[X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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99-0363802
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(State of Incorporation)
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(I.R.S. Employer Identification Number) |
Large accelerated filer
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[ ] |
Accelerated filer
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[ ]
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Non-accelerated filer
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[X]
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Smaller reporting company
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[X]
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Emerging Growth Company |
[X]
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Defense Technologies International Corp.
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||||||||
Condensed Consolidated Balance Sheets
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||||||||
October 31,
2018
|
April 30,
2018
|
|||||||
ASSETS
|
(Unaudited)
|
(Audited)
|
||||||
Current assets:
|
||||||||
Cash
|
$
|
60,412
|
$
|
8
|
||||
Inventory
|
2,787
|
--
|
||||||
Total current assets
|
63,199
|
8
|
||||||
Deposits
|
3,000
|
--
|
||||||
Investments
|
378,600
|
378,600
|
||||||
Total assets
|
$
|
444,799
|
$
|
378,608
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
224,434
|
$
|
352,162
|
||||
Accrued licenses agreement payable
|
11,300
|
6,300
|
||||||
Accrued interest and fees payable
|
131,113
|
155,896
|
||||||
Accrued interest payable – related parties
|
--
|
21,383
|
||||||
Convertible notes payable, net of discount
|
869,937
|
816,526
|
||||||
Derivative liabilities
|
2,043,413
|
3,248,160
|
||||||
Payables – related parties
|
613,882
|
437,968
|
||||||
Notes payable
|
429,226
|
25,000
|
||||||
Total current liabilities
|
4,323305
|
5,063,395
|
||||||
Total liabilities
|
4,323305
|
5,063,395
|
||||||
Commitments and Contingencies
|
--
|
--
|
||||||
Stockholders' deficit:
|
||||||||
Preferred stock, $0.0001 par value; 20,000,000 shares authorized, Series A – 2,925,369 and 3,277,369 shares issued and outstanding, respectively
|
292
|
328
|
||||||
Series B – 520,000 shares issued and outstanding, respectively
|
52
|
52
|
||||||
Common stock, $0.0001 par value; 200,000,000 shares authorized, 3,657,820, net of treasury and 1,283,758 shares issued and outstanding, respectively
|
366
|
128
|
||||||
Additional paid-in capital
|
5,233,998
|
5,076,110
|
||||||
Accumulated deficit
|
(9,087,651
|
)
|
(9,745,809
|
)
|
||||
Total
|
(3,853,287
|
)
|
(4,669,571
|
)
|
||||
Non-controlling interest
|
(25,563
|
)
|
(15,596
|
)
|
||||
Total stockholders' deficit
|
(3,878,506
|
)
|
(4,684,787
|
))
|
||||
Total liabilities and stockholders' deficit
|
$
|
444,799
|
$
|
378,608
|
Defense Technologies International Corp. | ||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
As of October 31, | ||||||||||||||||
Unaudited) | ||||||||||||||||
Three Months
|
Six Months
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Expenses:
|
||||||||||||||||
General and administrative
|
$
|
252,747
|
$
|
85,474
|
$
|
421,497
|
$
|
241,917
|
||||||||
Total expenses
|
252,747
|
85,474
|
421,497
|
241,917
|
||||||||||||
Loss from operations
|
(252,747
|
)
|
(85,474
|
)
|
(421,497
|
)
|
(241,917
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest expense
|
(100,575
|
)
|
(15,661
|
)
|
(119,236
|
)
|
(98,379
|
)
|
||||||||
Loss on note
|
(5,244
|
)
|
--
|
(7,596
|
)
|
--
|
||||||||||
Interest – note discount
|
(8,472
|
)
|
--
|
(8,472
|
)
|
--
|
||||||||||
Gain (loss) on derivative liability
|
(1,036,410
|
)
|
244,013
|
1,214,992
|
463,026
|
|||||||||||
Gain (loss) on extinguishment of debt
|
(10,000
|
)
|
---
|
(10,000
|
)
|
(62,704
|
)
|
|||||||||
Total other income (expense)
|
(1,160,701
|
)
|
228,352
|
1,069,688
|
301,943
|
|||||||||||
Income (loss) before income taxes
|
(1,413,448
|
142,878
|
648,191
|
60,026
|
||||||||||||
Provision for income taxes
|
--
|
--
|
--
|
--
|
||||||||||||
Net income (loss) before non-controlling interest
|
(1,413,448
|
)
|
142,878
|
648,191
|
60,026
|
|||||||||||
Non- controlling interest in net (gain) loss of the consolidated subsidiary
|
3,872
|
|
--
|
9,967
|
|
--
|
||||||||||
Net income (loss) attributed to the Company
|
$
|
(1,409,576
|
)
|
$
|
142,878
|
$
|
658,158
|
$
|
60,026
|
|||||||
Net loss per common share:
|
||||||||||||||||
Basic
|
$
|
(0.68
|
)
|
$
|
1.10
|
$
|
0.38
|
$
|
0.46
|
|||||||
Diluted
|
$
|
(0.68
|
)
|
$
|
0.48
|
$
|
0.16
|
$
|
0.20
|
|||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
2,083,095
|
130,565
|
1,716,403
|
129,392
|
||||||||||||
Diluted
|
2,083,095
|
299,493
|
4,136,181
|
298,653
|
Defense Technologies International Corp.
|
Condensed Consolidated Statements of Cash Flows
|
(Unaudited)
|
Six Months Ended
October 31,
|
||||||||
2018
|
2017
|
|||||||
Net income (loss)
|
$
|
648,191
|
$
|
60,026
|
||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Common shares issued for services
|
45,000
|
27,996
|
||||||
Amortization of debt discount to interest expense
|
(21,529
|
)
|
108,206
|
|||||
(Gain) loss on derivative liability
|
(1,204,747
|
)
|
(463,026
|
)
|
||||
Loss on note
|
8,093
|
--
|
||||||
Change in operating assets and liabilities:
|
||||||||
( Increase) decrease in inventory
|
(2,787
|
)
|
--
|
|||||
Increase in prepaid expenses
|
--
|
15,000
|
||||||
Deposits
|
(3,000
|
)
|
--
|
|||||
Increase (decrease) in accounts payable and accrued expense
|
56,752
|
(9,450
|
)
|
|||||
Increase in payables – related parties
|
154,531
|
151,060
|
||||||
Net cash provided by (used in) operating activities
|
(319,496
|
)
|
(110,188
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from convertible notes
|
280,000
|
110,000
|
||||||
Repayment of convertible notes payable
|
(190,100
|
)
|
--
|
|||||
Proceeds from notes payable
|
300,000
|
--
|
||||||
Repayment of notes payable
|
(10,000
|
)
|
--
|
|||||
Net cash provided by (used in) financing activities
|
379,900
|
110,000
|
||||||
Net increase (decrease) in cash
|
60,404
|
(188
|
)
|
|||||
Cash at beginning of period
|
8
|
193
|
||||||
Cash at end of period
|
$
|
60,412
|
$
|
5
|
||||
Supplement Disclosures
|
||||||||
Interest Paid
|
$
|
---
|
$
|
--
|
||||
Income tax Paid
|
$
|
--
|
$
|
--
|
||||
Noncash financing and investing activities
|
||||||||
Common stock issued for the conversion of preferred shares
|
$
|
200
|
$
|
--
|
||||
Common stock issued for convertible debt
|
$
|
39,779
|
$
|
13,890
|
||||
Note payable issued for accounts payable
|
$
|
114,226
|
$
|
--
|
||||
Preferred shares issued for conversion of debt
|
$
|
--
|
$
|
190,383
|
||||
Common stock retired to treasury
|
$
|
--
|
$
|
1,178
|
||||
Derivative liability on debt conversion
|
$
|
--
|
$
|
121,779
|
||||
Accrued interest paid though repayment of notes
|
$
|
90,037
|
$
|
--
|
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.
|
Level 1
|
Level 2
|
Level 3
|
||||||||||
Fair value of derivative liability as of April 30, 2018
|
$
|
--
|
$
|
--
|
$
|
3,248,160
|
||||||
Debt discount related to new debt
|
--
|
--
|
--
|
|||||||||
Day one measurement of new debt
|
--
|
--
|
--
|
|||||||||
Change in fair value of the derivative
|
--
|
--
|
(1,204,747
|
)
|
||||||||
Conversion of debt to shares of common stock and repayment of debt
|
--
|
--
|
--
|
|||||||||
Balance at October 31, 2018
|
$
|
--
|
$
|
--
|
2,043,413
|
Risk-free interest rate
|
0.125
|
%
|
||
Expected life in years
|
0.25
|
|||
Dividend yield
|
0
|
%
|
||
Expected volatility
|
407.00
|
%
|
Shares |
Weighted Average Exercise Price |
Weighted
Average
Remaining Contract Term (Years) |
Aggregate Intrinsic Value |
|||||||||||||
Outstanding at April 30, 2018
|
833
|
$
|
1.50
|
.06
|
$
|
83
|
||||||||||
Granted
|
100,000
|
$
|
0.70
|
2.83
|
||||||||||||
Exercised
|
-
|
$
|
-
|
|||||||||||||
Forfeited or expired
|
(833
|
)
|
$
|
(1.50
|
)
|
--
|
--
|
|||||||||
Outstanding and exercisable at October 31, 2018
|
100,000
|
$
|
0.70
|
2.83
|
$
|
--
|
a)
|
Administration Agreement with EMAC Handel's AG, renewed effective May 1,
2017
for a period of three years. Monthly fee for administration services of $5,000, office rent of $250 and office supplies of $125. Extraordinary expenses are invoiced by EMAC on a quarterly basis. The fee may be paid in cash and or with common stock.
|
b)
|
Service Agreement signed April 25, 2016 with Merrill W. Moses, President, Director and CEO, for services of $7,500 per month beginning May 2016 and the issuance of 233 restricted common shares of the Company. The fees may be paid in cash and or with common stock.
|
c)
|
Service Agreement signed May 20, 2016 with Charles C. Hooper, Director, for services of $5,000 per month beginning May 2016 and the issuance of 233 restricted common shares of the Company. The fees may be paid in cash and or with common stock.
|
d)
|
Administration and Management Agreement of PSSI signed January 12, 2017 with RAB Investments AG, for general fees of $5,000 per month, office rent of $250 and telephone of $125 beginning January 2017, the issuance of 2,000 common shares of PSSI and a 12% royalty calculated on defines sales revenues payable within 10 days after the monthly sales. On January 12, 2017 the agreement was cancelled with RAB and assigned to EMAC Handel
|
e)
|
Service Agreement of PSSI signed January 12, 2017 with Merrill W. Moses, President, Director and CEO, for services of $2,500 per month beginning February 2017 and the issuance of 333 common shares of PSSI.
|
f)
|
Business Development and Consulting Agreement of PSSI signed January 15, 2017 with WSMG Advisors, Inc., for finder's fees of 10% of funding raised for PSSI and the issuance of 1,000 common shares of PSSI.
|
·
|
Royalty payments of 5% of gross sale from the license agreement will be calculated and paid quarterly with a minimum of $12,500 paid each quarter.
|
·
|
All payment will be in US dollars or stock of the Company and or its subsidiary. The value of the stock will be a discount to market of 25% of the average trading price for the 10 days prior to conversion. The number of shares received by Control Capture prior to any reverse split are anti-dilutive.
|
·
|
Invoices for parts and materials will be billed separate of the license fees noted above.
|
Exhibit No
.
|
Description of Exhibit
|
31.1
|
|
32.1
|
|
101 INS*
|
XBRL Instance Document
|
101SCH*
|
XBRL Taxonomy Extension Schema
|
101 CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
101 DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
101 LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
101 PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
Date: December 14
, 2018
|
By:
/S/ MERRILL W. Moses
|
Merrill W. Moses
|
|
Chief Executive Officer
|
|
Acting Chief Financial Officer
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|