Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Jul. 31, 2017 |
Sep. 19, 2017 |
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| Entity Registrant Name | DEFENSE TECHNOLOGIES INTERNATIONAL CORP. | |
| Document Type | 10-Q | |
| Document Period End Date | Jul. 31, 2017 | |
| Trading Symbol | cgcc | |
| Amendment Flag | false | |
| Entity Central Index Key | 0001533357 | |
| Current Fiscal Year End Date | --04-30 | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Current Reporting Status | Yes | |
| Entity Voluntary Filers | No | |
| Entity Well-known Seasoned Issuer | No | |
| Document Fiscal Year Focus | 2018 | |
| Document Fiscal Period Focus | Q1 | |
| Entity Incorporation, State Country Name | Delaware | |
| Entity Incorporation, Date of Incorporation | May 27, 1998 | |
| Common Class A | ||
| Entity Common Stock, Shares Outstanding | 199,365,345 | |
| Series A Preferred Stock | ||
| Entity Common Stock, Shares Outstanding | 3,225,369 | |
| Series B Preferred Stock | ||
| Entity Common Stock, Shares Outstanding | 500,000 |
CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares |
Jul. 31, 2017 |
Apr. 30, 2017 |
|---|---|---|
| Preferred stock par value | $ 0.0001 | |
| Preferred shares authorized | 20,000,000 | |
| Common stock par value | $ 0.0001 | $ 0.0001 |
| Common stock shares authorized | 200,000,000 | 200,000,000 |
| Common stock shares issued | 199,365,345 | 188,324,721 |
| Common stock shares outstanding | 199,365,345 | 188,324,721 |
| Series A Preferred Stock | ||
| Preferred stock par value | $ 0.0001 | $ 0.0001 |
| Preferred shares authorized | 20,000,000 | 20,000,000 |
| Preferred shares issued | 3,225,369 | 1,473,545 |
| Preferred shares outstanding | 3,225,369 | 1,473,545 |
| Series B Preferred Stock | ||
| Preferred stock par value | $ 0.0001 | $ 0.0001 |
| Preferred shares authorized | 20,000,000 | 20,000,000 |
| Preferred shares issued | 500,000 | 500,000 |
| Preferred shares outstanding | 500,000 | 500,000 |
1. Nature of Operations and Continuation of Business |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 1. Nature of Operations and Continuation of Business |
NOTE - 1: BASIS OF PRESENTATION AND ORGANIZATION
Defense Technologies International Corp. (the "Company ") was incorporated in the State of Delaware on May 27, 1998. Effective June 15, 2016, the Company changed its name to Defense Technologies International Corp. from Canyon Gold Corp. to more fully represent the Company's expansion goals into the advanced technology sector.
Effective July 15, 2016, the Company executed documents intended to finalize the acquisition of 100% of Defense Technology Corporation, a privately held Colorado company ("DTC"), a developer of defense, detection and protection products to improve security for Anchor schools and other public facilities. DTC has informed us that it is unable to complete the required audited financial statements. Accordingly, the Company will not be able to consolidate DTC's financial statements into its audited financial statements. After a thorough review of the situation and discussions with DTC, we have mutually agreed to rescind the acquisition of DTC and entered into a Rescission Agreement and Mutual Release (the “Rescission Agreement”), effective October 17, 2016.
In connection with the Rescission Agreement with the Company, DTC rescinded its agreement with the inventor and developer of the technology and assets that were subject to the original agreement between the Company and DTC. On October 19, 2016, the Company entered into a new Definitive Agreement with Controlled Capture Systems, LLC (“CCS”), representing the inventor of the technology and assets previously acquired by DTC, that included a new exclusive Patent License Agreement and Independent Contractor agreement. Under the license agreement with CCS, the Company acquired the world-wide exclusive rights and privileges to the CCS security technology, patents, products and improvements. The Company agreed to pay CCS an initial licensing fee of $25,000 and to pay ongoing royalties as defined in the Definitive Agreement.
Effective January 12, 2017, Passive Security Scan, Inc. ("PSSI") was incorporated in the state of Utah as subsidiary controlled by the Company. The Company transferred to PSSI its exclusive world-wide license to the defense, detection and protection security products previously acquired by the Company. The Company currently owns 79.8% of PSSI with 20.2% acquired by several individuals and entities. The Company plans to continue the development of the technology and conduct all sales and marketing activities in PSSI.
Basis of Presentation
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The Company’s fiscal year end is April 30.
The interim condensed consolidated financial statements have been prepared without audit in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended April 30, 2017 included in its Annual Report on Form 10-K filed with the SEC.
The interim condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial position as of July 31, 2017, the consolidated results of its operations and its consolidated cash flows for the three months ended July 31, 2017 and 2016. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full fiscal year.
Consolidation and Non-Controlling Interest
These consolidated financial statements include the accounts of the Company, and its majority-owned subsidiary, PSSI, from its formation on January 15, 2017 to date. All inter-company transactions and balances have been eliminated.
The non-controlling interest in PSSI, representing 7,941,436 common shares, or 20.2%, was acquired by several individuals and entities, including related parties, in exchange for services and accrued expenses totaling $15,935.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Exploration Costs
All sampling, metallurgical, engineering, contractor costs, and efforts to obtain mineral rights have been charged to expense as incurred.
Over Commitment of Shares
The number of shares issuable under convertible debt with variable exercise prices is undeterminable. Currently, the Company does not have a sufficient number of authorized common shares to allow for conversion of all outstanding convertible debt and convertible preferred stock or exercise of stock options and warrants, and will need to restructure its equity.
Impairment of Long-Lived Assets
We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Net Income (Loss) per Common Share
Basic net income or loss per common share is calculated by dividing the Company’s net income or loss by the weighted average number of common shares outstanding during the period. Diluted net income or loss per common share is calculated by dividing the Company’s net income or loss by sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents then outstanding. Potential dilutive common share equivalents consist of shares issuable upon exercise of outstanding stock options and warrants, using the treasury stock method and the average market price per share during the period, and conversion of convertible debt, using the if converted method. As of July 31, 2017, the Company had 87,264,841 potential shares issuable under outstanding options, warrants and convertible debt. With a loss in operations for the three month period ended July 31, 2017, the additional shares were determined to be antidilutive.
Reclassifications
Certain amounts in the 2016 consolidated financial statements have been reclassified to conform with the current year presentation.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)". The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement.
In March 2016, the FASB issued ASU No. 2016-09, "Stock Compensation (Topic 718)", which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement. |
2. Going Concern |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 2. Going Concern | NOTE – 2: GOING CONCERN
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern. Through July 31, 2017, the Company has no revenues, has accumulated deficit of $6,669,420 and a working capital deficit of $2,006,572 and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Company’s ability to continue as a going concern. Management plans to continue to provide for the Company's capital needs during the year ending April 30, 2017 by issuing debt and equity securities and by the continued support of its related parties. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. There is no assurance that funding will be available to continue the Company’s business operations. |
3. Investments |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 3. Investments | NOTE – 3: INVESTMENTS
Effective January 12, 2017, Passive Security Scan, Inc. ("PSSI") was incorporated in the state of Utah as subsidiary controlled by the Company. The Company transferred to PSSI its exclusive world-wide license to the defense, detection and protection security products previously acquired by the Company for 15,000,000 shares of PSSI valued at $378,600 for 79.8% of PSSI. The balance of PSSI was acquired by several individuals and entities. The Company plans to continue the development of the technology and conduct all sales and marketing activities in PSSI. |
4. Related Party Transactions |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 4. Related Party Transactions | NOTE - 4: RELATED PARTY TRANSACTIONS
Management and administrative services are currently compensated as per a Service Agreement between the Company and its Chief Executive Officer and Director executed on April 25, 2016, a Service Agreement between the Company and a Director executed on May 20, 2016, and an Administration Agreement with a related party executed on March 15, 2011 and renewed on May 1, 2015, whereby the fee is based on services provided and invoiced by the related parties on a monthly basis and the fees are paid in cash when possible or with common stock. The Company also, from time to time, has some of its expenses paid by related parties with the intent to repay. These types of transactions, when incurred, result in payables to related parties in the Company’s consolidated financial statements as a necessary part of funding the Company’s operations.
As of July 31, 2017 and April 30, 2017, the Company had payable balances due to related parties totaling $401,261 and $440,182, 334753respectively, which resulted from transactions with these related parties and other significant shareholders.
During the three month period ended July 31, 2017 the Company issued 1,750,824 series A preferred shares to related parties with a value of $175,182 for the retirement of convertible debt of $57,050, notes payable of $34,426, interest of $23,487 and payables of $37,719, accounts payable of $7,500 and prepaid of $15,000.
During the three month period ended July 31, 2017 the Company issued 152,000 shares of series A preferred to a related party for $15,200 in accounts payable.
On May 1, 2016 the Company issued 350,000 of its common shares, valued at $105,000, to its Chief Executive Officer pursuant to his Service Agreement. |
5. Convertible Debt |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 5. Convertible Debt | NOTE – 5: CONVERTIBLE DEBT
On April 30, 2016, the convertible notes payable with principal balances of $11,000, $9,000, $141,150, $14,500 and $20,000 were amended to establish a conversion price of $0.05 per share, interest at 6% retroactive to the original issuance date of the notes, and a conversion date of 90 days from demand of the lender. The amendments were determined to be extinguishments of the prior debt and the issuance of new debt in accordance with ASC 470-50, Debt – Modifications and Extinguishments, resulting in a loss on extinguishment of debt totaling $33,237. In addition, the Company recorded a debt discount and a beneficial conversion feature totaling $195,650 at the inception of the new debt.
On March 10, 2016, the Company entered into a convertible promissory note for $17,000, which bears interest at an annual rate of 6% and is convertible into shares of the Company’s common stock at $0.05 per share. The Company recorded a debt discount and a beneficial conversion feature of $17,000 at the inception of the note.
On February 4, 2016, the Company entered into a convertible promissory note with an institutional investor for $41,000, which matures on February 4, 2017. The Company may repay the note at any time on or before the date that is 120 days after the date of the note. If the Company does not repay the note during the first 120 days, a one-time interest charge of 12% will be charged. After the first 120 days, the note may be prepaid by the Company with the prior written consent of the investor at 125% of the principal owed. The investor has the right, after the first 180 days of the note, to convert the note and accrued interest in whole or in part into shares of the common stock of the Company at a price per share equal to 60% (representing a discount rate of 40%) of the lowest bid price of the Company's common stock during the 60 consecutive trading days immediately preceding the date of the conversion notice. At the inception of the convertible note to institutional investor, the Company paid debt issuance costs of $2,500, and recorded a debt discount of $41,000, including an original issue discount of $3,500, a derivative liability of $78,034 related to the conversion feature, and a loss on derivative liability of $40,534. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note.
On July 31, 2016, the Company entered into a convertible promissory note for $53,650, which has no defined maturity date. The note bears interest at an annual rate of 6% and is payable only on conversion into shares of the Company’s common stock at $0.10 per share.
On June 8, 2016, the Company entered into a convertible promissory note with an institutional investor for $25,000, which bears interest at an annual rate of 10% and matures on December 9, 2016. The note holder has the right, after a period of 180 days of the note, to convert the note and accrued interest into shares of the common stock of the Company at a discounted price per share equal to 50% to 65% of the market price of the Company’s common stock, depending upon the stock’s liquidity as determined by the note holder’s broker. At the inception of the convertible note, the Company paid debt issuance costs of $2,500, recorded a debt discount of $22,500, and recorded a derivative liability of $51,553 related to the conversion feature, and a loss on derivative liability of $29,053. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note.
On July 18, 2016, the Company entered into a Senior Secured Convertible Promissory Note with an institutional investor for $189,000, with net proceeds to the Company of $175,000. The note bears interest at an annual rate of 8%, matures on January 17, 2017 and is convertible into common shares of the Company after six months at a fixed conversion price of $0.25 per share. In the event of default, the conversion price changes to a variable price based on a defined discount to the market price of the Company’s common stock. The net proceeds were used to retire two outstanding convertible promissory notes and to provide working capital.
On May 25, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $56,500, with net proceeds to the Company of $52,000. The note bears interest at an annual rate of 2%, matures on May 25, 2018 and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 55% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty trading days prior to the conversion date. At the inception of the convertible note, the Company paid debt issuance costs of $4,500, recorded a debt discount of $47,500, and recorded a derivative liability of $98,459 related to the conversion feature, and a loss on note issuance of $50,959. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note.
On July 17, 2017, the Company entered into a Convertible Promissory Note amendment with an institutional investor for $ $25,000. The note bears interest at an annual rate of 15%, as part of the note that is in default. The note is convertible into common shares of the Company at a variable conversion price equal to 60% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty one trading days prior to the conversion date. At the inception of the convertible note, the recorded a debt discount of $22,920, and recorded a derivative liability of $22,920 related to the conversion feature.
On July 24, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $15,000. The note bears interest at an annual rate of 2%, matures on May 25, 2018 and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 55% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty trading days prior to the conversion date. At the inception of the convertible note, the Company recorded a debt discount of $15,000, and recorded a derivative liability of $26,717 related to the conversion feature, and a loss on note issuance of $11,717. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note.
On July 24, 2017, the Company entered into a Funding Agreement with RAB Investments AG, a current lender and stockholder located in Zug, Switzerland, which is intended to provide necessary funding towards the initial production of our Offender Alert Passive Scan. The Funding Agreement calls for RAB to fund a minimum of $50,000 to a maximum of $150,000 on a “best efforts basis,” with a first tranche of $25,000 to be completed during August 2017. In exchange for the funds, DTIC will issue convertible notes that may be converted into common stock of the Company at a discount of 25%, based on the 10-day average trading value of Company shares at the time of the initial conversion. The notes may be converted at any time, in whole or partially, but all conversions must be at the same rate as the initial conversion. No funding has been provided as of the date of this filing and there is no assurance that funds will be provided by the anticipated initial first tranche during August 2017, or thereafter.
Pursuant to a Securities Purchase Agreement dated July 18, 2016 (the "July 2016 SPA", the Company entered into a Senior Secured Convertible Promissory Note (the "July 2016 Note") with Firstfire Global Opportunities Fund, LLC ("Firstfire) for $189,000. The July 2016 Note was in default with respect to the maturity date, and the Company was in default on certain terms of the July 2016 SPA, including calculation of exercise prices on Firstfire debt conversions and limitations on the Company entering into subsequent "Variable Rate Transactions." On August 9, 2017, the Company and Firstfire entered into a Waiver and Settlement Agreement whereby the Company will issue an additional 13,000,000 shares of its common stock to Firstfire to cure the deficiency of shares previously issued in the debt conversions. Further, Firstfire agreed to waive any default with respect to the subsequent variable rate transactions.
During the three months ended July 31, 2017, the Company issued a total of 8,815,624 shares of its common stock in the conversion of $8,090 in convertible notes principal and $5,800 in accrued interest payable and fees.
As of July 31, 2017 and April 30, 2017, the convertible debt outstanding, net of discount, was $650,136 and $594,772, respectively. |
6. Fair Value Measurements and Derivative Liabilities |
3 Months Ended | ||||||||||||||||||||||
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Jul. 31, 2017 | |||||||||||||||||||||||
| Notes | |||||||||||||||||||||||
| 6. Fair Value Measurements and Derivative Liabilities | NOTE – 6: FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES
As defined in (Financial Accounting Standards Board ASC 820), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are 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.
As of July 31, 2017, the Company believes the amounts reported for cash, payables, accrued liabilities and amounts due to related parties approximate their fair values due to the nature or duration of these instruments.
The following table represents the change in the fair value of the derivative liabilities during the year ended July 31, 2017:
The estimated fair value of the derivative liabilities at July 31, 2017 was calculated using the Black-Scholes pricing model with the following assumptions:
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7. Equity |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 7. Equity | NOTE – 7: EQUITY
Common Stock
During the three months ended July 31, 2016, the Company issued a total of 3,246,380 shares of its common stock: 1,400,000 shares for services valued at $303,800; 16,500 shares in payment of accrued fees payable of $10,325, recognizing a gain on extinguishment of debt of $4,550; and a total of 1,829,880 shares in the conversion of debt principal of $72,605 and accrued interest payable of $11,644.
Effective July 5, 2017, EMAC returned 11,775,000 common shares of the Company that were previously issued in payment for certain mineral lease properties in Nevada.
In June 2017, the Company entered into a ninety-day Business Consulting Agreement with Mark Taggatz (“Taggatz”) for the development and commercialization of the Company’s progressive scan technology. The Company is to pay Taggatz fees totaling $37,500, payable in common stock of the Company. The Company issued 14,000,000 shares of its common stock in July 2017 in for payment of $28,000 of this obligation.
During the three month period ended July 31, 2017, the Company issued 8,815,624 shares of its common stock in the conversion of debt and interest of $13,890.
Preferred Stock
The Company has 20,000,000 shares of $0.0001 par value preferred stock authorized and has designated Series A and Series B preferred stock. Each share of the Series A preferred stock is convertible into ten common shares and carries voting rights on the basis of 100 votes per share. Each share of the Series B preferred stock is convertible into ten common shares and carries no voting rights.
Effective June 12, 2017, the Company issued 1,309,380 shares of Series A preferred stock to EMAC for consideration totaling $130,938: convertible note payable of $25,000; three notes payable totaling $34,426; accrued interest payable of $18,718; payables – related parties of $22,794 and prepayment of services of $30,000 for the months of May 2017 through October 2017. The accrued interest payable included interest on the $25,000 convertible note payable compounded at 6% per annum retroactive to January 1, 2012, as negotiated between the parties.
Effective June 12, 2017, the Company issued 442,444 shares of Series A preferred stock to a related party lender in payment of Company indebtedness totaling $44,244: convertible note payable of $32,050; accrued interest payable of $4,694 and repayment of accounts payable of $7,500.
Effective June 12, 2017, the Company issued 152,000 shares of Series A preferred stock to a related party in repayment of accrued services of $15,200.
As of July 31, 2017 the Company had 3,377,365 Series A and 500,000 Series B preferred share issued and outstanding. Due to lack of authorized common shares available, the Series A and Series B preferred stock has been classified as mezzanine equity in our consolidated balance sheets. Once the common shares are increased to meet the shares required, the preferred shares will become permanent equity. |
8. Stock Options and Warrants |
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Jul. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8. Stock Options and Warrants | NOTE – 8: STOCK OPTIONS AND WARRANTS
During the year ended April 30, 2016, the Company issued options to a consultant to purchase a total of 1,000,000 shares of the Company’s common stock and warrants to a lender to purchase 68,333 shares of the Company’s common stock.
During the three months ended July 31, 2016, the Company issued warrants to a lender to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.60 per share. The warrants vested upon grant and expire on July 17, 2018. The Company estimated the grant date fair value of the warrants at $14,365 using the Black-Scholes option-pricing model and charged the amount to debt discount.
The following assumptions were used in estimating the value of the warrants:
A summary of the Company’s stock options and warrants as of July 31, 2017, and changes during the three months then ended is as follows:
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price of $0.0038 as of July 31, 2017, which would have been received by the holders of in-the-money options had the option holders exercised their options as of that date. |
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9. Contingencies and Commitments |
3 Months Ended | ||||||||||||||||
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Jul. 31, 2017 | |||||||||||||||||
| Notes | |||||||||||||||||
| 9. Contingencies and Commitments | NOTE – 9: COMMITMENTS AND CONTINGENCIES
The Company has the following material commitments as of July 31, 2017:
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10. Subsequent Events |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Notes | |
| 10. Subsequent Events | NOTE - 10: SUBSEQUENT EVENTS
The Company has evaluated subsequent events to determine events occurring after July 31, 2017 through September 19, 2017 that would have a material impact on the Company’s financial results or require disclosure except as follows:
On August 10, 2017, a shareholder return to the Company 4,750,000 share of common stock to be cancelled. Subsequent to the returning of the share 4,750,000 shares were issued to Mark Taggatz for service.
On August 31, 2017 the Company issued a $5,000 convertible note to RAB Investments. The note bears interest at 6% per annum and is convertible by the investor into common shares of the Company at $0.01 per share after March 31, 2018.
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1. Nature of Operations and Continuation of Business: Consolidation and Non-Controlling Interest (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Policies | |
| Consolidation and Non-Controlling Interest | Consolidation and Non-Controlling Interest
These consolidated financial statements include the accounts of the Company, and its majority-owned subsidiary, PSSI, from its formation on January 15, 2017 to date. All inter-company transactions and balances have been eliminated.
The non-controlling interest in PSSI, representing 7,941,436 common shares, or 20.2%, was acquired by several individuals and entities, including related parties, in exchange for services and accrued expenses totaling $15,935. |
1. Nature of Operations and Continuation of Business: Use of Estimates (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Policies | |
| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
1. Nature of Operations and Continuation of Business: Impairment of Long-lived Assets (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Policies | |
| Impairment of Long-lived Assets | Impairment of Long-Lived Assets
We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. |
1. Nature of Operations and Continuation of Business: Net Income (Loss) Per Common Share (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Policies | |
| Net Income (Loss) Per Common Share | Net Income (Loss) per Common Share
Basic net income or loss per common share is calculated by dividing the Company’s net income or loss by the weighted average number of common shares outstanding during the period. Diluted net income or loss per common share is calculated by dividing the Company’s net income or loss by sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents then outstanding. Potential dilutive common share equivalents consist of shares issuable upon exercise of outstanding stock options and warrants, using the treasury stock method and the average market price per share during the period, and conversion of convertible debt, using the if converted method. As of July 31, 2017, the Company had 87,264,841 potential shares issuable under outstanding options, warrants and convertible debt. With a loss in operations for the three month period ended July 31, 2017, the additional shares were determined to be antidilutive. |
1. Nature of Operations and Continuation of Business: Reclassifications (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Policies | |
| Reclassifications | Reclassifications
Certain amounts in the 2016 consolidated financial statements have been reclassified to conform with the current year presentation. |
1. Nature of Operations and Continuation of Business: Recent Accounting Pronouncements (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Policies | |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)". The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement.
In March 2016, the FASB issued ASU No. 2016-09, "Stock Compensation (Topic 718)", which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement. |
6. Fair Value Measurements and Derivative Liabilities: Schedule of Derivative Liability Related to the Conversion Feature (Tables) |
3 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2017 | |||||||||||||||
| Tables/Schedules | |||||||||||||||
| Schedule of Derivative Liability Related to the Conversion Feature |
|
6. Fair Value Measurements and Derivative Liabilities: Schedule of Assumptions Used (Tables) |
3 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2017 | |||||||||
| Tables/Schedules | |||||||||
| Schedule of Assumptions Used |
|
8. Stock Options and Warrants: Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions (Tables) |
3 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2017 | |||||||||
| Tables/Schedules | |||||||||
| Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions |
|
8. Stock Options and Warrants: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Share-based Compensation Arrangements by Share-based Payment Award |
|
||||||||||||||||||||||||||||||||||||||||||||||||
1. Nature of Operations and Continuation of Business (Details) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Details | |
| Entity Incorporation, State Country Name | Delaware |
| Entity Incorporation, Date of Incorporation | May 27, 1998 |
1. Nature of Operations and Continuation of Business: Net Income (Loss) Per Common Share (Details) |
3 Months Ended |
|---|---|
|
Jul. 31, 2017
shares
| |
| Details | |
| Potential shares issuable under outstanding options, warrants and convertible debt | 87,264,841 |
2. Going Concern (Details) - USD ($) |
3 Months Ended | 109 Months Ended | |
|---|---|---|---|
Jul. 31, 2017 |
Jul. 31, 2016 |
Jul. 31, 2017 |
|
| Details | |||
| Net loss attributed to the Company | $ 83,019 | $ (799,206) | $ 6,669,420 |
| Working capital deficit | $ 2,006,572 | $ 2,006,572 | |
3. Investments (Details) - USD ($) |
Jul. 31, 2017 |
Apr. 30, 2017 |
|---|---|---|
| Details | ||
| Investments | $ 378,600 | $ 378,600 |
4. Related Party Transactions (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jul. 31, 2017 |
Jul. 31, 2016 |
Apr. 30, 2017 |
|
| Details | |||
| Payables - related parties | $ 401,261 | $ 334,753 | |
| Common stock issued for services - shares | 1,400,000 | 350,000 | |
| Common shares issued for services | $ 28,000 | $ 303,800 | $ 105,000 |
6. Fair Value Measurements and Derivative Liabilities: Schedule of Derivative Liability Related to the Conversion Feature (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2017 |
Apr. 30, 2017 |
|
| Derivative liabilities | $ 630,757 | $ 823,452 |
| Derivative Liability | ||
| Derivative liabilities | 630,757 | $ 823,452 |
| Debt discount related to new debt | 98,459 | |
| Day one measurement of new debt | 49,637 | |
| Change in fair value of the derivative | (219,011) | |
| Conversion of debt to shares of common stock and repayment of debt | $ (121,778) |
6. Fair Value Measurements and Derivative Liabilities: Schedule of Assumptions Used (Details) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Fair Value Assumptions, Expected Dividend Rate | 0.00% |
| Maximum | |
| Fair Value Assumptions, Risk Free Interest Rate | 0.10% |
| Fair Value Assumptions, Expected Term | 8 months 16 days |
| Fair Value Assumptions, Expected Volatility Rate | 493.00% |
| Minimum | |
| Fair Value Assumptions, Expected Term | 4 days |
| Fair Value Assumptions, Expected Volatility Rate | 475.00% |
7. Equity (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jul. 31, 2017 |
Jul. 31, 2016 |
Apr. 30, 2017 |
|
| Common stock issued for services - shares | 1,400,000 | 350,000 | |
| Common shares issued for services | $ 28,000 | $ 303,800 | $ 105,000 |
| Stock Issued During Period In Payment of Payables | 16,500 | ||
| Stock Issued During Period In Payment of Payables - value | $ 10,325 | ||
| Stock Issued During Period In Conversion of Debt Principal | 1,829,880 | ||
| Stock Issued During Period In Conversion of Debt Principal - value | $ 72,605 | ||
| Stock Issued During Period for Accrued Interest Payable - value | $ 11,644 | ||
| Preferred shares authorized | 20,000,000 | ||
| Preferred stock par value | $ 0.0001 | ||
| Series A Preferred Stock | |||
| Preferred shares issued | 3,377,365 | ||
| Preferred shares outstanding | 3,377,365 | ||
| Series B Preferred Stock | |||
| Preferred shares issued | 500,000 | ||
| Preferred shares outstanding | 500,000 | ||
8. Stock Options and Warrants (Details) |
3 Months Ended |
|---|---|
|
Jul. 31, 2017
USD ($)
shares
| |
| Details | |
| Warrants Issued to A Consultant To Purchase Shares | 1,000,000 |
| Warrants Issued to A Lender To Purchase Shares | 250,000 |
| Estimated Fair Value of Warrants, charged to Debt Discount | $ | $ 14,365 |
8. Stock Options and Warrants: Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions (Details) |
3 Months Ended |
|---|---|
Jul. 31, 2017 | |
| Details | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.68% |
| Share Based Compensation Arrangement By Share Based Payment Award, Fair Value Assumptions, Expected Life in Years | 2.0 |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% |
8. Stock Options and Warrants: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details) |
Jul. 31, 2017
$ / shares
shares
|
Apr. 30, 2017
$ / shares
shares
|
|---|---|---|
| Details | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | shares | 1,300,000 | 1,300.000 |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ / shares | $ 1.385 | $ 1.385 |
| Share Based Compensation Arrangement By Share Based Payment Award, Weighted Average Remaining Contract Term (Years) | 0.82 | 1.07 |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | shares | 1,300,000 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares | $ 1.385 |
9. Contingencies and Commitments (Details) |
3 Months Ended | 27 Months Ended |
|---|---|---|
|
Jul. 31, 2017
USD ($)
|
Jul. 31, 2017
USD ($)
|
|
| EMAC Handels AG | ||
| Monthly fee for administration services | $ 5,000 | |
| Monthly fee for Office Rent | 250 | |
| Monthly fee for Office Supplies | 125 | |
| DelbertGBlewettMember | ||
| Monthly Director's fee per Service Agreement | $ 7,500 | $ 7,500 |
| Charles C. Hooper | ||
| Monthly fee for administration services | 5,000 | |
| PssiMember | ||
| Monthly fee for Office Rent | 250 | |
| Monthly fee for general fees | 5,000 | |
| Monthly fee for telephone | 125 | |
| Merrill W. Moses | ||
| Monthly fee for administration services | $ 2,500 |
000010 - Document - Document and Entity Information
000020 - Statement - CONDENSED CONSOLIDATED BALANCE SHEETS
000030 - Statement - CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL
000040 - Statement - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
000050 - Statement - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
000060 - Disclosure - 1. Nature of Operations and Continuation of Business
000070 - Disclosure - 2. Going Concern
000080 - Disclosure - 3. Investments
000090 - Disclosure - 4. Related Party Transactions
000100 - Disclosure - 5. Convertible Debt
000110 - Disclosure - 6. Fair Value Measurements and Derivative Liabilities
000120 - Disclosure - 7. Equity
000130 - Disclosure - 8. Stock Options and Warrants
000140 - Disclosure - 9. Contingencies and Commitments
000150 - Disclosure - 10. Subsequent Events
000260 - Disclosure - 1. Nature of Operations and Continuation of Business (Details)
000280 - Disclosure - 2. Going Concern (Details)
000290 - Disclosure - 3. Investments (Details)
000300 - Disclosure - 4. Related Party Transactions (Details)
000310 - Disclosure - 5. Convertible Debt (Details)
000340 - Disclosure - 7. Equity (Details)
000350 - Disclosure - 8. Stock Options and Warrants (Details)
000380 - Disclosure - 9. Contingencies and Commitments (Details)