4,100,000), May 9, 2017 (US$4,400,000) and May 16, 2018 (US$1,500,000), respectively (collectively the “2016 Notes”). Pursuant to the Amendment, Fengate has agreed to convert all of the 2016 Notes on or before the earlier to occur of (i) the maturity date of the 2016 Convertible Notes and (ii) the Company raising new equity investment of not less than US$2,000,000, on terms mutually acceptable to Fengate and the Company (subject to Fengate’s regulatory considerations). Conversion of the 2016 Notes will occur in a single conversion transaction at a price that is equal to a 25% discount to the average closing price of the Company’s common stock for the 10 trading days immediately prior to the conversion date, with the exact structure of the conversion to be determined by the parties. On June 3, 2020 the maturity date of the 2016 Notes was extended from May 31 to December 31, 2020 effective May 31, 2020. The Amendment of January 9, 2020 also amends the outstanding 2018 Convertible Note issued to Fengate on November 30, 2018 (US$3,400,780), April 13, 2019 (US$2,804,187) and November 6, 2019 (US$3,795,033). Maturity of the 2018 Convertible Note has been deferred to December 1, 2021. The Company analyzed the embedded conversion option on the amended “2016 Notes” for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option qualified for derivative accounting. On January 9, 2020 the Company used the Black-Scholes model to value the embedded conversion options at $7,965,083. The assumptions used were a discount rate of 1.96%, volatility rate of 148.8%; and a term of 0.39 years respectively. The modification resulted in $3,981,220 of APIC previously recorded for beneficial conversion feature of these convertible notes being reclassified as derivative liability, and $3,983,863 was recorded as derivative loss expense. The Company used the Black-Scholes model to re-value the embedded conversion options at $15,119,145 as of August 31, 2020. The change of $7,154,062 during the nine month period ended August 31, 2020 was recorded as derivative loss expense. The assumptions used were a discount rate of 0.18%, volatility of 143.24% and a term of 0.33 year. |
PAYCHECK PROTECTION PROGRAM (PP
PAYCHECK PROTECTION PROGRAM (PPP) LOAN | 9 Months Ended |
Aug. 31, 2020 | |
PAYCHECK PROTECTION PROGRAM (PPP) LOAN | |
NOTE 6. PAYCHECK PROTECTION PROGRAM (PPP) LOAN | On May 28, 2020, the company obtained a Paycheck Protection Program (PPP) loan in the amount of $135,165. These business loans were established by the 2020 US Federal government Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act and used for payroll costs, rent, mortgage interest, and utility costs during the 24 week period after the date of loan disbursement is eligible to be forgiven provided that (a) we use the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. While the full loan amount may be forgiven, the amount of loan forgiveness will be reduced if, among other reasons, we do not maintain staffing or payroll levels or less than 60% of the loan proceeds are used for payroll costs. Principal and interest payments on any unforgiven portion of the PPP Funds will be deferred to the date the SBA remits the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Aug. 31, 2020 | |
CONTINGENCIES | |
NOTE 7. CONTINGENCIES | NOTE 7. CONTINGENCIES On January 11, 2019, the Company filed a lawsuit against Everlast World’s Boxing Headquarters Corp. (“Everlast”) in the New York Supreme Court in New York County, New York. This action involved the Company seeking a declaration that it was entitled to terminate a License Agreement between the parties pursuant to which Trident had the right to market certain Everlast-branded products. Everlast subsequently removed that case to the U.S. District Court for the Southern District of New York. On January 17, 2019, Everlast filed a counter civil lawsuit against the Company and other defendants in the U.S. District Court for the Southern District of New York. In that lawsuit, Everlast seeks payment from the defendants under a License Agreement dated June 4, 2013, for $425,555 in unpaid royalties allegedly due and owing under the License Agreement and interest on the allegedly unpaid royalties of $96,265, which interest allegedly continues to accrue. Everlast has also sought all costs, expenses, and legal fees incurred by Everlast in collecting monies that it claims are due under the License Agreement. On February 26, 2020, the court in the Everlast matter issued an Opinion and Order granting a motion to dismiss all of Trident’s claims against Everlast and granting a motion for judgment on the pleadings as to liability against Trident. The Court left open the question of damages to be awarded to Everlast. The Company and Everlast have participated in settlement discussions before a magistrate judge, but no settlement has been reached. Everlast has filed a motion for summary judgment for damages in the amount of $741,998, including damages, costs, and attorneys’ fees. (See Note 8). |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Aug. 31, 2020 | |
SUBSEQUENT EVENTS | |
NOTE 8. SUBSEQUENT EVENTS | NOTE 8. SUBSEQUENT EVENTS On October 15, 2020, the Court in the Everlast case ordered, adjudged and decreed that Plaintiff Everlast World’s Boxing Headquarters Corporation have judgment and recover the following sums 1. $425,000 representing royalty payments due to Plaintiff; 2. Interest on royalty payments computed to October 15, 2020, in the sum of $242,920; 3. Costs in the sum of $800; and 4. Attorneys’ fees in the sum of $70,226; making in total the sum of $738,946 payable by the Company to Everlast. The Clerk of Court was directed to close the case. The Company has 30 days from the date of judgement to appeal the case. Management will review the judgement and explore all its options. The Company has accrued $425,000 liability as of August 31, 2020. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Aug. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2019 as reported in the Form 10-K have been omitted. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. The ultimate impact from COVID-19 on the Company’s operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company’s financial performance in 2020. |
Customer Concentration | The Company had four major customers that accounted for approximately 59.3% of sales for the nine month period ended August 31, 2020 and 63.7% of the accounts receivable compared to four major customers that accounted for 79.2% of sales and 54.0% of the accounts receivable for the 12 month period ended November 30, 2019. |
Fair Value of Financial Instruments | The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable and note payable. The fair value of the Company’s long-term debt is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value. As of August 31, 2020 the Company did not have any financial assets or liabilities measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, except for a derivative liability, related to the embedded conversion option on the “2016” and “2018” convertible notes, with a fair value as of August 31, 2020 of $30,421,358. The derivative liability was fair valued using Level 3 inputs. The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs: Balance at November 30, 2019 $ 5,825,480 APIC reclassified to derivative liability 3,981,220 Unrealized derivative loss included in other expense 20,614,658 Balance at August 31, 2020 $ 30,421,358 During the nine months ended August 31, 2020, the embedded conversion option on the 2016 convertible notes qualified for derivative accounting. The beneficial conversion feature that was recorded to additional paid in capital (APIC) when the convertible notes were first issued amounting to $3,981,220 were reclassified to derivative liability when the conversion price on the notes were amended to a variable conversion rate (see Note 5). The fair value of the derivative liabilities are calculated at the time of issuance and the Company records a derivative liability for the calculated value. Changes in the fair value of the derivative liabilities are recorded in other income (expense) in the consolidated statements of operations. The following are the assumptions used for derivative instruments valued using the Black Scholes option pricing model as of August 31, 2020: Market value of stock on measurement date $ 0.288 Risk-fee interest rate 0.16 to 0.18 % Dividend yield 0 % Volatility factor 143.24 % Term 0.33 yr. and 1.25 yr. |
Recent Accounting Pronouncements | The Company has evaluated recent accounting pronouncements through the date the financial statements were issued and filed with the Securities and Exchange Commission and believe that there are none that will have a material impact on the Company’s financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Aug. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of change in fair value of financial instruments | Balance at November 30, 2019 $ 5,825,480 APIC reclassified to derivative liability 3,981,220 Unrealized derivative loss included in other expense 20,614,658 Balance at August 31, 2020 $ 30,421,358 |
Schedule of derivative instruments valued using the Black Scholes option pricing model | Market value of stock on measurement date $ 0.288 Risk-fee interest rate 0.16 to 0.18 % Dividend yield 0 % Volatility factor 143.24 % Term 0.33 yr. and 1.25 yr. |
WARRANTS AND OPTIONS (Tables)
WARRANTS AND OPTIONS (Tables) | 9 Months Ended |
Aug. 31, 2020 | |
WARRANTS AND OPTIONS | |
Schedule of stock option activity | Number of Options Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding - November 30, 2019 3,215,000 $ 0.40 2.42 Exercisable - November 30, 2019 3,215,000 $ 0.40 2.42 $ -0- Granted -0- Exercised or Vested -0- Forfeited or Expired 750,000 Outstanding - August 31, 2020 2,465,000 $ 0.40 2.27 Exercisable - August 31, 2020 2,465,000 $ 0.40 2.27 $ -0- |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 9 Months Ended |
Aug. 31, 2020USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Balance at November 30, 2019 | $ 5,825,480 |
APIC reclassified to derivative liability | 3,981,220 |
Unrealized derivative loss included in other expense | 20,614,658 |
Balance at August 31, 2020 | $ 30,421,358 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 9 Months Ended |
Aug. 31, 2020$ / shares | |
Market value of stock on measurement date | $ 0.288 |
Divident yield | 0.00% |
Volatility factor | 143.24% |
Minimum [Member] | |
Risk-fee interest rate | 0.16% |
Term | 3 months 29 days |
Maximum [Member] | |
Risk-fee interest rate | 0.18% |
Term | 1 year 2 months 30 days |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended | 12 Months Ended |
Aug. 31, 2020USD ($)integer | Nov. 30, 2019USD ($) | |
APIC reclassified to derivative liability | $ | $ 3,981,220 | |
Derivative Liability | $ | $ 30,421,358 | $ 5,825,480 |
Accounts Receivable [Member] | ||
Number of customers | 4 | |
Concentration risk percentage | 63.70% | 54.00% |
Sales [Member] | ||
Number of customers | 4 | |
Concentration risk percentage | 79.20% | |
Sales [Member] | Major Customers [Member] | ||
Number of customers | 4 | |
Concentration risk percentage | 59.30% |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 9 Months Ended | ||||
Aug. 31, 2020 | Aug. 31, 2019 | Mar. 05, 2020 | Nov. 30, 2019 | Nov. 30, 2018 | |
Working capital deficit | $ (47,165,954) | ||||
Cash and Cash Equivalents | 82,658 | $ 352,982 | $ 1,013,674 | $ 3,133,303 | |
Increased tranche amount | $ 936,168 | ||||
Proceeds from convertible debt | 936,168 | $ 2,804,187 | |||
Second Tranche [Member] | April 13, 2019 [Member, | |||||
Proceeds from promissory note | 2,804,187 | ||||
First Tranche [Member] | November 30, 2018 [Member] | |||||
Proceeds from promissory note | 3,400,780 | ||||
Third Tranche [Member] | November 06, 2019 [Member] | Convertible Debt [Member] | |||||
Proceeds from promissory note | 3,795,033 | ||||
Third Tranche [Member] | November 6, 2019 [Member] | |||||
Proceeds from convertible debt | 3,795,033 | ||||
Interest payment | $ 936,168 |
WARRANTS AND OPTIONS (Details)
WARRANTS AND OPTIONS (Details) - Stock Options [Member] | 9 Months Ended |
Aug. 31, 2020USD ($)$ / sharesshares | |
Intrinsic Value | |
Outstanding, Beginning Balance | 3,215,000 |
Exercisable, Beginning Balance | 3,215,000 |
Granted | 0 |
Exercised or Vested | 0 |
Forfeited or Expired | 750,000 |
Outstanding, Ending Balance | 2,465,000 |
Exercisable, Ending Balance | 2,465,000 |
Outstanding, Beginning Balance | $ / shares | $ 0.40 |
Exercisable, Beginning Balance | $ / shares | 0.40 |
Outstanding, Ending Balance | $ / shares | 0.40 |
Exercisable, Ending Balance | $ / shares | $ 0.40 |
Outstanding Contractual Life in Years, Beginning Balance | 2 years 5 months 1 day |
Exercisable Contractual Life in Years, Beginning Balance | 2 years 5 months 1 day |
Outstanding Contractual Life in Years, Ending Balance | 2 years 3 months 7 days |
Exercisable Contractual Life in Years, Ending Balance | 2 years 3 months 7 days |
Exercisable Intrinsic Value, Beginning Balance | $ | $ 0 |
Exercisable Intrinsic Value, Ending Balance | $ | $ 0 |
CONVERTIBLE DEBT (Details Narra
CONVERTIBLE DEBT (Details Narrative) - USD ($) | May 09, 2017 | May 14, 2015 | Feb. 05, 2015 | Jun. 03, 2020 | Jan. 09, 2020 | Sep. 30, 2019 | May 16, 2018 | Sep. 26, 2016 | Jan. 29, 2015 | May 31, 2020 | May 31, 2019 | Aug. 31, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Mar. 05, 2020 | Nov. 30, 2018 |
Increased tranche amount | $ 936,168 | |||||||||||||||
Proceeds from convertible debt | $ 936,168 | $ 2,804,187 | ||||||||||||||
Extended maturity date | Dec. 1, 2021 | Nov. 30, 2019 | ||||||||||||||
APIC reclassified to derivative liability | 3,981,220 | |||||||||||||||
Derivative loss expense | $ 8,028,629 | $ 663,020 | 20,614,658 | 1,254,122 | ||||||||||||
Amortization of debt discount | 1,614,006 | 1,781,727 | ||||||||||||||
Derivative loss expense | $ 20,614,658 | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Term | 1 year 2 months 30 days | |||||||||||||||
Minimum [Member] | ||||||||||||||||
Term | 3 months 29 days | |||||||||||||||
Convertible notes [Member] | Maximum [Member] | ||||||||||||||||
Term | 3 years | |||||||||||||||
Convertible notes [Member] | Minimum [Member] | ||||||||||||||||
Term | 2 years 6 months | |||||||||||||||
Black-Scholes Model One [Member] | ||||||||||||||||
Derivative loss expense | $ 1,942,899 | |||||||||||||||
Term | 2 months 30 days | |||||||||||||||
Discount rate | 0.18% | |||||||||||||||
Black-Scholes Model [Member] | ||||||||||||||||
Derivative loss expense | $ 3,983,863 | |||||||||||||||
Term | 4 months 21 days | |||||||||||||||
Discount rate | 1.96% | |||||||||||||||
Volatility rate | 148.80% | |||||||||||||||
Embedded conversion feature | $ 7,965,083 | 9,907,982 | ||||||||||||||
Convertible Debt [Member] | Maximum [Member] | ||||||||||||||||
Percentage of interest rate | 8.00% | |||||||||||||||
Convertible Debt [Member] | Minimum [Member] | ||||||||||||||||
Percentage of interest rate | 6.00% | |||||||||||||||
Convertible Debt [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Proceeds from convertible debt | $ 500,000 | $ 1,800,000 | $ 4,100,000 | |||||||||||||
Extended maturity date | Nov. 30, 2019 | |||||||||||||||
Amortization of debt discount | 3,333,334 | |||||||||||||||
Principal amount of debt | $ 10,000,000 | $ 2,300,000 | ||||||||||||||
Common stock conversion, shares | 16,666,667 | 3,239,437 | ||||||||||||||
Percentage of interest rate | 8.00% | 6.00% | ||||||||||||||
Interest amortized | $ 334,988 | 713,018 | ||||||||||||||
Proceeds from promissory note | $ 4,100,000 | |||||||||||||||
Additional funding amount | 5,900,000 | |||||||||||||||
Aggregate amount of promissory note | $ 10,000,000 | |||||||||||||||
Conversion price (in dollars per share) | $ 0.60 | $ 0.71 | ||||||||||||||
2016 Notes [Member] | ||||||||||||||||
Extended maturity date | Dec. 31, 2020 | |||||||||||||||
Terms of amendment, description | Fengate has agreed to convert all of the 2016 Notes on or before the earlier to occur of (i) the maturity date of the 2016 Convertible Notes and (ii) the Company raising new equity investment of not less than US$2,000,000, on terms mutually acceptable to Fengate and the Company (subject to Fengate’s regulatory considerations). Conversion of the 2016 Notes will occur in a single conversion transaction at a price that is equal to a 25% discount to the average closing price of the Company’s common stock for the 10 trading days immediately prior to the conversion date, with the exact structure of the conversion to be determined by the parties. On June 3 the maturity date was extended from May 31 to December 31, 2020 effective May 31, 2020. | |||||||||||||||
Amended SPA Notes [Member] | ||||||||||||||||
Extended maturity date | Dec. 1, 2021 | |||||||||||||||
2018 Convertible Note [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Principal amount of debt | $ 10,000,000 | |||||||||||||||
Percentage of interest rate | 12.00% | |||||||||||||||
Convertible note description | Company at a 25% discount to the average closing price of the common shares during the 10 trading days immediately prior to the applicable conversion date | |||||||||||||||
2018 Convertible Note [Member] | Conversion Option [Member] | Maximum [Member] | ||||||||||||||||
Volatility | 107.30% | |||||||||||||||
Discount rate | 2.80% | |||||||||||||||
Promissory note maturity period | 1 year 6 months | |||||||||||||||
2018 Convertible Note [Member] | Conversion Option [Member] | Minimum [Member] | ||||||||||||||||
Volatility | 79.57% | |||||||||||||||
Discount rate | 1.96% | |||||||||||||||
Promissory note maturity period | 1 year 1 month 17 days | |||||||||||||||
2018 Convertible Note [Member] | Conversion Option [Member] | Re-value [Member] | ||||||||||||||||
Derivative loss expense | $ 3,674,580 | |||||||||||||||
Term | 3 months 29 days | |||||||||||||||
Embedded conversion | $ 15,119,145 | |||||||||||||||
Derivative loss expense | $ 7,154,062 | |||||||||||||||
Conversion option, description | The assumptions used were a discount rate of 2.80%, 1.96% and 1.96%; volatility rate of 79.57%, 104.70% and 107.3%; and a term of 1.50, 1.13 and 0.57 years respectively. The Company used the Black-Scholes model to re-value the embedded conversion options at $15,302,213 as of August 31, 2020. The change of $9,476,733 during the nine month period ended August 31, 2020 was recorded as derivative loss expense. The assumptions used were a discount rate of 0.16%, volatility of 143.24% and a term of 1.25 year | |||||||||||||||
Volatility | 143.24% | |||||||||||||||
Discount rate | 0.16% | |||||||||||||||
Unamortized debt discount | $ 1,638,442 | |||||||||||||||
Amortization of debt | 1,004,452 | $ 1,092,318 | ||||||||||||||
November 6, 2019 [Member] | Amended SPA Notes [Member] | ||||||||||||||||
Convertible promissory notes | $ 3,795,033 | |||||||||||||||
November 06, 2019 [Member] | Convertible Note [Member] | Conversion Option [Member] | ||||||||||||||||
Volatility | 104.70% | |||||||||||||||
Discount rate | 1.96% | |||||||||||||||
Black scholes model conversion option | $ 1,696,933 | |||||||||||||||
Promissory note maturity period | 6 months 26 days | |||||||||||||||
April 13, 2019 [Member] | Amended SPA Notes [Member] | ||||||||||||||||
Convertible promissory notes | $ 2,804,187 | |||||||||||||||
November 30, 2018 [Member] | Amended SPA Notes [Member] | ||||||||||||||||
Convertible promissory notes | 3,400,780 | |||||||||||||||
May 16, 2018 [Member] | 2016 Notes [Member] | ||||||||||||||||
Convertible promissory notes | $ 1,500,000 | |||||||||||||||
May 9, 2017 [Member] | 2016 Notes [Member] | ||||||||||||||||
Convertible promissory notes | 4,400,000 | |||||||||||||||
September 26, 2016 [Member] | 2016 Notes [Member] | ||||||||||||||||
Convertible promissory notes | 4,100,000 | |||||||||||||||
May 14, 2015 [Member] | 2016 Notes [Member] | ||||||||||||||||
Convertible promissory notes | 500,000 | |||||||||||||||
February 5, 2015 [Member] | 2016 Notes [Member] | ||||||||||||||||
Convertible promissory notes | $ 1,800,000 | |||||||||||||||
November 30, 2018 [Member] | 2018 Convertible Note [Member] | Conversion Option [Member] | ||||||||||||||||
Black scholes model conversion option | 892,000 | |||||||||||||||
Unamortized discount | 1,363,876 | |||||||||||||||
Amortization | 1,279,018 | $ 1,092,318 | ||||||||||||||
November 30, 2018 [Member] | 2018 Convertible Note [Member] | Conversion Option [Member] | Re-value [Member] | ||||||||||||||||
Black scholes model conversion option | 9,476,733 | |||||||||||||||
April 13, 2019 [Member, | 2018 Convertible Note [Member] | Conversion Option [Member] | ||||||||||||||||
Black scholes model conversion option | 1,911,256 | |||||||||||||||
Third Tranche [Member] | Convertible Debt [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Proceeds from convertible debt | $ 1,500,000 | |||||||||||||||
Third Tranche [Member] | November 6, 2019 [Member] | ||||||||||||||||
Proceeds from convertible debt | 3,795,033 | |||||||||||||||
Interest payment | $ 936,168 | |||||||||||||||
Third Tranche [Member] | November 06, 2019 [Member] | Convertible Debt [Member] | ||||||||||||||||
Extended maturity date | Dec. 1, 2021 | |||||||||||||||
Proceeds from promissory note | $ 3,795,033 | |||||||||||||||
Accrued interest | 0 | |||||||||||||||
Second Tranche [Member] | Convertible Debt [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Proceeds from convertible debt | $ 4,400,000 | |||||||||||||||
Second Tranche [Member] | April 13, 2019 [Member, | ||||||||||||||||
Proceeds from promissory note | 2,804,187 | |||||||||||||||
First Tranche [Member] | November 30, 2018 [Member] | ||||||||||||||||
Proceeds from promissory note | $ 3,400,780 |
PAYCHECK PROTECTION PROGRAM (_2
PAYCHECK PROTECTION PROGRAM (PPP) LOAN (Details Narrative) - Paycheck Protection Program [Member] - USD ($) | 1 Months Ended | 9 Months Ended |
May 28, 2020 | Aug. 31, 2020 | |
Interest rate | 1.00% | |
Debt instrument maturity term | 2 years | |
Loan Payable | $ 135,165 | |
Description of forgivable loans | Providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act and used for payroll costs, rent, mortgage interest, and utility costs during the 24 week period after the date of loan disbursement is eligible to be forgiven provided that (a) we use the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. While the full loan amount may be forgiven, the amount of loan forgiveness will be reduced if, among other reasons, we do not maintain staffing or payroll levels or less than 60% of the loan proceeds are used for payroll costs. Principal and interest payments on any unforgiven portion of the PPP Funds will be deferred to the date the SBA remits the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. |
CONTINGENCIES (Details Narrativ
CONTINGENCIES (Details Narrative) - Licensing Agreements [Member] | 9 Months Ended |
Aug. 31, 2020USD ($) | |
Unpaid royalty, amount | $ 425,555 |
Interest on unpaid royalties | $ 96,265 |
Description of settlement | The Company and Everlast have participated in settlement discussions before a magistrate judge, but no settlement has been reached. Everlast has filed a motion for summary judgment for damages in the amount of $741,998, including damages, costs, and attorneys’ fees. |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Oct. 15, 2020 | Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | Nov. 30, 2019 |
Interest on royalty payment | $ 833,040 | $ 983,745 | $ 3,280,847 | $ 2,965,106 | ||
Accrued liability | $ 6,157,319 | $ 6,157,319 | $ 3,605,175 | |||
Subsequent Events [Member] | ||||||
Royalty payment due | $ 425,000 | |||||
Interest on royalty payment | 242,920 | |||||
Other costs | 800 | |||||
Attorneys' fees | 70,226 | |||||
Net payable to plaintiff | 738,946 | |||||
Accrued liability | $ 425,000 |