Attached files

file filename
EX-32 - RULE 13A-14(B) CERTIFICATION - PERVASIP CORPexhibit_32.htm
EX-31 - RULE 13A-14(A) CERTIFICATION - PERVASIP CORPexhibit_31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

ý QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: August 31, 2016

 

OR

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 000-04465

 

PERVASIP CORP.
(Exact name of registrant as specified in its charter)

 

New York   13-2511270
(State or other jurisdiction of incorporation or organization)  

(I.R.S. Employer

Identification No.)

 

430 North Street

White Plains, New York 10605

(Address of principal executive offices)

 

(914) 750-9339
(Registrant’s telephone number, including area code)

 

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer   Accelerated filer   Non-accelerated filer   Smaller reporting company  ý

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

 

As of December 15, 2016, the Company has 3,778,005,709 shares of its common stock, par value $0.00001 per share, issued and outstanding.

 

 

 


 
 

 

TABLE OF CONTENTS

 

  Page
PART I—FINANCIAL INFORMATION
   
Item 1. Financial Statements 3
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
   
Item 3. Quantitative and Qualitative disclosures about Market Risk 22
   
Item 4. Controls and Procedures 23
   
PART II—OTHER INFORMATION
   
Item 1. Legal Proceedings 24
   
Item1A. Risk Factors 24
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
   
Item 3. Defaults Upon Senior Securities 24
   
Item 4. Mine Safety Disclosures 24
   
Item 5. Other Information 24
   
Item 6. Exhibits 24
   
Signatures 25

 

 

 

2


 
 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

Pervasip Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

 

   (Unaudited)   
ASSETS   August 31, 2016  November 30, 2015
       
Current assets:      
 Cash and cash equivalents  $1,426   $8,978 
 Accounts receivable, net of allowance of $98,739 in 2015   —      7,183 
 Inventory   25,000    127,650 
 Restricted securities   40,000    220,000 
 Prepaid expenses and other current assets   1,814    365,726 
Total current assets   68,240    425,726 
           
Equipment and leasehold improvements, net   —      18,817 
Restricted cash   22,528    60,000 
Total assets  $90,768   $444,543 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current liabilities:          
Current portion of long-term debt, net of discounts of $459,300 and $491,027 at August 31, 2016 and November 30, 2015, respectively  $2,921,932   $2,932,018 
Accounts payable and other accrued liabilities   1,903,814    1,622,649 
Accounts payable and other accrued liabilities – related party   654,847    431,313 
    Due to Pension Benefit Guaranty Corporation   2,184,727    2,104,410 
    Deposits payable   147,889    147,890 
    Sales tax payable   5,929    28,665 
    Related party debt   1,575,014    1,178,311 
    Derivative liabilities   527,685    692,212 
Total current liabilities   9,921,836    9,137,468 
           
Long-term debt less current portion   448,649    409,614 
Total liabilities   10,370,485    9,547,082 
           
Redeemable preferred stock Series I, $0.00001 par value; 55,000 shares authorized; 27,500 and 0 shares issued and outstanding, redemption amount of $275,000   119,636    710 
Redeemable preferred stock Series D,  $0.00001 par value; 51 shares authorized; 51 shares issued and outstanding, redemption amount of $51   —      —   
           
           
Stockholders’ deficit:          
Preferred stock, $0.00001 par value; 144,949 shares authorized   —      —   
Convertible preferred stock, $0.00001 par value; 20,800,010 authorized          
Series E: 10 shares issued and outstanding, respectively   —      —   
Series F: 10,000,000 shares issued and outstanding, respectively   100    100 
Series G: 10,000,000 shares issued and outstanding, respectively   100    100 
Series H: 100,000 and 600,000 shares issued and outstanding, respectively   1    6 
Series I: 7,500 and 0 shares issued and outstanding          
Series J: 51 and 0 shares issued and outstanding          
Common stock, $0.00001 par value; 8,978,999,990 shares authorized, 3,778,005,709 and 3,652,005,709 shares issued and outstanding in 2016 and 2015, respectively   37,780    36,520 
Capital in excess of par value   42,155,379    42,448,241 
Accumulated deficit   (52,577,053)   (51,379,820)
Total Pervasip Corp. stockholder’s deficit   (10,383,693)   (8,894,853)
Noncontrolling interest in subsidiaries   (15,660)   (208,396)
                            Total stockholders’ deficit   (10,399,353)   (9,103,848)
Total liabilities and stockholders’ deficit  $90,768   $444,543 

 

 See accompanying notes to the unaudited condensed consolidated financial statements.

 

3


 
 

 

  

Pervasip Corp. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

    For the Nine Months Ended   For the Three Months Ended
   August 31, 2016  August 31, 2015  August 31, 2016  August 31, 2015
      (Restated)      (Restated)
Revenues  $279,380   $296,905   $—     $295,084 
                     
Costs and expenses:                    
Cost of goods sold   191,209    184,209    —      184,209 
Cost of services    —      12,225     —      —    
Selling, general and administrative   671,683    402,640    191,416    234,674 
Total costs and expenses   862,892    599,074    191,416    418,883 
                     
Loss from operations   (583,512)   (302,169)   (191,416)   (123,799)
                     
Other income (expense):                    
 Interest expense   (489,999)   (908,402)   (164,274)   (319,085)
 Amortization of debt discounts   (602,951)   (5,305)   (233,373)   —   
 Gain on troubled debt restructuring   —      2,065,614    —      —   
 Impairment of investments   (180,000)   —      —      —   
 Gain on settlement of derivative liabilities   —      1,488,450    —      265,002 
 Loss on abandonment of asset   (81,466)   —      —      —   
 Other income (expense)   —      222    —      222 
 Gain (loss) on change in derivative liabilities   735,750    (2,324,101)   132,174    693,360 
Total other income (expense)   (618,667)   316,478    (265,473)   639,499 
Net income (loss)   (1,202,179)   14,309    (456,889)   515,700 
Loss from noncontrolling interest   123,871    58,663    2,606    62,628 
Net income (loss) atributable to Pervasip Corp.   (1,078,308)   72,972    (454,283)   578,328 
Accretion of preferred stock dividends - beneficial conversion feature   118,926    100,000    91,566    12,030 
Net income (loss) attributable to common stockholders  $(1,197,233)  $(32,972)  $(545,849)  $566,298 
                     
Basic earnings (loss) per share  $(0.00)  $(0.00)  $0.00   $0.00 
Diluted earnings (loss) per share  $(0.00)  $(0.00)  $0.00   $0.00 
                     
Weighted average number of common shares outstanding:                    
Basic   3 731 897 013    2,897,604,470    3,778,005,709    3,795,760,513 
Diluted   3,731,897,013    10,977,588,597    3,778,005,709    3,795,760,513 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

4


 

 
 

 

Pervasip Corp. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

 

 

   For the Nine Months Ended  For the Three Months Ended
   August 31, 2016  August 31, 2015  August 31, 2016  August 31, 2015
       (Restated)      (Restated)
Net income (loss)  $(1,202,179)  $14,309   $(456,889)  $515,700 
Other Comprehensive income (loss):                    
 Unrealized loss on marketable securities   —      (976,000)   —      (52,000)
Comprehensive income (loss)  $(1,202,179)  $(961,691)  $(456,889)  $463,700 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5


 

 
 

 Pervasip Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   For the Nine Months Ended
   August 31, 2016  August 31, 2015
Operating activities:      (Restated)
Net income (loss)  $(1,202,179)  $14,309 
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
 Stock-based compensation   —      4,000 
 Change in value of marketable securities   180,000    —   
 Amortization of debt discount   602,949    496,063 
 Amortization of financing costs and intangible assets   —      23,433 
 Depreciation   —      8,184 
 Loss on abandonment of asset   81,466    —   
 Gain on troubled debt restructuring   —      (2,065,614)
 Gain on sale of subsidiary   —      —   
 Gain on settlement of derivative liabilities   —      (1,488,450)
 Change in fair value of derivative liabilities   (735,750)   (2,324,101)
Changes in operating assets and liabilities:          
 Accounts receivable   7,183    (52,794)
 Inventory   40,001    94,935 
 Prepaid expenses and other current assets   101    3,337 
 Other assets   —      (6,138)
 Accounts payable and accrued liabilities   283,428    169,673 
 Accounts payable and accrued liabilities – related party   316,420    217,208 
 Due to Pension Benefit Guaranty Corporation   80,317    76,409 
Net cash used in operating activities   (346,064)   (181,344)
           
Cash flows from investing activities:          
     Cash acquired in acquisitions of businesses   —      16,016 
      Decrease in cash placed under restriction   7,500    —   
      Purchase of fixed assets   —      (810)
Net cash provided by investing activities   7,500    15,206 
           
Cash flows from financing activities:          
  Proceeds from borrowings   39,035    244,750 
  Principal payments of debt   (11,840)   (74,797)
  Proceeds from related party debt   303,817    —   
Net cash provided by financing activities   331,012    169,953 
           
Increase (decrease) in cash and cash equivalents   (7,552)   3,815 
Cash and cash equivalents at beginning of period   8,978    1,832 
Cash and cash equivalents at the end of period  $1,426   $5,647 
Supplemental disclosure of cash flow information:          
Cash paid during the period for:          
Income taxes  $—     $—   
Interest  $29,160   $18,158 
Non-cash investing and financing transactions:          
Fair value of derivative liabilities to discount on debt  $571,223   $193,780 
Payable conversion into common stock   25,000    —   
Settlement of accrued interest with issuance of preferred stock  $—     $100,000 
Acquisition of net liabilities of business-merger recapitalization  $—     $187,870 
Settlement of payables with issuance of warrants  $—     $20,000 
Conversion of accrued liabilities to notes payable  $—     $150,731 
Excess of purchase price over value of assets  $ —     $598,809 

 

See accompanying notes to the unaudited consolidated financial statements.

 

6


 
 

 

 

PERVASIP CORP.

Notes To Condensed Consolidated Financial Statements

Unaudited

 

Note 1– Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission for quarterly reports on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed balance sheet at November 30, 2015 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for the nine and three-month periods ended August 31, 2016, are not necessarily indicative of the results that may be expected for the year ended November 30, 2015. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended November 30, 2015.

 

For a summary of significant accounting policies (which have not changed from November 30, 2015), see the Company’s Annual Report on Form 10-K for the year ended November 30, 2015.

 

Marketable securities

 

The Company classifies investments in equity securities bought and held primarily to be sold in the short term that have readily determinable fair values, as trading securities. Unrealized holding gains and losses for trading securities are included in earnings. Any unrealized holding gains and losses from available-for-sale securities are excluded from earnings and are recorded in comprehensive income until a gain or loss has been realized.

 

Segment Information

 

In 2016, the Company operated in one segment, providing gardening products and analytical services to home and commercial gardeners.

 

 

Note 2 – Going Concern Matters and Realization of Assets

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. However, the Company has sustained substantial losses from its operations in recent years and as of August 31, 2016, the Company has negative working capital of $9,853,596 and a stockholders’ deficit of $10,399,353. In addition, the Company is unable to meet its obligations as they become due and sustain its operations.

 

The Company may not be able to raise sufficient additional debt, equity or other cash on acceptable terms, if at all. Failure to generate sufficient revenues, achieve certain other business plan objectives or raise additional funds could have a material adverse effect on the Company’s results of operations, cash flows and financial position, including its ability to continue as a going concern, and may require it to significantly reduce, reorganize, discontinue or shut down its operations.

 

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, and to succeed in its future operations.  The 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 its existence.  Management’s plans include efforts to preserve current revenue sources, develop new revenue sources and negotiate further debt reductions with creditors.

    

There can be no assurance that the Company will be able to achieve its business plan objectives or be able to achieve or maintain cash-flow-positive operating results. If the Company is unable to generate adequate funds from operations or raise sufficient additional funds, the Company may not be able to repay its existing debt, continue to operate its network, respond to competitive pressures or fund its operations. As a result, the Company may be required to significantly reduce, reorganize, discontinue or shut down its operations. The financial statements do not include any adjustments that might result from this uncertainty.

 

7


 

 
 

 

 

Note 3 – Recent Accounting Pronouncements and Accounting Principles

 

In May 2014, FASB issued ASU 2014-09, "Revenue from Contracts with Customers". This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The revised effective date for this ASU is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. We will adopt this ASU when effective. Companies may use either a full retrospective or modified retrospective approach to adopt this ASU and our management is currently evaluating which transition approach to use. We are currently evaluating the possible impact of ASU 2014-09, but we do not anticipate that it will have a material impact on the Company's consolidated results of operations, financial position or cash flows.

 

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under this amendment, management is now required to determine every interim and annual period whether conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. If management indicates that it is probable the entity will not be able to meet its obligations as they become due within the assessment period, then management must evaluate whether it is probable that plans to mitigate those factors will alleviate that substantial doubt. The guidance is effective for fiscal years, beginning after December 15, 2016. Early adoption is permitted. We do not expect the adoption of ASU 2014-15 to have a significant impact on the Company's consolidated results of operations, financial position or cash flows.

 

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.”  ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability.  ASU 2015-03 is effective for interim and annual reporting periods beginning after December 15, 2015.  The new guidance will be applied on a retrospective basis and early adoption is permitted.  The Company chose early adoption of the new guidance, which resulted in an additional debt discount at November 30, 2015 of $258,065, due to financing fees. For the nine and three month periods ended August 31, 2015, amortization of deferred finance costs have been reclassified to amortization of debt discount, due to the retrospective application of the guidance.

 

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740) – Balance Sheet Classification of Deferred Taxes.” To simplify the presentation of deferred income taxes, the amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The amendments in this Update apply to all entities that present a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Update.  For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  For all other entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.  Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period.  The amendments in this Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented.  If an entity applies the guidance prospectively, the entity should disclose in the first interim and first annual period of change, the nature of and reason for the change in accounting principle and a statement that prior periods were not retrospectively adjusted.  If an entity applies the guidance retrospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and quantitative information about the effects of the accounting change on prior periods.  We do not expect the adoption of ASU 2015-17 to have a significant impact on our consolidated results of operations, financial position or cash flows.

 

In January 2016, the FASB issued ASU 2016-01 – “Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities.”  ASU 2016-01, among other changes, requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income.  This Update also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment.  The amendments in ASU 2016-01 will become effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  We are currently evaluating the effect of the adoption of ASU 2016-01 will have on our consolidated results of operations, financial position or cash flows.

 

8


 
 

 

In February 2016, the FASB issued ASU 2016-02 – “Leases (Topic 842).” Under ASU 2016-02, entities will be required to recognize lease asset and lease liabilities by lessees for those leases classified as operating leases.  Among other changes in accounting for leases, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease.  Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option.  The amendments in ASU 2016-02 will become effective for fiscal years beginning after December 15, 2018, including interim periods with those fiscal years, for public business entities.  We are currently evaluating the effect of the adoption of ASU 2016-02 will have on our consolidated results of operations, financial position or cash flows.

 

In March 2016, the FASB issued ASC 2016-09 – “Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-based Payment Accounting.”  The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  In addition to these simplifications, the amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment.  The amendments in ASC 2016-09 will become effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.  An entity that elects early adoption must adopt all of the amendments in the same period.  We are currently evaluating the effect of the adoption of ASU 2016-09 will have on our consolidated results of operations, financial position or cash flows.

 

 In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipt and Cash Payments. The new guidance addresses certain classification issues related to the statement of cash flows which will eliminate the diversity of practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for fiscal years beginning after December 2017. Early adoption is permitted. We are currently evaluating the possible impact of ASU 2016-15, but do not anticipate that it will have a material impact on the Company's consolidated results of operations, financial position or cash flows.

 

 In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. The new guidance amends the consolidation guidance on how a reporting entity that is the single decision make of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The guidance is effective for fiscal years beginning after December 2016. Early adoption is permitted. We are currently evaluating the possible impact of ASU 2016-17, but do not anticipate that it will have a material impact on the Company's consolidated results of operations, financial position or cash flows.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned and partially owned subsidiaries after elimination of significant intercompany balances and transactions. The operations of a 90% owned subsidiary, Canalytix LLC, is included beginning on March 25, 2015, and the operations of a 60% owned subsidiary, Grow Big Supply, LLC (“GBS”) is included beginning on July 6, 2015.

 

On January 26, 2016, the Company foreclosed on the non-controlling ownership of GBS, which amounted to 40%. As of that date, GBS became a wholly-owned subsidiary. In February 2016, we were provided significant financial incentives from GBS’s landlord to close the GBS store and we staged the contents of the store so it could be moved to another location. We laid off our staff at the store, except for our Chief Science Officer and Chief Operating Officer, and we moved our inventory to temporary storage while we searched for a location that would allow us to perform scientific work in the cannabis industry. However, before the contents of the store was moved, a theft occurred that was engineered by approximately 10 individuals. The Company submitted an insurance claim for approximately $296,000, based on the coverages that were stated in our commercial theft insurance policy. The insurance company is offering a settlement of $25,000 based upon the conclusion that a former employee engineered the theft. As a result of the acquisition of the non-controlling interest, which occurred without any additional consideration, the Company recorded the entire amount of the non-controlling interest of $316,607 as a reduction to capital in excess of par value.

 

9


 
 

 

Note 4 – Major Customers

 

As of August 31, 2016 there was no accounts receivable. As of November 30, 2015, one customer accounted for 12% of the gross amount of accounts receivable, and such amount was fully reserved. 

 

During the nine-month and three-month periods ended August 31, 2015, one customer accounted for 26% and 11%, respectively, of the Company’s revenues. A second customer accounted for 29% and 2%, respectively, of the Company’s revenues. A third customer accounted for 6% and 17%, respectively, of the Company’s revenues. 

 

At August 31, 2015, two customers accounted for 17% and 15% of the Company’s accounts receivable.

 

Note 5 – Net Income (Loss) Per Common Share

 

Basic net income (loss) per share is computed by dividing net income available to common stockholders (numerator) by the weighted average number of vested, common shares outstanding during the period (denominator). Diluted net income (loss) per share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the if-converted method. Dilutive potential common shares include shares issuable upon exercise of outstanding stock options, warrants and convertible debt agreements.

 

   Nine Months Ended August 31, 2016  Nine Months Ended August 31, 2015 (Restated)  Three Months Ended August 31, 2016  Three Months Ended August 31, 2015 (Restated)
Net income (loss) attributable to common stockholders - basic  $(1,197,233)  $32,972   $(545,849)  $566,298 
Income attributable to convertible notes   —      835,651    —      (958,362)
Interest expense – convertible notes   —      583,509    —      287,398 
Net income (loss) attributable to common stockholders - diluted  $(1,197,233)  $1,452,132   $(545,849)  $(104,666)
                     
Weighted average common shares outstanding - basic   3,731,897,013    2,897,604,470    3,778,005,709    3,795,730,513 
Effect of dilutive securities   —      8,079,984,127    —      —   
Weighted average common shares outstanding – diluted   3,731,897,013    10,977,588,597    3,778,005,709    3,795,730,513 
                     
Earnings (loss) per common share - basic  $0.00   $0.00   $(0.00)  $(0.00)
Earnings (loss) per common share - diluted  $0.00   $0.00   $(0.00)  $(0.00)

 

Approximately 14,849,133,501 shares of common stock issuable upon the exercise of outstanding stock options, warrants or convertible debt were excluded from the calculation of net income (loss) per share for the nine and three-month periods ended August 31, 2016, respectively, because the effect would be anti-dilutive. Approximately 2,792,448,000 and 8,167,107,000 shares of common stock issuable upon the exercise of outstanding stock options, warrants or convertible debt were excluded from the calculation of net income (loss) per share for the nine and three-month periods ended August 31, 2015, respectively, because the effect would be anti-dilutive.

 

Note 6 – Stock-Based Compensation Plans

 

The Company issues stock options to its employees, consultants and outside directors pursuant to stockholder-approved and non-approved stock option programs and records the applicable expense in accordance with the authoritative guidance of the Financial Accounting Standards Board. For the nine-month periods ended August 31, 2016 and 2015, the Company recorded $0 and $4,000, respectively, in stock-based compensation expense. At August 31, 2016, there is no remaining unrecognized employee stock-compensation expense for previously granted unvested options.

 

10


 
 

  

Note 7 – Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses consist of trade payables and accrued liabilities that individually are less than 5% of the Company’s current liabilities.

 

Note 8 – Defined Benefit Plan

 

The Company received a letter dated July 27, 2011 from the Pension Benefit Guaranty Corporation, (“PBGC”), stating that the Company’s defined benefit pension plan (the “Plan”) was terminated as of September 30, 2010, and the PBGC was appointed trustee of the Plan. Pursuant to the agreement, the PBGC has a claim to the Company for the total amount of the unfunded benefit liabilities of the Plan plus accrued interest. The PBGC has notified the Company that the liability is due and payable as of the termination date, and interest accrues on the unpaid balance at the applicable rate provided under Section 6621(a) of the Internal Revenue Code. The total amount outstanding to the PBGC August 31, 2016 and November 30, 2015 was $2,184,727 and $2,104,410, respectively, including accrued interest, which is recorded as a current liability. The Company made no payments to the Plan in the nine-month periods ended August 31, 2016 and 2015.  The Plan covers approximately 40 former employees.

 

Effective June 30, 1995, the Plan was frozen, ceasing all benefit accruals and resulting in a plan curtailment.  As a result of the curtailment, it has been the Company’s policy to recognize the unfunded status of the Plan as of the end of the fiscal year with a corresponding charge or credit to earnings for the change in the unfunded liability.  There was no pension expense recorded in the nine-month periods ended August 31, 2016 and 2015.

 

Effective January 14, 2015, the Company executed a settlement and release agreement with the PBGC pursuant to which PBGC agreed to accept $100,000 in full satisfaction of all amounts that had been due from the Company, which amounted to $2,184,727 at August 31, 2016. The Company agreed to pay the sum of $100,000 to PBGC in equal installments of $25,000 on January 31, 2015, April 30, 2015, July 31, 2015 and October 31, 2015. Upon receipt of the settlement amount, the PBGC shall be deemed to have released the Company from any and all employer liability and fiduciary responsibility. No installment payments have been made and the Company has not received a default notice from PBGC.  

 

Note 9 – Debt

 

   August 31, 2016  November 30, 2015
Senior secured convertible redeemable debenture due to TCA  $570,028   $600,000 
Convertible subordinated debt   2,726,496    2,867,461 
Convertible debt due to various lenders   320,750    320,750 
Other short-term debt due to various lenders   212,607    224,448 
Total debt   3,829,881    3,832,659 
Less: current portion of long-term debt   (2,921,932)   (2,932,018)
Less: discount on debt   (459,300)   (491,027)
Total long-term debt, net of discount  $448,649   $409,614 

 

 

At August 31, 2016, future payments under long-term debt obligations over each of the next five years and thereafter were as follows:

 

 

Twelve months ended August 31:  August 31, 2016
2017  $3,381,232 
2018   —   
2019   —   
2020   448,649 
2021   —   
Minimum future payments of principal   3,829,881 

 

11


 
 

 

 

Convertible subordinated debt

During February 2013, the Company entered into a securities purchase agreement with 112359 Factor Fund, LLC (the “Fund”) pursuant to which the Company issued to the Fund (i) an amended convertible debenture in the principal amount of $1,000,000 (“Amended Note 1”) and (ii) a second amended convertible debenture in the principal balance of $1,000,000 (“Amended Note 2” and together with Amended Note 1, the “Amended Notes”).  The Amended Notes were sold to the Fund by the Company in exchange for the Fund’s assumption and payment to Laurus Master Fund (“Laurus”) of amounts due under an assignment agreement (which required the Fund to make payments totaling $350,000, of which $250,000 was paid, to Laurus), payment to the Company of $150,000, and the agreement to purchase from another lender and cancel an existing convertible debenture in the amount of approximately $35,000.

 

The Amended Notes originally matured on December 31, 2014. Amended Note 1 was modified in January 2015 to mature on December 31, 2015 and the Fund agreed that upon payment in full of the remaining balance of Amended Note 1, that Amended Note 2 would be considered paid in full.  Interest accrues on the unpaid principal and interest on the notes at a rate per annum equal to 6% for Amended Note 1 and 2% for Amended Note 2.

 

Principal and interest payments on Amended Note 1 can be made at any time by the Company, with a 30% prepayment premium, or the Fund can elect at any time to convert any portion of Amended Note 1 into shares of common stock of the Company at 100% of the volume weighted average price of the common stock for the 30 trading days immediately prior to the conversion date.   The Fund did not submit a conversion notice during the six- or three-month periods ended August 31, 2016 and 2015.

 

The conversion price of Amended Note 1 is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. The fair value of the note was recognized as a derivative instrument at the issuance date and was measured at fair value at each reporting period. The Company determined that the fair value of the notes was $1,703,423 at the issuance dates. The value of the debt of $1,000,000 was recorded as a debt discount and is amortized to interest expense over the term of the Notes. The variance to the fair value of $703,423 was recognized as an initial loss and recorded to interest expense.

 

Amended Note 2 converts into shares of common stock of the Company in an amount equal to the lesser of the outstanding balance of Amended Note 2 divided by $0.01. Any principal or interest amount can be paid in cash.

 

During the year ended November 30, 2013, the Fund also loaned the Company amounts of $50,000, $35,000 and $12,000 (the “Bridge Notes”). In June 2013, the Fund refinanced the Bridge Notes with additional funding into another note for $665,000 (the “New Note”). The additional funding under the New Note provided cash to purchase two outstanding convertible debentures for an aggregate price of $99,360; cash for operations of $60,000 in June 2013; and $40,000 in cash each month for the months of July 2013 through December 2013. The Company incurred $68,640 in finder fees and legal fees in connection with the New Note, and a $100,000 original issuance discount. The New Note bears interest at 6% per annum and is due December 31, 2015. The New Note can be converted at any time into shares of common stock of the Company at 60% of the volume weighted average price of the common stock for the 20 trading days immediately prior to the conversion date, as defined. The Company received an aggregate of $300,000 in cash under the New Note in the months of June through December 2013 under the New Note.

 

The conversion price of the $665,000 of variable conversion price note is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. The fair value of the conversion feature was recognized as a derivative instrument at the issuance date and is measured at fair value at each reporting period. The Company determined that the fair value of the conversion feature was $1,103,940 at the issuance date. Debt discount was recorded up to the $665,000 face amount of the note and is amortized to interest expense over the term of the note. The fair value of the conversion feature in excess of the principal amount allocated to the notes in the aggregate amount of $478,940 was expensed immediately as additional interest expense.

 

In conjunction with the New Note, the Company agreed to implement a salary deferral plan to reduce the cash expenditures for personnel, to limit its cash expenditures to certain pre-approved items, and to accrue an additional fee to the Fund of $150,000, which was included in interest expense and added to the principal balance of Amended Note 1.   The Fund agreed to limit its sales of the Company’s common stock, to not engage in any short transactions involving the Company’s common stock, and to not require the Company to increase its authorized shares of common stock for a certain time period, even though the financing documents require the Company to reserve authorized shares for issuance to the Fund, if the Fund desired to convert existing debt into shares of common stock.

 

12


 
 

 

Effective January 20, 2015, the Company signed a debt modification agreement with the Fund. The modification reduced the outstanding balance on Amended Note 1 from $280,190 to $250,000, and provided that upon the completion of the payments required to retire Amended Note 1, the outstanding balance of Amended Note 2 would be reduced from $1,000,000 to $0. The Fund subsequently assigned the remaining balance of Amended Note 1 and the related security agreements to EXO Opportunity Fund LLC (“EXO”). The Company also received $25,000 in cash in February 2015, in conjunction with a variable rate convertible debenture payable to EXO (“the EXO Note), which matured on December 31, 2015, bears interest at an annual rate of 6%, and is subject to the same security agreements as Amended Note 1.

 

The conversion price of the EXO Note is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. The fair value of the notes was recognized as a derivative instrument at the issuance date and is measured at fair value at each reporting period. The Company determined that the fair value of the note was $74,990 at the issuance date. Debt discount was recorded up to the $25,000 face amount of the note and is amortized to interest expense over the term of the note. The fair value of the conversion feature in excess of the principal amount allocated to the notes in the aggregate amount of $49,990 was expensed immediately as additional interest expense.

 

On January 21, 2015, the Company signed a second debt modification agreement with the Fund. This modification provided for the reduction of the principal balance of the New Note from $634,600 to $250,000, subject to certain conditions precedent. The Fund assigned a $250,000 portion of the New Note and the related security agreements to two new debt holders in equal amounts of $125,000 each.

 

In conjunction with the debt modification agreement for Amended Note 1, the Company recognized a gain on troubled debt restructuring of 2,065,614 and $1,538,145 for the six- and three-month periods ended May 31, 2015.

  

On April 21, 2015, EXO purchased a $63,000 convertible note, with a minimum conversion price of $0.00005 per share, that the Company originally issued to Diamond Remark LLC (“Diamond”) on September 4, 2014. EXO can elect at any time to convert any portion of the debt into shares of common stock of the Company at a discount of 49% of the price of the common stock as defined in the agreement, subject to a minimum conversion price of $0.00005 per share. On March 3, 2015, Diamond notified the Company that the Company was in default and that in accordance with the default provisions of the lending agreement, the amount of money that the Company was required to pay back to Diamond had increased due to default fees. The note was due on June 26, 2015, and remains in default. EXO purchased the note for $97,675. In conjunction with the penalty clauses in the note and default fees due to EXO, on September 8, 2015, the Company issued an amended and restated convertible promissory note to EXO in the amount of $209,847, with the same conversion terms and conditions as the original note issued to Diamond. The note matures on March 31, 2016 and bears interest at a rate of 8% per annum. 

 

On May 11, 2015, the Company signed a $140,000 convertible note agreement with FLUX Carbon Starter Fund (the “Flux Note 1”), which matured on December 31, 2015, and bears interest at an annual rate of 6%. The Flux Note 1 can be converted into the Company’s common stock at a price of $0.002 per share. In conjunction with the Flux Note, the Company received $68,000 in cash and recorded an original issuance discount of $72,000 as interest expense.

On July 1, 2015, in conjunction with the purchase of Plaid Canary Corporation (“PCC”) (see Note 14), the Company assumed a secured note payable to FLUX Carbon Starter Fund in the amount of $627,000, (the “Flux Note 2”) with an annual interest rate of 20%, that matured on January 31, 2016. The Flux Note 2 can convert into shares of common stock of PCC at the market price of PCC’s common stock. The market price is defined as the lowest closing bid price of PCC’s common stock during the previous 90 trading days. The Flux Note 2 contains an original issuance discount of $313,500, $53,107 and $0 of which was expensed in the nine– and three-month periods ended August 31, 2016.

The Amended Notes, New Note, Flux Note 1, Flux Note 2 and notes payable to EXO (the “Subordinated Debt”) are subordinated to any debt payable to TCA. In instances where the Subordinated Debt is past due, the Company is negotiating extended maturity dates. None of the Subordinated Debt holders have issued the Company a default notice. The Company contests the validity and enforceability of the Amended Notes because the asignees of the Amended Notes did not pay the full amount of consideration of $350,000 to Laurus to complete the assignment of the Amended Notes. As noted above, the Company paid $70,000 of the required $350,000 payment, in order to complete the settlement agreement with Laurus.

During the nine-month period ended August 31, 2015, the Subordinated Debt holders converted $240,400 of principal into 1,159,047,428 shares of common stock of the Company and recorded a gain of $1,419,661 on the conversions.  

At August 31, 2016 and November 30, 2015, the Company owed the Subordinated Debt holders $2,726,496 and $2,687,461, respectively.

 

13


 
 

 

Debt due to TCA

On October 14, 2015 the Company entered into a Securities Purchase Agreement (“SPA”) with TCA , as lender, pursuant to which TCA agreed to loan the Company up to a maximum of $5 million for working capital and general operating expenses. An initial amount of $500,000 was funded by TCA on October 14, 2015.  Any additional funding to be provided to the Company under the SPA will be at the discretion of TCA.

 

Our obligation to repay the $500,000 borrowed pursuant to the SPA is evidenced by TCA Debenture 1. The repayment of TCA Debenture 1 is secured by a first position security interest in substantially all of the Company’s assets and in substantially all of the assets of the Company's subsidiaries, as evidenced by a security agreement between the Company and its subsidiaries and TCA, The Company also pledged the stock it owns in its subsidiaries.  TCA Debenture 1 matures on April 14, 2017 and bears interest at the rate of 18% per annum. Interest and principal payments are due in monthly installments beginning in November 2015 and February 2016, respectively.

Upon the occurrence of an event of default, TCA may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable under TCA Debenture 1 into shares of the Company’s common stock at a conversion price equal to 85% of the lowest daily volume weighted average price of the Company’s common stock during the five trading days immediately prior to the applicable conversion date, in each case subject to a provision that no conversion may result in TCA becoming the beneficial owner of more than 4.99% of the Company’s outstanding common stock.

The Company also borrowed $100,000 from TCA on November 18, 2015, under a debenture with similar terms, except that the $100,000 debenture will mature on November 18, 2016 (“TCA Debenture 2”).

 Upon the sale of the TCA Debenture 1, the Company also signed an advisory agreement and issued to TCA, as an advisory fee, 27,500 shares of Pervasip Series I Preferred Stock. Each share of Series I Preferred Stock has a stated value of $10, which will be the share's priority interest in the Company's net assets in the event of liquidation. Each share may be converted by the holder into a number of shares of common stock equal to the stated value divided by the average of the five lowest closing bid prices during the ten trading days immediately preceding conversion. The holder of Series I Preferred Stock will have voting rights equivalent to those of the common stock into which the Series I shares are convertible. In the event that TCA does not realize net proceeds from the sale of these Series I preferred shares or the common shares upon conversion of the preferred shares (the “Advisory Fee shares”) equal to the $275,000 fee value by the maturity date of the credit facility, these Advisory fee shares will become subject to mandatory redemption by TCA, and the Company shall be liable to TCA for the net proceeds below an aggregate amount of $275,000. The Company also issued to TCA 51 shares of Series J Preferred Stock. The Series J Preferred Stock will give TCA voting control of the Company if the Company defaults on the note and TCA declares the voting control effective.

At August 31, 2016 and November 30, 2015, the Company owed TCA $570,028 and $600,000, respectively.

Convertible Debt due to various lenders

 

 

Convertible debt with a fixed conversion rate

 

At August 31, 2016 and November 30, 2015, the Company owed a lender $138,000, in connection with two notes that are past due, are in default, bear a default interest rate of 18% per annum, and are convertible at prices of $0.015 and $0.02 cents per share.

 

During the year ended November 30, 2014, the Company received $63,000 in convertible debt with a minimum conversion price of $0.00005 per share. The lender can elect at any time to convert any portion of the debt into shares of common stock of the Company at a discount of 49% of the price of the common stock as defined in the agreement, subject to a minimum conversion price of $0.00005 per share. At November 30, 2014 the Company owed the lender $63,000. The lender sold this note to EXO, as noted above.

 

At August 31, 2016 and November 30, 2015, a total of $138,000 of convertible debt with a fixed conversion rate was outstanding.

 

14


 
 

 

Convertible debt with a variable conversion rate issued for cash

 

The Company is past due and in default on a convertible debenture in the amount of $115,000. The convertible debt bears interest at an annual rate of 6% and was due in October 2016. The lender can elect at any time to convert any portion of the debt into shares of common stock of the Company, subject to a limit of 4.99% of the outstanding shares, at a price discount of 30% of the price of the common stock as defined in the agreements.

 

The conversion price of the variable conversion price note is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. The fair value of the notes was recognized as a derivative instrument at the issuance date and is measured at fair value at each reporting period. The Company determined that the fair value of the conversion feature was $163,714 at the issuance dates. The debt was recorded as a debt discount of $152,102 and is amortized to interest expense over the term of the note. The fair value of the conversion feature in excess of the principal amount allocated to the notes in the aggregate amount of $11,612 was expensed immediately as additional interest expense.

 

At August 31, 2016 and November 30, 2015, a total of $115,000 of variable-rate convertible debt that had been issued for cash was outstanding, respectively.

 

 

Convertible debt with a variable conversion rate assigned to lenders

 

At August 31, 2016 and November 30, 2015, the Company owes one lender $67,750 as a result of an assignment in fiscal 2012. The convertible debt bears interest at 0% and is past due. The lender can elect at any time to convert any portion of the debt into shares of common stock of the Company at a price discount of 55% of the market price of the Company’s common stock as defined in the agreements.

 

At August 31, 2016 and November 30, 2015, a total of $320,750 of other convertible debt was outstanding, respectively.

 

Other short-term debt due to various lenders

 

During the six months ended May 31, 2016 and 2015, the Company received $0 and $50,000, respectively from lenders in exchange for notes payable that had no conversion features.

 

At August 31, 2016 and November 30, 2015, the Company owed various lenders $212,607 and 224,448, respectively, for non-convertible notes. Cash payments were made on these notes of $11,840 and $60,368 during the nine months ended August 31, 2016 and 2015, respectively. Other short-term debt carries an interest rate of 0% to 17% over the term of the loans, and includes cash advances (the “Cash Advances”) from lenders that purchased future sales. The Company agreed to repay the Cash Advances at a premium to the amount received from the lender. For the three months ended August 31, 2016 and 2015, $0 and $18,158, respectively, of amortization of premium from the Cash Advances is included in interest expense. At August 31, 2016 and November 30, 2015, Cash Advances totaled $106,808 and 118,649, respectively. Assets of two subsidiaries of the Company secure the Cash Advances, which are currently in default.

 

Long-term debt

 

The Company acquired 90% of Canalytix LLC on March 25, 2015. Canalytix owes Flux Carbon Starter Fund $448,649 and $409,614, as of August 31, 2016 and November 30, 2015, respectively, under a secured senior term loan agreement, which is included in long-term debt in the Company’s consolidated financial statements. The debt bears an annual interest rate of 12% and matures on December 31, 2019. Principal payments are made periodically from cash flow. No principal payments are due until maturity.

 

15


 
 

 

Note 10 - Derivative Liabilities

 

The Company evaluated its convertible note agreements pursuant to ASC 815 and for those notes in which there was no minimum or fixed conversion price resulting in an indeterminate number of shares to be issued in the future, the Company determined an embedded derivative existed and ASC 815 applied for its convertible notes. The Company valued the embedded derivatives using the Black-Scholes valuation model.  

  

Convertible debt with a variable conversion feature

 

In 2016, the Company estimated the fair value of the derivatives using the Black-Scholes valuation method with assumptions including: (1) term of 0 to 0.63 years; (2) a computed volatility rate of 327%; (3) a discount rate of 1%; and (4) zero dividends. Upon settlement the valuation of this embedded derivative was recorded as gain/loss on derivative liability.

 

In 2015, the Company estimated the fair value of the derivatives using the Black-Scholes valuation method with assumptions including: (1) term of 0 to 0.34 years; (2) a computed volatility rate of 422%; (3) a discount rate of 1%; and (4) zero dividends. Upon settlement the valuation of this embedded derivative was recorded as gain/loss on derivative liability.

 

Redeemable convertible preferred stock 

 

In 2016, the Company estimated the fair value of the derivatives using the Black-Scholes valuation method with assumptions including: (1) term reflecting the immediate exercisability; (2) a computed volatility rate of 327% (3) a discount rate of 1% and (4) zero dividends.  No preferred stock derivatives existed in fiscal 2015.

Tainted conventional convertible debt 

 

In 2016, the Company estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 0 years; (2) a computed volatility rate of 327%; (3) a discount rate of 1%; and (4) zero dividends. The valuation of this embedded derivative was recorded with an offsetting gain/loss on derivative liability.

 

In 2015, the Company estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of .0 to .534 years; (2) a computed volatility rate of 422%; (3) a discount rate of 1%; and (4) zero dividends. The valuation of this embedded derivative was recorded with an offsetting gain/loss on derivative liability.

 

Tainted warrants

 

The Company also evaluated all outstanding warrants to determine whether these instruments may be tainted. All warrants outstanding were considered tainted as a result of the tainted equity environment and potential inability of the Company to settle the instruments with shares of the Company’s stock as the number of shares issuable cannot be estimated and could exceed the amount of authorized shares available to be issued by the Company. The Company valued the embedded derivatives within the warrants using the Black-Scholes valuation model.  

 

In 2016, the Company estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 1.27 to 6.83 years; (2) a computed volatility rate of 327%; (3) a discount rate of 1%; and (4) zero dividends. The valuation of this embedded derivative was recorded with an offsetting gain/loss on derivative liability.

 

In 2015, the Company estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of .46 to 7.83 years; (2) a computed volatility rate of 422%; (3) a discount rate of 1%; and (4) zero dividends. The valuation of this embedded derivative was recorded with an offsetting gain/loss on derivative liability.

 

16


 
 

Activity for embedded derivative instruments during the nine months ended August 31, 2016 was as follows:

 

      Initial valuation      
      of derivative      
      liabilities upon  Change in   
   Balance at  issuance of new  fair value of  Balance at
   November 30,  securities during  derivative  August 31,
   2015  the period  liabilities  2016
Variable convertible debt  $166,494   $571,223   $(231,375)  $506,342 
Redeemable convertible preferred stock   412,500         (400,121)   12,379 
Tainted convertible debt   95,018         (93,616)   1,402 
Tainted warrants   18,200         (10,638)   7,562 
   $692,212   $571,223   $(735,750)  $527,685 
                     

  

Activity for embedded derivative instruments during the nine months ended August 31, 2015 was as follows:

 

   Balance at November 30, 2014  Initial valuation of derivative liabilities upon issuance of new securities during the period  Change in fair value of derivative liabilities  Conversion of debt to equity  Debt Forgiveness  Balance at August 31, 2015
Variable convertible debt  $527,781   $81,793   $2,384,209   $(1,488,450)  $(1,153,545)  $351,788 
Tainted convertible debt   106,246    118,790    (82,025)   —           143,011 
Tainted warrants   5,312    2,000    21,917    —           29,229 
   $639,339   $202,583   $2,324,101   $(1,488,450)  $(1,153,545)  $524,028 

 

Note 11 – Stockholders’ Equity

 

As discussed in Note 9, the Company entered into various transactions where it issued convertible notes to third parties. Such convertible notes allowed the debt holders to convert outstanding debt principal into shares of the Company’s common stock, par value $0.00001, (the “Common Stock”) at a discount to the trading price of the Common Stock. To the extent, if any, that there was a beneficial conversion feature associated with these debts, the beneficial conversion feature was bifurcated from the host instrument and accounted for as a freestanding derivative. As a result of such conversions, in the nine-month period ended August 31, 2015, $278,260 of principal and accrued interest was converted into 2,468,080,212 shares of Common Stock. Also during the first quarter of 2015, the Company issued 40,000,000 shares of Common Stock for services rendered, which was valued at $4,000.

 

No conversions of debt occurred in the nine-month period ended August 31, 2016. 126,000,000 shares of common stock were issued in March 2016 as a finders’ fee payment, at a valuation of $25,000, to the firms that introduced the Company to TCA. 

A total of 175,000 and 100,000 shares of Series I preferred stock issued to TCA as advisory fees are redeemable upon the occurrence of certain events that are outside the control of the company. These shares (and the common shares into which these shares may be converted, together, “Advisory Fee Shares”) are also mandatorily redeemable in the event that TCA has not realized net proceeds from the sale of the Advisory Fee Shares by the earlier of an event of default or on October 14, 2016 and November 18, 2016, for $175,000 and $100,000, respectively, less cash proceeds received from prior sales of Advisory Fee Shares. The total redemption amount of $275,000 is being accreted over the respective twelve month periods using the effective interest method. A total of $118,926 of preferred dividends were accreted for the Series I Preferred Stock issued to TCA during the nine months ended August 31, 2016

Each share of Series F and Series G convertible preferred stock is convertible into 250,000 and 500 shares of Common Stock, respectively, which gives the holder of the Series F and Series G a beneficial conversion price. At the issuance date of January 13, 2015, the effective conversion price was less than the fair value of the Common Stock into which the preferred shares are convertible. Consequently, the Company recognized a beneficial conversion feature (“BCF”). The intrinsic value of the BCF is limited to the basis that is initially allocated to the convertible security. The Company recorded a discount on the preferred stock of $100,000 from the value of the Series F and Series G shares issued in exchange for outstanding payables to the chief executive officer (see Note 12 – Related Party Transactions). The discount is being accreted to preferred stock dividends over a six-month period, as the preferred stock is convertible after six months (date of earliest conversion). Accretion amounted to $100,000 for the nine-month period ended August 31, 2015.

17


 
 

 

Note 12 – Related Party Transactions

 

At August 31, 2016 and November 30, 2015, we owed our chief executive officer $1,575,651 and $1,380,162, respectively, for loans he provided to the Company, unpaid salary and unpaid business expenses. During the first quarter of fiscal 2015, the Company settled $100,000 in outstanding payables to the chief executive officer of by issuing 10,000,000 shares each of the Company’s Series F and G preferred stock and 10 shares of the Company’s Series E stock.

 

At August 31, 2016 and November 30, 2015, we owed $458,149 and $222,918, respectively, to a company that is controlled by the entity that owned 60% of our voting control, via ownership of our Series H preferred stock. On August 24, 2016, the 500,000 shares of Series H preferred stock that were issued to Flux Carbon Corporation in conjunction with the purchase of Plaid Canary Corporation, were surrendered to the Company. After this surrender, Flux Carbon Corporation’s beneficial ownership of the Company is a 10% voting control, via the ownership of 100,000 shares of Series H preferred stock.

 

 

Note 13 – Fair Value

 

The Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

  

  ·   Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

  ·   Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

  ·   Level 3 inputs are unobservable inputs for the asset or liability.

 

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, we base fair value on 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. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon management’s own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows that could significantly affect the results of current or future value.

 

Valuation Hierarchy

 

The table below presents the amounts of assets and liabilities measured at fair value on a recurring basis as of August 31, 2016 and November 30, 2015:

 

The fair value of restricted securities are measured with quoted prices in active markets. The fair value of the derivatives that are traded in less active over-the-counter markets are generally measured using pricing models with non-observable inputs.  These measurements are classified as Level 3 within the fair value of hierarchy.

 

 

18


 
 

 

  

    Total   (Level 1)   (Level 2)   (Level 3)
August 31, 2016                
                 
Restricted securities   $ 40,000     $ 40,000       —         —    
Derivative liability   $ 527,685       —         —       $ 527,685  
                                 
November 30, 2015                                                           
                                 
Restricted securities   $ 220,000     $ 220,000                  
Derivative liability   $ 692,212       —         —       $ 692,212  

 

The Company has no instruments with significant off balance sheet risk.

 

In 2016, we estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 0 to 6.83 years; (2) a computed volatility rate of 327% (3) a discount rate of 1% and (4) zero dividends.  The valuation of this embedded derivative was recorded with an offsetting gain/loss on derivative liability.

 

In 2015, we estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 0 to 7.83 years; (2) a computed volatility rate of 422% (3) a discount rate of 1% and (4) zero dividends.  The valuation of this embedded derivative was recorded with an offsetting gain/loss on derivative liability.

 

Fluctuations in the conversion discount percentage have the greatest effect on the value of the conversion liabilities valuations during each reporting period. As the conversion discount percentage increases for each of the related conversion liabilities instruments, the change in the value of the conversion liabilities increases, therefore increasing the liabilities on the Company's balance sheet. The higher the conversion discount percentage, the higher the liability. A 10% change in the conversion discount percentage would result in more than a $110,000 change in our Level 3 fair value.

 

Note 14 - Restatement

 

The Company restated its financial statements for the nine months ended August 31, 2015, to correct certain accounting errors related to revenue recognition. The table below summarizes the impact of the restatement described above on financial information previously reported on the Company’s Forms 10-Q for the period ended August 31, 2015:

 

   Original  Adjustments  As Restated
Balance Sheet at 8/31/15:               
                
Deposits  $—     $70,000   $70,000 
                
Income Statement for Three Months Ended 8/31/15:               
                
Related party revenues   5,000    (5,000)   —   
Net income   520,700    (5,000)   515,700 
Earnings per share   0.00    0.00    0.00 
Earnings per share - diluted   0.00    0.00    0.00 
                
Income Statement for Nine Months Ended 8/31/15:               
                
Related party revenues   70,000    (70,000)   —   
Net income   84,309    (70,000)   14,309 
Earnings per share   0.00    0.00    0.00 
Earnings per share - diluted   0.00    0.00    0.00 
                
Cash Flow Statement for Nine Months Ended 8/31/15:               
                
Net income   84,309    (70,000)   14,309 

 

Note 15 - Subsequent Events

 

In November 2016, we secured a verbal agreement with a licensed grower and dispensary and we moved inventory from our storage into its warehouse. As a result of our inability to continue operating GBS in manner similar to our fiscal 2015 operations, our sales in 2016 for GBS are limited to approximately $280,000.

On September 20, 2016, the Company received a demand for payment from TCA Global Credit Master Fund, L.P. (the “TCA Fund”) of $1,164,460.50 pursuant to a Senior Secured Convertible Redeemable Debenture, dated June 30, 2015, and effective October 14, 2015; a Securities Purchase Agreement, dated and effective the same, and that Promissory Note, dated and effective the same; a Senior Secured Convertible Redeemable Debenture, dated June 30, 2015, and effective October 14, 2015; and a Securities Purchase Agreement, dated June 30, 2015 and effective November 18, 2015. TCA Fund has also filed suit in the state of Florida to collect this past due amount, plus interest that continues to accrue at the rate of $323.66 per day until the obligation is satisfied.

19


 
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the U.S. Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

 

Overview

 

During fiscal 2015 we transitioned from our cloud-based telecommunications business to pursue a cloud-based business focused on the emerging cannabis industry. We purchased Canalytix LLC, which is developing a cloud-based application to monitor and control greenhouse facilities, providing real-time data on energy usage, HVAC systems, lighting and costs. On July 1, 2015, we purchased Plaid Canary Corporation (“PCC”), a special purpose consolidation company organized to acquire companies and technologies in emerging agricultural markets. On July 6, 2015, PCC acquired 60% of the membership units of Grow Big Supply LLC (“Grow Big”), which operated a retail supply store in Denver, Colorado targeted at those involved in growing cannabis.

 We planned to use part of the Grow Big facility to provide laboratory testing and oil extraction services. The facility, however, was in a warehouse district and it was too difficult to maintain the cleanliness required for laboratory work. In February 2016, we were provided significant financial incentives from Grow Big’s landlord to close our Grow Big store and move it to another location. We laid off our staff at the store, except for our Chief Science Officer and Chief Operating Officer, and we moved our inventory to temporary storage while we searched for a location that would allow us to perform scientific work and sell off our remaining inventory. In November 2016, we secured a verbal agreement with a licensed grower and dispensary and we moved inventory from storage into its warehouse. When our existing inventory is sold, we do not plan to continue the sale of gardening products. We believe there is more value in providing scientific analysis and extraction services to entities that are operating under a cannabis license.

 We have developed scientific methods for the analysis of cannabinoids in flowers, concentrates, and edibles through the use of available instruments. As our operations expand, we plan to assist medical marijuana specialty production facilities in order to better regulate, calculate proper dosage, and improve consistency in the product.

 

20


 
 

 

 

Results of Operations

 

For the Nine Months Ended August 31, 2016 Compared to the Nine Months Ended August 31, 2015

 

Our revenue for the nine-month period ended August 31, 2016 decreased by $17,525, or 6%, to $279,380, as compared to $296,905 reported for the nine-month period ended August 31, 2015. The decrease in revenues was due to the closure of our hydroponics store in 2016.  We discontinued our hydroponics business in February 2016 and anticipate that we will become a scientific analysis agricultural-products company in fiscal 2017

 

For the nine-month period ended August 31, 2016, our gross profit amounted to 88,171, which was a decrease of $12,300 from the gross profit of $100,471 reported in the nine-month period ended August 31, 2015. The reduction in gross profit is attributable to the closure of our hydroponics store in 2016.

 

Selling, general and administrative expenses increased by $269,043 or 67%, to $671,683 for the nine-month period ended August 31, 2016 from $402,640 reported in the same prior-year fiscal period. The increase was primarily due to an increase in employees in fiscal 2016.

 

As a result of the above noted changes, our loss from operations for the nine-month period ended August 31, 2016 increased by $281,343 to $583,512 from $302,169 reported in the prior-year fiscal period. However, significant non-operating income and expenses also occurred, thus:

 

  · Interest expense and debt amortization increased by $179,243 to $1,092,950 for the nine-month period ended August 31, 2016 as compared to $913,707 for the prior-year fiscal period.  The increase is primarily due to larger amounts of amortization of debt discount during fiscal year 2016.

 

  · For the nine-month period ended August 31, 2015, we reported a gain on troubled debt restructuring of $2,065,614, as compared to no transactions reported in the nine-month period ended August 31, 2016 In the first quarter of fiscal 2015 we negotiated two debt modification agreements and one debt assignment agreement that produced a gain on troubled debt restructuring, whereas no such transactions occurred in the prior-year fiscal period.

 

  · For the nine-month period ended August 31, 2016, we reported an impairment loss of $180,000 for an “other than temporary” decline in the market value of restricted securities.  We had no impairment losses for the six-month period ended August 31, 2015

 

  · For the nine-month period ended August 31, 2016, we reported a gain on the settlement of derivative liabilities of $0, as compared to a gain of $1,488,450 in the nine-month period ended August 31, 2015. Each instance of a liability settlement is contingent upon the valuation of the derivative at the time of the settlement, as compared to its value at the previous measurement date.

 

  · For the nine-month period ended August 31, 2016, we had a gain from the change in the valuation of derivative liabilities of $735,750, as compared to a loss of  $2,324,101, for the nine-month period ended August 31, 2015. The loss in the fiscal 2015 period is due to the higher market value of embedded derivatives in our debt instruments, at the end of the fiscal quarter, because of the rising price per share of our common stock at the end of the fiscal quarter.  The gains in the fiscal 2016 period are due to the lower market value of embedded derivatives in our debt instruments, at the end of the fiscal quarter, in comparison with the market value when the debt originated. 

 

Our net result for the nine-month period ended August 31, 2016 was a net loss of $1,202,179 compared to net income of $14,309 reported in the prior-year fiscal period.

 

For the Three Months Ended August 31, 2016 Compared to the Three Months Ended August 31, 2015

 

Our revenue for the three-month period ended August 31, 2016 decreased by $295,084, or 100%, to $0, as compared to $295,084 reported for the three-month period ended August 31, 2015. The decrease in revenues was due to the closure of our hydroponics store in 2016.  We discontinued our hydroponics business in February 2016 and anticipate that we will become a scientific analysis agricultural-products company in fiscal 2017.

 

21


 
 

 

For the three-month period ended August 31, 2016, our gross profit amounted to $0, as compared to a $110,875 from the same period last year. The decrease in gross profit in 2016 was because we had no revenues during the 2016 quarter.

 

Selling, general and administrative expenses decreased by $43,258 or 18%, to $191,416 for the three-month period ended August 31, 2016 from $234,674 reported in the same prior-year fiscal period. The increase was primarily due to an increase in employees and travel expenses in fiscal 2016.

 

As a result of the above noted changes, our loss from operations for the three-month period ended August 31, 2016 increased by $67,617 to $191,416 from $123,799 reported in the prior-year fiscal period. However, significant non-operating income and expenses also occurred, thus:

 

  · Interest expense and debt amortization increased by $78,561 to $397,646 for the three-month period ended August 31, 2016 as compared to $319,085 for the prior-year fiscal period.  The increase is attributable to larger amounts of amortization of debt discount. 

 

  · For the three-month period ended August 31, 2016, we reported a gain on the settlement of derivative liabilities of $0, as compared to $265,002 in the three-month period ended August 31, 2015. Each instance of a liability settlement is contingent upon the valuation of the derivative at the time of the settlement, as compared to its value at the previous measurement date.

 

  · For the three-month period ended August 31, 2016, we had a gain from the change in the valuation of derivative liabilities of $132,174, as compared to a gain of $693,360 for the three-month period ended August 31, 2015. The gains are due to the lower market value of embedded derivatives in our debt instruments, at the end of the fiscal quarter, in comparison with the market value when the debt originated. 

 

Our net result for the three-month period ended August 31, 2016 was a net loss of $456,889 compared to net income of $515,700 reported in the prior-year fiscal period.

  

Liquidity and Capital Resources

 

At August 31, 2016, we had cash and cash equivalents of $1,426 and negative working capital of $9,853,596.

 

Operating activities for the nine months ended August 31, 2016 used $346,064 of cash, consisting principally of approximately $129,000 in non-cash income statement charges and net loss of $1,202,179 and approximately $727,000 in changes in operating assets and liabilities. Operating results for the nine months ended August 31, 2015 used $181,344 of cash, consisting principally of approximately $698,000 in non-cash income statement charges and offset by net income of $84,309 and approximately $432,000 in changes in operating assets and liabilities.

 

Net cash provided by investing activities amounted to $7,500 and $15,206 for the nine-month periods ended August 31, 2016 and 2015. Cash provided during the nine months ended August 31, 2016 is the result of a decrease in cash placed under restriction. Cash provided during the nine months ended August 31, 2015, is the cash acquired in the acquisition of two businesses, totaling $16,016. Cash used for investing activities consisted of fixed asset purchases of $810. For the nine months ended August 31, 2015, cash used for investing activities consisted of fixed asset purchases of $810.

 

Net cash provided by financing activities aggregated $331,012 and $169,953 for the nine-month periods ended August 31, 2016 and 2015, respectively. In the nine months ended August 31, 2016, cash provided by financing activities resulted from proceeds from borrowings of $342,852, offset by principal payments of $11,840. For the nine months ended August 31, 2015, cash provided by financing activities resulted from proceeds from borrowings of $244,750, offset by principal payments of $74,797.

 

22


 
 

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of our company as a going concern.  However, we have sustained net losses from operations during the last several years, and we have very limited liquidity.  Our operating losses have been funded through the issuance of equity securities and borrowings. Management anticipates that we will be dependent, for the near future, on our ability to obtain additional capital to fund our operating expenses and anticipated growth. The report of our independent registered public accounting firm, included in our Form 10-K for the year ended November 30, 2015 expresses doubt about our ability to continue as a going concern.  Our operating losses have been funded through the issuance of equity securities and borrowings.

 

Although we have improved our balance sheet with transactions to settle our debt, we continue to have liabilities in excess of our assets.  We are working to settle our remaining liabilities and to raise cash to support our operating loss, and we continually consider a variety of possible sources.  In the current economic environment, the procurement of outside funding is extremely difficult and there can be no assurance that such financing will be available, or, if available, that such financing will be at a price that will be acceptable to us.  If we are unable to generate sufficient revenues or raise additional capital, our operations will terminate.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide information under this item.

 

Item 4. Controls and Procedures.

 

(a) Disclosure Controls and Procedures.

 

The Company’s management, with the participation of the Company’s principal executive officer (“PEO”) / principal financial officer (“PFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the PEO / PFO concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the PEO / PFO, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses in our disclosure controls and procedures consisted of:

 

There is a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles in the US (“GAAP”), telecom taxation requirements and the financial reporting requirements of the SEC;

 

There are insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements; and

 

There is a lack of segregation of duties, in that we only had one person performing all accounting-related duties.

 

(b) Changes in Internal Control Over Financial Reporting

 

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

23


 

 
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations, except as described in Note 15. Except as described in Note 15, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide information under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None 

 

Item 3. Defaults Upon Senior Securities.

 

Except for matters described in Note 9 and Note 15 of the consolidated financial statements, there have been no defaults in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None

 

Item 6. Exhibits.

 

Exhibit No.   Document
     
31   Rule 13a-14(a) Certification
     
32   Rule 13a-14(b) Certification
     
101.INS   XBRL Instance
     
101.SCH   XBRL Schema
     
101.CAL   XBRL Calculation
     
101.DEF   XBRL Definition
     
101.LAB   XBRL Label
     
101.PRE   XBRL Presentation

 

24


 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

      PERVASIP CORP.
           
           
Date: December 15, 2016   By:  /s/ Paul H. Riss  
        Name: Paul H. Riss  
       

Title: Chief Executive Officer

(Principal Executive Officer)

(Principal Financial and

Accounting Officer)

 

 

 

 

 

 

 

 

 

 

25