UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended JulyMarch 31, 2009
[ ] Transition report under Section 13 2022
or 15(d) of the Exchange Act
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
000-56090
Commission File Number: 333-151350
AIR TRANSPORT GROUP HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Nevada 98-0491567
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7453 Woodruff Way
Stone Mountain Ga 30087 Telephone: 404-671-9253
(Address of principal executive offices) (Registrant'sNumber
PHARMAGREEN BIOTECH INC. |
(Exact name of registrant as specified in its charter) |
Nevada | 98-0491567 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2987 Blackbear Court, Coquitlam, British Columbia | V3E 3A2 | |
(Address of principal executive offices) | (Zip Code) |
702-803-9404
(Registrant’s telephone number, including area code)
Former Name, Address and Fiscal Year, If Changed Since Last Report
Check
Indicate by check mark whether the issuer:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 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 [ ]☐ No [X]
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 (ss.232.405(§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 [ ]☒ 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. See the definitiondefinitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Act:
Large accelerated filer | ☐ | Non-accelerated Filer | ☒ |
Accelerated filer | ☐ | Smaller reporting company | ☒ |
Emerging Growth | ☒ |
If an emerging growth company, [X]
(Doindicate by check mark if the registrant has elected not check if a smaller reporting company)
to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes [ ]☒ No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes [ ]☐ No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classissuer’s classes of common stock, as of the latest practicable date:
date.As of October 12, 2009, the issuerMay 16, 2022, we had 56,620,000404,221,269 shares of its common stock issued and outstanding.
TABLE of CONTENTS
| 2 |
| Table of Contents |
PART I - I—FINANCIAL INFORMATION
ITEM
Item 1. FINANCIAL STATEMENTS.
The interim financial statements included herein are unaudited but reflect,Financial Statements.
PHARMAGREEN BIOTECH INC.
Condensed Consolidated Financial Statements
For the Six Months Ended March 31, 2022
(Expressed in management's opinion, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of our financial
position and the results of our operations for the interim periods presented.
Because of the nature of our business, the results of operations for the
quarterly period ended July 31, 2009 are not necessarily indicative of the
results that may be expected for the full fiscal year.
2
Air Transport Group Holdings, Inc.
(fka Azure International, Inc.)
(A Development Stage Company)U.S. Dollars)
(Unaudited)
| 3 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Condensed Consolidated Balance Sheets
(Stated
(Expressed in US Dollars)
|
| March 31, 2022 |
|
| September 30, 2021 |
| ||
|
| $ |
|
| $ |
| ||
|
| (unaudited) |
|
|
| |||
Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Cash |
|
| 3,045 |
|
|
| 25,300 |
|
Amounts receivable |
|
| 70 |
|
|
| 290 |
|
Prepaid expenses and deposits (Notes 11 and 12) |
|
| 195,288 |
|
|
| 347,491 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
| 198,403 |
|
|
| 373,081 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities (Notes 3 and 7) |
|
| 721,228 |
|
|
| 659,437 |
|
Advances from Alliance Growers Corp. (Note 12(a)) |
|
| 60,055 |
|
|
| 59,122 |
|
Loans payable (Note 4) |
|
| 40,000 |
|
|
| 40,000 |
|
Convertible notes – current portion, net of unamortized discount of $14,282 and $nil, respectively (Note 5) |
|
| 206,552 |
|
|
| 190,834 |
|
Derivative liabilities (Notes 5 and 6) |
|
| 816,657 |
|
|
| 472,003 |
|
Due to related parties (Note 7) |
|
| 712,535 |
|
|
| 605,019 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
| 2,557,027 |
|
|
| 2,026,415 |
|
|
|
|
|
|
|
|
|
|
Loans payable (Note 4) |
|
| 32,029 |
|
|
| 31,532 |
|
Convertible notes, net of unamortized discount of $15,271 and $19,233, respectively (Note 5) |
|
| 11,797 |
|
|
| 7,834 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 2,600,853 |
|
|
| 2,065,781 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock Authorized: 1,000,000 shares, $0.001 par value; 10,000 shares issued and outstanding |
|
| 10 |
|
|
| 10 |
|
Common stock Authorized: 2,000,000,000 shares, $0.001 par value; 397,221,269 and 381,171,269 shares issued and outstanding, respectively (Note 8) |
|
| 397,221 |
|
|
| 381,171 |
|
Additional paid-in capital (Note 8) |
|
| 9,991,722 |
|
|
| 9,680,572 |
|
Accumulated other comprehensive loss |
|
| (28,311 | ) |
|
| (8,378 | ) |
Deficit |
|
| (12,716,434 | ) |
|
| (11,699,417 | ) |
|
|
|
|
|
|
|
|
|
Total Pharmagreen Biotech Inc. stockholders’ deficit |
|
| (2,355,792 | ) |
|
| (1,646,042 | ) |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
| (46,658 | ) |
|
| (46,658 | ) |
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
| (2,402,450 | ) |
|
| (1,692,700 | ) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit |
|
| 198,403 |
|
|
| 373,081 |
|
|
|
|
|
|
|
|
|
|
Nature of business and continuance of operations (Note 1) |
|
|
|
|
|
|
|
|
Commitments and contingency (Note 12) |
|
|
|
|
|
|
|
|
Subsequent event (Note 13) |
|
|
|
|
|
|
|
|
(The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Air Transport Group Holdings, Inc.
(fka Azure International, Inc.)
(A Development Stage Company)statements)
| 4 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Condensed Consolidated Statements of Operations (Statedand Comprehensive Loss
(Expressed in US Dollars)
(Unaudited)
|
| Three months ended March 31, 2022 $ |
|
| Three months ended March 31, 2021 $ |
|
| Six months ended March 31, 2022 $ |
|
| Six months ended March 31, 2021 $ |
| ||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Consulting fees (Note 7) |
|
| 424,363 |
|
|
| 56,053 |
|
|
| 563,891 |
|
|
| 106,193 |
|
Foreign exchange loss |
|
| (3,657 | ) |
|
| (2,801 | ) |
|
| (3,081 | ) |
|
| (13,907 | ) |
General and administrative |
|
| 20,904 |
|
|
| 19,248 |
|
|
| 48,117 |
|
|
| 43,660 |
|
Professional fees |
|
| 12,115 |
|
|
| 59,451 |
|
|
| 43,574 |
|
|
| 92,959 |
|
Salaries and wages |
|
| 5,135 |
|
|
| 4,998 |
|
|
| 10,019 |
|
|
| 9,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
| 458,860 |
|
|
| 136,949 |
|
|
| 662,520 |
|
|
| 238,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before other income (expenses) |
|
| (458,860 | ) |
|
| (136,949 | ) |
|
| (662,520 | ) |
|
| (238,573 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion of discount on convertible notes (Note 5) |
|
| (2,893 | ) |
|
| (13,246 | ) |
|
| (4,692 | ) |
|
| (85,622 | ) |
Interest and finance costs (Note 4 and 5) |
|
| (10,071 | ) |
|
| (626,807 | ) |
|
| (20,162 | ) |
|
| (663,037 | ) |
Loss on change in fair value of derivative liabilities (Note 6) |
|
| (563,917 | ) |
|
| (2,509,926 | ) |
|
| (329,643 | ) |
|
| (3,184,838 | ) |
Gain on settlement on convertible notes |
|
| 0 |
|
|
| 145,494 |
|
|
| 0 |
|
|
| 613,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
| (576,881 | ) |
|
| (3,004,485 | ) |
|
| (354,497 | ) |
|
| (3,319,971 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| (1,035,741 | ) |
|
| (3,141,434 | ) |
|
| (1,017,017 | ) |
|
| (3,558,544 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net loss attributable to non-controlling interest |
|
| 0 |
|
|
| 44 |
|
|
| 0 |
|
|
| 45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Pharmagreen Biotech Inc. |
|
| (1,035,741 | ) |
|
| (3,141,390 | ) |
|
| (1,017,017 | ) |
|
| (3,558,499 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| (17,470 | ) |
|
| (12,744 | ) |
|
| (19,933 | ) |
|
| (55,199 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to Pharmagreen Biotech Inc. |
|
| (1,053,211 | ) |
|
| (3,154,134 | ) |
|
| (1,036,950 | ) |
|
| (3,613,698 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share attributable to Pharmagreen Biotech Inc. stockholders |
|
| (0.00 | ) |
|
| (0.01 | ) |
|
| (0.00 | ) |
|
| (0.02 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding used in the calculation of net loss per share attributable to Pharmagreen Biotech Inc. |
|
| 394,410,713 |
|
|
| 307,043,543 |
|
|
| 389,278,687 |
|
|
| 231,249,242 |
|
(The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Air Transport Group Holdings, Inc.
(fka Azure International, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
From Inception (November 26, 2007) to July 31, 2009
(Statedstatements)
| 5 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(Expressed in US Dollars)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common |
|
| Additional |
|
| other |
|
|
|
|
| Non - |
|
| Total |
| ||||||||||
|
| Preferred stock |
|
| Common stock |
|
| stock |
|
| paid-in |
|
| comprehensive |
|
|
|
|
| controlling |
|
| stockholders’ |
| ||||||||||||||||
|
| Number of shares |
|
| Amount $ |
|
| Number of shares |
|
| Amount $ |
|
| issuable $ | capital $ | income (loss) $ | Deficit $ | interest $ | deficit $ |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance, September 30, 2020 |
|
| - |
|
|
| 0 |
|
|
| 95,806,289 |
|
|
| 95,806 |
|
|
| 180,000 |
|
|
| 3,967,261 |
|
|
| 36,679 |
|
|
| (7,167,346 | ) |
|
| (46,505 | ) |
|
| (2,934,105 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of units for cash |
|
| - |
|
|
| 0 |
|
|
| 5,400,000 |
|
|
| 5,400 |
|
|
| 0 |
|
|
| 21,600 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 27,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred shares for cash |
|
| 10,000 |
|
|
| 10 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock pursuant to the conversion of convertible notes |
|
| - |
|
|
| 0 |
|
|
| 144,315,380 |
|
|
| 144,316 |
|
|
| (180,000 | ) |
|
| 1,647,737 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,612,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services |
|
| - |
|
|
| 0 |
|
|
| 90,000 |
|
|
| 90 |
|
|
| 0 |
|
|
| 1,265 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (42,455 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (42,455 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (417,109 | ) |
|
| (1 | ) |
|
| (417,110 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
|
| 10,000 |
|
|
| 10 |
|
|
| 245,611,669 |
|
|
| 245,612 |
|
|
| 0 |
|
|
| 5,637,863 |
|
|
| (5,776 | ) |
|
| (7,584,455 | ) |
|
| (46,506 | ) |
|
| (1,753,252 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of units for cash |
|
| - |
|
|
| 0 |
|
|
| 17,411,250 |
|
|
| 17,411 |
|
|
| 6,113 |
|
|
| 72,701 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 96,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock pursuant to the conversion of convertible notes |
|
| - |
|
|
| 0 |
|
|
| 84,845,100 |
|
|
| 84,845 |
|
|
| 0 |
|
|
| 2,848,372 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,933,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services |
|
| - |
|
|
| 0 |
|
|
| 300,000 |
|
|
| 300 |
|
|
| 0 |
|
|
| 7,020 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 7,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (12,744 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (12,744 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (3,141,390 | ) |
|
| (44 | ) |
|
| (3,141,434 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021 |
|
| 10,000 |
|
|
| 10 |
|
|
| 348,168,019 |
|
|
| 348,168 |
|
|
| 6,113 |
|
|
| 8,565,956 |
|
|
| (18,520 | ) |
|
| (10,725,845 | ) |
|
| (46,550 | ) |
|
| (1,870,668 | ) |
Balance, September 30, 2021 |
|
| 10,000 |
|
|
| 10 |
|
|
| 381,171,269 |
|
|
| 381,171 |
|
|
| 0 |
|
|
| 9,680,572 |
|
|
| (8,378 | ) |
|
| (11,699,417 | ) |
|
| (46,658 | ) |
|
| (1,692,700 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for cash, net of issuance costs |
|
| - |
|
|
| 0 |
|
|
| 4,000,000 |
|
|
| 4,000 |
|
|
| 0 |
|
|
| 88,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 92,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (2,463 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (2,463 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 18,724 |
|
|
| 0 |
|
|
| 18,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
|
| 10,000 |
|
|
| 10 |
|
|
| 385,171,269 |
|
|
| 385,171 |
|
|
| 0 |
|
|
| 9,768,572 |
|
|
| (10,841 | ) |
|
| (11,680,693 | ) |
|
| (46,658 | ) |
|
| (1,584,439 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for cash |
|
| - |
|
|
| 0 |
|
|
| 1,450,000 |
|
|
| 1,450 |
|
|
| 0 |
|
|
| 25,050 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 26,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services |
|
| - |
|
|
| 0 |
|
|
| 10,600,000 |
|
|
| 10,600 |
|
|
| 0 |
|
|
| 198,100 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 208,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (17,470 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (17,470 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (1,035,741 | ) |
|
| 0 |
|
|
| (1,035,741 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
| 10,000 |
|
|
| 10 |
|
|
| 397,221,269 |
|
|
| 397,221 |
|
|
| 0 |
|
|
| 9,991,722 |
|
|
| (28,311 | ) |
|
| (12,716,434 | ) |
|
| (46,658 | ) |
|
| (2,402,450 | ) |
(The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Air Transport Group Holdings, Inc.
(fka Azure International, Inc.)
(A Development Stage Company)statements)
| 6 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Condensed Consolidated Statements of Cash Flows
(Stated
(Expressed in US Dollars)
(Unaudited)
|
| Six months ended March 31, 2022 |
|
| Six months ended March 31, 2021 |
| ||
|
|
|
|
|
|
| ||
OPERATING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Net loss |
|
| (1,017,017 | ) |
|
| (3,558,544 | ) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Accretion of discount on convertible notes |
|
| 4,692 |
|
|
| 85,622 |
|
Financing fees and default penalties |
|
| 0 |
|
|
| 663,037 |
|
Gain on settlement of convertible note |
|
| 0 |
|
|
| (613,526 | ) |
Loss on change in fair value of derivative liabilities |
|
| 329,643 |
|
|
| 3,184,838 |
|
Shares issued for services |
|
| 208,700 |
|
|
| 8,675 |
|
|
|
|
|
|
|
|
|
|
Changes in non-cash operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 220 |
|
|
| 34 |
|
Prepaid expenses and deposits |
|
| 152,203 |
|
|
| 3,754 |
|
Accounts payable and accrued liabilities |
|
| 61,791 |
|
|
| 84,334 |
|
Due to related parties |
|
| 55,450 |
|
|
| 36,232 |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
| (204,318 | ) |
|
| (105,544 | ) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible note |
|
| 30,000 |
|
|
| 0 |
|
Proceeds from issuance of units |
|
| 0 |
|
|
| 123,225 |
|
Proceeds from issuance of preferred shares |
|
| 0 |
|
|
| 10 |
|
Proceeds from issuance of shares, net of issuance costs |
|
| 118,500 |
|
|
| 0 |
|
Proceeds from loans from related party |
|
| 66,912 |
|
|
| 33,646 |
|
Repayment of loans from related parties |
|
| (14,846 | ) |
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
| 200,566 |
|
|
| 156,881 |
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash |
|
| (18,503 | ) |
|
| (50,018 | ) |
|
|
|
|
|
|
|
|
|
Change in cash |
|
| (22,255 | ) |
|
| 1,319 |
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period |
|
| 25,300 |
|
|
| 12,196 |
|
|
|
|
|
|
|
|
|
|
Cash, end of period |
|
| 3,045 |
|
|
| 13,515 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for settlement of convertible notes |
|
| 0 |
|
|
| 4,545,270 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
|
| 0 |
|
|
| 0 |
|
Income taxes paid |
|
| 0 |
|
|
| 0 |
|
(The accompanying notes are an integral part of these condensed consolidated financial statements.
6
AIR TRANSPORT GROUP HOLDINGSstatements)
| 7 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
(fka Azure International, Inc.)
(A Development Stage Company)
Footnotes
Notes to the Condensed Consolidated Financial Statements
From Inception to July
March 31, 2009
(Stated2022
(Expressed in US Dollars)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Air Transport Group Holdings, Inc (the "Company"U.S. dollars)
(Unaudited)
1. | Nature of Business and Continuance of Operations |
Pharmagreen Biotech Inc. (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on November 26, 2007, under the name Azure International, Inc. On October 30, 2008, and effective as of the same date, the Company filed Articles of Merger (“Articles”) with the Secretary of State of the State of Nevada, to effect a merger by and between Air Transport Group Holdings, Inc., a Nevada corporation and Azure International, Inc. As a result of the merger, the Company changed its name to Air Transport Group Holdings, Inc. The Company was previously in the business of providing technical advisory and appraisals to the aircraft and aviation business as well as providing sourcing for aircraft leases and parts. Pursuant to a Share Exchange Agreement with WFS Pharmagreen Inc. (“WFS”) on May 2, 2018, the Company changed its name to Pharmagreen Biotech Inc. and changed its principal business to the production of starter plantlets for the North American high CBD hemp and medical cannabis industries through the application of the proprietary plant tissue culture in vitro process called “Chibafreen”. This proprietary process will produce plantlets that will be genetically identical and free of pests and disease free with consistent and certifiable constituent properties. Going Concern These condensed consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at March 31, 2022, the Company has not earned any revenues from operations, has a working capital deficit of $2,358,624, and has an accumulated deficit of $12,716,434. During the six months ended March 31, 2022, the Company used cash flows for operations of $204,318. Furthermore, the Company has defaulted on convertible notes. These factors raise substantial doubt upon the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern. The outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Company’s supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Company’s operations and the operations of the Company’s suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. Specifically, the Company attributes the pandemic to a delay in a planned financing which was to be used for the construction of the biotech complex, resulting in an impairment of the capitalized construction-in-progress at September 30, 2020. The extent to which the COVID-19 pandemic further impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company’s customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources, and financial results. |
2. | Significant Accounting Policies | |
(a) | Interim Financial Statements | |
These condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. | ||
| 8 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
2. | Significant Accounting Policies (continued) | |
(b) | Basis of Presentation | |
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, WFS Pharmagreen Inc. (“WFS”), and its 89.7% owned subsidiary 1155097 B.C. Ltd. (“115BC”), companies incorporated in British Columbia, Canada. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is September 30. | ||
(c) | Use of Estimates and Judgments | |
The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the equity component of convertible notes, fair value of derivative liabilities, fair value of stock-based payments, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The Company applies judgment in the application of the going concern assumption which requires management to take into account all available information about the future, which is at least, but not limited to, 12 months from the end of the reporting period. | ||
(d) | Recently Adopted Accounting Pronouncements | |
The Company has implemented all new accounting pronouncements that are in effect and that may impact its condensed consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations |
3. | Accounts Payable and Accrued Liabilities |
Accounts payable and accrued liabilities consists of the following: |
|
| March 31, 2022 $ |
|
| September 30, 2021 $ |
| ||
|
|
|
|
|
|
| ||
Accounts payable |
|
| 622,554 |
|
|
| 579,851 |
|
Accrued interest payable |
|
| 98,674 |
|
|
| 79,586 |
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
| 721,228 |
|
|
| 659,437 |
|
| 9 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
4. | Loans Payable | |
(a) | On November 22, 2019, the Company entered into a promissory note with an unrelated party for $40,000 in connection with an equity purchase agreement (Refer to Note 12(b)). The promissory note is unsecured, was due on November 30, 2020, and bears interest on the unpaid principal balance at a rate of 10% per annum. At March 31, 2022, the Company has recorded accrued interest payable of $9,402 (September 30, 2021 - $7,410) and the promissory note is in default. Refer to Note 12(j). | |
(b) | On April 22, 2020, the Company received a loan for Cdn$40,000 from the Government of Canada under the Canada Emergency Business Account program (“CEBA”). As at March 31, 2022, the balance owing is $32,029 (Cdn$40,000) (September 30, 2021 - $31,532 (Cdn$40,000)). These funds are interest free until December 31, 2023, at which time the remaining balance will convert to a 2-year term loan at an interest rate of 5% per annum. If the Company repays the loan prior to December 31, 2023, there will be loan forgiveness of 25% of the principal balance repaid, up to a maximum of Cdn$10,000. | |
5. | Convertible Notes | |
(a) | On April 4, 2018, the amount of $32,485 owed to related parties was converted to Series A convertible notes, which are unsecured, non-interest bearing, and due on April 4, 2023. These notes are convertible in whole or in part, at any time until maturity, to common shares of the Company at $0.0001 per share. The outstanding balance remaining at maturity shall bear interest at 12% per annum until fully paid. The Company evaluated the convertible notes for a beneficial conversion feature in accordance with ASC 470-20 Debt with Conversion and Other Options. The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $32,485 as additional paid-in capital and reduced the carrying value of the convertible note to $nil. The carrying value will be accreted over the term of the convertible notes up to their face value of $32,485. | |
During the year ended September 30, 2018, the Company issued 31,745,000 shares of common stock upon the conversion of $3,174 of Series A convertible notes, which included 18,000,000 common shares to the President of the Company and 5,320,000 common shares to family members of the President of the Company. Upon conversion, the Company immediately recognized the related remaining debt discount of $3,112 as accretion expense. During the year ended September 30, 2019, the Company issued 3,900,000 shares of common stock upon the conversion of $390 of Series A convertible notes. Upon conversion, the Company immediately recognized the related remaining debt discount of $375 as accretion expense. During the year ended September 30, 2020, the Company issued 18,525,000 shares of common stock upon the conversion of $1,853 of Series A convertible notes. Upon conversion, the Company immediately recognized the related remaining debt discount of $1,670 as accretion expense. As at March 31, 2022, the carrying value of the convertible notes was $11,797 (September 30, 2021 – $7,834) and had an unamortized discount of $15,271 (September 30, 2021 - $19,233). During the six months ended March 31, 2022, the Company recorded accretion expense of $3,963 (2021 - $1,744). | ||
| 10 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
5. | Convertible Notes (continued) | |
(b) | On January 14, 2020, the Company entered into a convertible note with an unrelated party for $78,000, of which $3,000 was paid for financing costs, resulting in net proceeds to the Company of $75,000. The note was due on January 14, 2021, and bears interest on the unpaid principal balance at a rate of 12% per annum, which increases to 15% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to lower of: 65% of the lowest trading price during the 20-trading day period prior to the issuance date; or (ii) 65% of the lowest trading price during the 20-trading day period prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $76,330. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $74,500, resulting in a loss on change in fair value of derivative liabilities of $1,830, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $78,000. | |
The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company recognized accretion expense of $16,447. During the year ended September 30, 2021, the Company issued 2,600,000 shares of common stock upon the conversion of $18,923 of the convertible note and $4,500 of conversion fees. On January 14, 2021, the Company failed to repay the note upon maturity and recorded additional default principal of $53,007. As at March 31, 2022, the carrying value of the convertible note was $112,084 (September 30, 2021 - $112,084), and the fair value of the derivative liability was $447,469 (September 30, 2021 - $264,481). | ||
(c) | On January 22, 2020, the Company entered into a convertible note with an unrelated party for $78,750, of which $9,750 was paid directly to third parties for financing costs, resulting in proceeds to the Company of $69,000. The note is due on January 22, 2021, and bears interest on the unpaid principal balance at a rate of 10% per annum, payable in common stock, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 65% of the lowest trading price during the 20-trading day period ending on the latest complete trading day prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $75,179. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $68,500, resulting in a loss on change in fair value of derivative liabilities of $6,679, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $78,750. | |
The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company defaulted on the convertible note and recognized accretion expense of $78,250. On January 22, 2021, the Company failed to repay the note upon maturity. As at March 31, 2022, the carrying value of the convertible note was $78,750 (September 30, 2021 - $78,750) and the fair value of the derivative liability was $359,055 (September 30, 2021 - $207,522). |
| 11 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
5. | Convertible Notes (continued) | |
(d) | On March 11, 2022, the Company entered into a convertible note with an unrelated party for $30,000, with an advance on January 18, 2022 for the full amount. The note is due on January 18, 2023, and bears interest on the unpaid principal balance at a rate of 10% per annum. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to the closing price on the day of receiving the notice to convert. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the note and conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $15,011, which reduced the carrying value of the convertible note to $14,989. The carrying value will be accreted over the term of the convertible note up to its face value of $30,000. | |
As at March 31, 2022, the carrying value of the convertible note was $15,718 (September 30, 2021 - $nil), had an unamortized discount of $14,282 (September 30, 2021 - $nil), and the fair value of the derivative liability was $10,133 (September 30, 2021 - $nil). During the six months ended March 31, 2022, the Company recorded accretion expense of $729. |
6. | Derivative Liabilities | |
The embedded conversion option of the Company’s convertible notes described in Note 5 contain a conversion feature that qualifies for embedded derivative classification. The fair value of this liability will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on change in fair value of derivative liabilities. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities: | ||
Balance, September 30, 2021 | 472,003 | |||
Additions | 15,011 | |||
Change in fair value of embedded conversion option | 329,643 | |||
Balance, March 31, 2022 | 816,657 |
The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using a binomial model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: |
|
| Expected volatility |
|
| Risk-free interest rate |
|
| Expected dividend yield |
|
| Expected life (in years) |
| ||||
As at March 11, 2022 |
|
| 149 | % |
|
| 1.22 | % |
|
| 0 | % |
|
| 0.86 |
|
As at March 31, 2022 |
|
| 101 | % |
|
| 1.63 | % |
|
| 0 | % |
|
| 0.52 |
|
7. | Related Party Transactions | ||
(a) | As at March 31, 2022, the Company owed $603,681 (Cdn$753,911) (September 30, 2021 - $547,079 (Cdn$693,998)) to the President of the Company, which is non-interest bearing, unsecured, and due on demand. During the six months ended March 31, 2022, the Company incurred consulting fees of $47,495 (2021 - $47,384) to the President of the Company. | ||
(b) | As at March 31, 2022, the Company owed $108,854 (Cdn$135,943) (September 30, 2021 - $57,940 (Cdn$73,500)) to the father of the President of the Company, which is non-interest bearing, unsecured, and due on demand. | ||
(c) | As at March 31, 2022, the Company owed $27,385 (Cdn$34,200) (September 30, 2021 – $26,960 (Cdn$34,200)) to a company owned by the father of the President of the Company, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. | ||
| 12 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
7. | Related Party Transactions(continued) | |
(d) | As at March 31, 2022, the Company owed $497,614 (Cdn$621,448) (September 30, 2021 – $445,591 (Cdn$565,256)) to a company controlled by the Chief Financial Officer of WFS, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. During the six months ended March 31, 2022, the Company incurred consulting fees of $47,495 (2021 - $47,384) to the company controlled by the Chief Financial Officer of WFS. |
8. | Common Stock | |
Six months ended March 31, 2022 | ||
(a) | On October 21, 2021, the Company issued 4,000,000 shares of common stock at $0.025 per share for proceeds of $100,000. In connection with the financing, the Company incurred commission fees of $8,000. | |
(b) | On January 19, 2022, the Company issued 650,000 units at $0.01 per unit for proceeds of $6,500. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance. | |
(c) | On January 19, 2022, the Company issued 800,000 shares of common stock at $0.025 per share for proceeds of $20,000. | |
(d) | On January 19, 2022, the Company issued 6,800,000 shares of common stock with a fair value of $136,000 for consultation communication and media services (Note 12(g)). | |
(e) | On January 19, 2022, the Company issued 1,800,000 shares of common stock with a fair value of $36,000 for strategic and business development advisory services (Note 12(h)). | |
(f) | On January 21, 2022, the Company issued 1,000,000 shares with a fair value of $19,700 for management consulting and strategic business advisory services (Note 12(f)). | |
(g) | On February 10, 2022, the Company issued 1,000,000 shares of common stock with a fair value of $17,000 for market awareness services (Note 12(i)). |
9. | Preferred Stock | |
On October 13, 2020. The Company filed a certificate of amendment to its articles of incorporation, whereby it increased the authorized capital to 2,000,000,000 shares of common stock with a par value of $0.001 per share and 1,000,000 preferred shares with a par value of $0.001. On October 14, 2020, the Company designated 10,000 preferred shares as Series A Super Voting Preferred Stock. The Series A Super Voting Preferred Stock has the following rights and restrictions: Dividends - Initially, there will be no dividends due or payable on the Series A Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed. Liquidation and Redemption Rights - Upon the occurrence of a Liquidation Event, the holders of Series A Super Voting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series A Super Voting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. Rank - All shares of the Series A Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par value $0.001 per share ( “Common Stock” ), and any other class or series of capital stock of the Corporation hereafter created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii) pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series A Super Voting Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. | ||
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| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
9. | Preferred Stock (continued) |
Voting Rights - If at least one share of Series A Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. Each individual share of Series A Super Voting Preferred Stock shall have the voting rights equal to: |
· | [twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A, Series A and any newly designated Preferred stock issued and outstanding at the time of voting}] Divided by: | |
· | [the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting] | |
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or Bylaws. Protective Provisions - So long as any shares of Series A Super Voting Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series A Super Voting Preferred Stock, alter or change the rights, preferences or privileges of the Series A Super Voting Preferred so as to affect adversely the holders of Series A Super Voting Preferred Stock. On October 14, 2020, the Company issued 10,000 shares of Series A Super Voting Preferred Stock to a Director of the Company for proceeds of $10. In connection with the issuance of the Series A Super Voting Preferred Stock, the Company evaluated whether the preferred stock should be classified as a liability based on the guidance under ASC 480, Distinguishing Liabilities from Equity. The Series A Super Voting Preferred Stock are not considered mandatorily redeemable, are not settleable in a variable number of shares, and do not contain any features embedded that required a separate assessment. As a result, the Company determined the Series A Super Voting Preferred Stock were not a liability and classified the preferred stock within equity in the amount of the aggregate par value of the issued shares of preferred stock, with any excess attributed to additional paid-in capital. | ||
10. | Share Purchase Warrants | |
The following table summarizes the continuity of the Company’s share purchase warrants: | ||
|
| Number of warrants |
|
| Weighted average exercise price $ |
| ||
|
|
|
|
|
|
| ||
Balance, September 30, 2021 |
|
| 37,986,786 |
|
|
| 0.05 |
|
|
|
|
|
|
|
|
|
|
Issued |
|
| 650,000 |
|
|
| 0.05 |
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
| 38,636,786 |
|
|
| 0.05 |
|
| 14 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
10. | Share Purchase Warrants (continued) |
Number of warrants Exercise price Expiry date 114,286 $0.55 July 16, 2022 400,000 $0.05 December 2, 2022 3,000,000 $0.05 December 11, 2022 2,000,000 $0.05 December 30, 2022 2,300,000 $0.05 January 11, 2023 13,500,000 $0.05 January 30, 2023 1,000,000 $0.05 February 16, 2023 611,250 $0.05 March 1, 2023 6,961,250 $0.05 May 14, 2023 6,100,000 $0.05 August 25, 2023 2,000,000 $0.05 September 24, 2023 650,000 $0.05 January 19, 2024 38,636,786
11. | Memorandum of Understanding |
On July 25 2021, the Company entered into a Memorandum of Understanding (“MOU”) to acquire all the assets and cannabis business operation, including 12 acres of property, structure and cannabis licenses, existing sales channels and distribution networks, from a private company situated in Northern California. Upon reaching a definitive agreement, the Company intends to further develop a state- of-the-art flowering greenhouse of approximately 12,000 square feet or the maximum allowed by California State and Regional County. The acquisition price is $2,400,000 to be paid through a combination of cash and shares. The Company also has an option from the seller to acquire an additional 120 acres or more of land for business expansion and development. As at March 31, 2022, the Company has advanced $68,100 (September 30, 2021 - $nil) under the MOU, which will be applied against the final purchase price upon completion of a definitive agreement. This amount has been included in prepaid expenses and deposits. The Company currently lacks funds with which to consummate the contemplated transaction and has not negotiated a definitive agreement with respect to the contemplated transaction. Thus, there is no assurance that the Company will ever enter into, and consummate, a definitive agreement with respect to the contemplated transaction. |
12. | Commitments and Contingency |
(a) | Effective December 11, 2017, the Company entered into a binding Letter of Intent (“LOI”) with Alliance Growers Corp. (“Alliance”), whereby the Company will build a new cannabis biotech complex located in Deroche, British Columbia, through their subsidiary, 115BC. On January 25, 2019, the Company’s subsidiaries WFS and 115BC entered into an option agreement with Alliance, which superseded the LOI entered into on December 11, 2017. The option agreement grants an option to Alliance to purchase 10% equity interest in 115BC for Cdn$1,350,000 and previously granted a second option to purchase an additional 20% equity interest in 115BC for funding of 30% of the total construction and equipment costs for the biotech complex less Cdn$1,350,000. On January 25, 2019, 115BC issued 8 shares of common stock to Alliance upon exercise of the first option for consideration of $1,018,182 (Cdn$1,350,008), which was recognized as additional paid-in capital. The second option expired unexercised. As at March 31, 2022, the Company received advances of $60,055 (Cdn$75,000) (September 30, 2021 - $59,122 (Cdn$75,000)) from Alliance, which is unsecured, non-interest bearing, and due on demand. |
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| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
12. | Commitments and Contingency (continued) | |
(b) | On November 22, 2019, the Company entered into an equity purchase agreement with an unrelated party, whereby the third party is to purchase up to $10,000,000 of the Company’s common stock. The equity purchase agreement is effective for a term of 2 years from the effective date of the registration statement. The purchase price would be 85% of the market price. In return, the Company issued a promissory note of $40,000 (Refer to Note 4(a)). In addition, the Company is required to pay an additional commitment fee of $10,000, of which $5,000 was paid upon signing the term sheet and the remaining $5,000 is due upon completion of the first tranche of the financing. | |
(c) | Effective May 14, 2021, the Company entered into a Software as a Service Agreement with Novation Solutions Inc. (“DealMaker”) to effect the Company’s planned Regulation A offering, including the set-up of an automated tracking, signing, and reconciliation portal. The Company will pay DealMaker $3,000 upon signing the agreement, $7,000 30 days prior to launching the portal, and a post launch monthly fee of $1,000. The monthly fee will automatically renew each month for the shorter of the duration of the offering period, or one year. | |
(d) | Effective August 23, 2021, the Company entered into an infomercial production and broadcast agreement with New to the Street Group LLC. Pursuant to the terms of the agreement, New to the Street Group LLC will provide investor relations and consulting services in consideration for 6,000,000 shares of common stock for the first 3 months and, at the option of the Company, at $40,000 per month for a further 9 months, which can be paid in cash or shares of common stock at the Company’s discretion. On September 22, 2021, the Company issued 6,000,000 shares of common stock with a fair value of $210,000. During the six months ended March 31, 2022, the Company recognized consulting fees of $210,000 pursuant to the agreement. As at March 31, 2021, the Company has recognized $nil (September 30, 2021 – $188,137) in prepaid expenses and deposits. | |
(e) | Effective August 27, 2021, the Company entered into a consulting agreement for investor relations and consulting services for a period of 6 months. Pursuant to the agreement, the Company agreed to issue shares of common stock of the Company with a fair value of $100,000. On September 22, 2021, the Company issued 4,340,000 shares of common stock with a fair value of $147,560. During the six months ended March 31, 2022, the Company recognized consulting fees of $95,763 pursuant to the agreement. As at March 31, 2021, the Company has recognized $nil (September 30, 2021 – $95,763) in prepaid expenses and deposits. | |
(f) | On January 12, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 1,000,000 shares of common stock in exchange for management consulting and strategic business advisory services. On January 21, 2022, the Company issued a total of 1,000,000 shares of common stock with a fair value of $19,700 pursuant to the agreement (Note 8(f)). As at March 31, 2022, the Company recognized $11,210 (September 30, 2021 - $nil) in prepaid expenses and deposits. During the six months ended March 31, 2022, the Company recognized consulting fees of $8,490 (2021 - $nil) pursuant to the agreement. | |
(g) | On January 18, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue shares of common stock of the Company with a fair value of Cdn$100,000 in exchange for consultation communication and media services. In addition, the Company may choose to pay a bonus if certain predetermine milestones is met during the term of the agreement. On January 19, 2022, the Company issued a total of 6,800,000 shares of common stock with a fair value of $136,000 pursuant to the agreement (Note 8(d)). As at March 31, 2022, the Company recognized $81,901 (September 30, 2021 - $nil) in prepaid expenses and deposits. During the six months ended March 31, 2022, the Company recognized consulting fees of $54,099 (2021 - $nil) pursuant to the agreement. | |
(h) | On January 18, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 1,800,000 shares of common stock in exchange for strategic and business development advisory services. On January 19, 2022, the Company issued a total of 1,800,000 shares of common stock with a fair value of $36,000 pursuant to the agreement (Note 8(e)). As at March 31, 2022, the Company recognized $21,680 (September 30, 2021 - $nil) in prepaid expenses and deposits. During the six months ended March 31, 2022, the Company recognized consulting fees of $14,320 (2021 - $nil) pursuant to the agreement. |
| 16 |
| Table of Contents |
PHARMAGREEN BIOTECH INC.
Notes to the Condensed Consolidated Financial Statements
March 31, 2022
(Expressed in U.S. dollars)
(Unaudited)
12. | Commitments and Contingency (continued) | |
(i) | On February 7, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 1,000,000 shares of common stock in exchange for market awareness services. On February 10, 2022, the Company issued a total of 1,000,000 shares of common stock with a fair value of $17,000 pursuant to the agreement (Note 8(g)). As at March 31, 2022, the Company recognized $12,398 (September 30, 2021 - $nil) in prepaid expenses and deposits. During the six months ended March 31, 2022, the Company recognized consulting fees of $4,602 (2021 - $nil) pursuant to the agreement. | |
(j) | On March 10, 2021, a noteholder filed a Notice of Motion for Summary Judgement in Lieu of Complaint (the “Notice”) with the State of New York Supreme Court, County of New York for $40,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs. On July 31, 2021, the Notice was dismissed without prejudice by the State of New York Supreme Court. On September 23, 2021, the noteholder filed a new Notice of Motion for Summary Judgement in Lieu of Complaint with the State of New York Supreme Court, County of New York for $44,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs. The Company believes that the claim has no merit and intends to defend its position vigorously. |
13. | Subsequent Event | |
On May 3, 2022, the Company issued 7,000,000 shares of common stock for consulting services. | ||
| 17 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This section of the Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Company History Overview
Pharmagreen Biotech Inc. (“the Company”) was incorporated under the laws of Nevada, U.S. on November 26, 2007 under the name Azure International, Inc. On October 30, 2008 and effective as of the same date, the Company filed Articles of Merger ("Articles") with the Secretary
of State of the State of Nevada, to effect a merger by and between Air Transport Group Holdings, Inc., a Nevada corporation incorporated on October 16, 2008, and Azure International, Inc. As a result of the merger, the Company changed its name to Air Transport Group Holdings, Inc.
On March 10, 2009,April 12, 2018, the Company completedentered into a forward stock split of its
common stock on a ratio of ten shares for every one share of the Company.
The record date of the forward stock split was February 27, 2009, the
payment date of the forward split was March 9, 2009, and the ex-dividend
date of the forward split was March 10, 2009. The forward split was payable
as a dividend, thereby requiring no action by shareholders, nor any
amendment to the articles of incorporation of the Company.
The Company is in the development stage as defined under Statement on
Financial Accounting Standards No. 7, Development Stage Enterprises ("SFAS
No.7"). The Company has not generated any revenue to date and consequently
its operations are subject to all risks inherent in the establishment of a
new business enterprise. For the period from inception, November 26, 2007
through July 31, 2009 the Company has accumulated losses of $101,766. The
company is in the airline business as an independent consultant and
contractor.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected an April 30 year-end.
b. Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement
exists, goods delivered, the contract price is fixed or determinable, and
collectability is reasonably assured.
c. Income Taxes
The Company prepares its tax returns on the accrual basis. The Company
accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
7
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
d. Use of Estimates
The preparation of the financial statements in conformityexchange agreement with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
e. Assets
The company has no cash as of July 31, 2009.
f. Income
Income represents all of the Company's revenue less all its expenses in the
period incurred. The Company has no revenues as of July 31, 2009 and has
paid expenses of $101,766 since inception. For the period ended July 31,
2009 it has incurred expenses of $30,415.
g. Recent Account Pronouncements
June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets--an amendment of FASB Statement No. 140" ("SFAS 166"). The
provisions of SFAS 166, in part, amend the derecognition guidance in FASB
Statement No. 140, eliminate the exemption from consolidation for
qualifying special-purpose entities and require additional disclosures.
SFAS 166 is effective for financial asset transfers occurring after the
beginning of an entity's first fiscal year that begins after November 15,
2009. The Company does not expect the provisions of SFAS 166 to have a
material effect on the financial position, results of operations or cash
flows of the Company.
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB
Interpretation No. 46(R) ("SFAS 167"). SFAS 167 amends the consolidation
guidance applicable to variable interest entities. The provisions of SFAS
167 significantly affect the overall consolidation analysis under FASB
Interpretation No. 46(R). SFAS 167 is effective as of the beginning of the
first fiscal year that begins after November 15, 2009. SFAS 167 will be
effective for the Company beginning in 2010. The Company does not expect
the provisions of SFAS 167 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles
- a replacement of FASB Statement No. 162" ("SFAS No. 168"). Under SFAS No.
168 the "FASB Accounting Standards Codification" ("Codification") will
become the source of authoritative U. S. GAAP to be applied by
nongovernmental entities. Rules and interpretive releases of the Securities
and Exchange Commission ("SEC") under authority of federal securities laws
8
are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 is
effective for financial statements issued for interim and annual periods
ending after September 15, 2009. On the effective date, the Codification
will supersede all then-existing non-SEC accounting and reporting
standards. All other non-grandfathered non-SEC accounting literature not
included in the Codification will become non-authoritative. SFAS No. 168 is
effective for the Company's interim quarterly period beginning July 1,
2009. The Company does not expect the adoption of SFAS No. 168 to have an
impact on the financial statements.
In June 2009, the Securities and Exchange Commission's Office of the Chief
Accountant and Division of Corporation Finance announced the release of
Staff Accounting Bulletin (SAB) No. 112. This staff accounting bulletin
amends or rescinds portions of the interpretive guidance included in the
Staff Accounting Bulletin Series in order to make the relevant interpretive
guidance consistent with current authoritative accounting and auditing
guidance and Securities and Exchange Commission rules and regulations.
Specifically, the staff is updating the Series in order to bring existing
guidance into conformity with recent pronouncements by the Financial
Accounting Standards Board, namely, Statement of Financial Accounting
Standards No. 141 (revised 2007)WFS Pharmagreen Inc., Business Combinations, and Statement of
Financial Accounting Standards No. 160, Non-controlling Interests in
Consolidated Financial Statements. The statements in staff accounting
bulletins are not rules or interpretations of the Commission, nor are they
published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation
Finance and the Office of the Chief Accountant in administering the
disclosure requirements of the Federal securities laws.
In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments. This FSP amends FASB
Statement No. 107, Disclosures about Fair Value of Financial Instruments,
to require disclosures about fair value of financial instruments for
interim reporting periods of publicly traded companies as well as in annual
financial statements. This FSP also amends APB Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized financial
information at interim reporting periods. This FSP shall be effective for
interim reporting periods ending after June 15, 2009. The Company does not
have any fair value of financial instruments to disclose.
In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition
and Presentation of Other-Than-Temporary Impairments. This FSP amends the
other-than-temporary impairment guidance in U.S. GAAP for debt securities
to make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements. The FSP does not amend existing
recognition and measurement guidance related to other-than-temporary
impairments of equity securities. The FSP shall be effective for interim
and annual reporting periods ending after June 15, 2009. The Company
currently does not have any financial assets that are
other-than-temporarily impaired.
In April 2009, the FASB issued FSP No. FAS 141(R)-1, Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies, to address some of the application issues under SFAS 141(R).
The FSP deals with the initial recognition and measurement of an asset
acquired or a liability assumed in a business combination that arises from
a contingency provided the asset or liability's fair value on the date of
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acquisition can be determined. When the fair value can-not be determined,
the FSP requires using the guidance under SFAS No. 5, Accounting for
Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable Estimation
of the Amount of a Loss. This FSP was effective for assets or liabilities
arising from contingencies in business combinations for which the
acquisition date is on or after January 1, 2009. The adoption of this FSP
has not had a material impact on our financial position, results of
operations, or cash flows during the six months ended June 30, 2009.
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly"
("FSP FAS 157-4"). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are
not orderly. Additionally, entities are required to disclose in interim and
annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending after
June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4
will have a material impact on its financial condition or results of
operation.
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair
Value of a Financial Asset When the Market for That Asset is Not Active,"
("FSP FAS 157-3"), which clarifies application of SFAS 157 in a market that
is not active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The adoption
of FSP FAS 157-3 had no impact on the Company's results of operations,
financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only
FSP improves the transparency of transfers of financial assets and an
enterprise's involvement with variable interest entities, including
qualifying special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP effective
January 1, 2009. The adoption of the FSP had no impact on the Company's
results of operations, financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers'
Disclosures about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1").
FSP FAS 132(R)-1 requires additional fair value disclosures about
employers' pension and postretirement benefit plan assets consistent with
guidance contained in SFAS 157. Specifically, employers will be required to
disclose information about how investment allocation decisions are made,
the fair value of each major category of plan assets and information about
the inputs and valuation techniques used to develop the fair value
measurements of plan assets. This FSP is effective for fiscal years ending
after December 15, 2009. The Company does not expect the adoption of FSP
FAS 132(R)-1 will have a material impact on its financial condition or
results of operation.
In September 2008, the FASB issued exposure drafts that eliminate
qualifying special purpose entities from the guidance of SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," and FASB Interpretation 46 (revised
December 2003), "Consolidation of Variable Interest Entities - an
interpretation of ARB No. 51," as well as other modifications. While the
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proposed revised pronouncements have not been finalized and the proposals
are subject to further public comment, the Company anticipates the changes
will not have a significant impact on the Company's financial statements.
The changes would be effective March 1, 2010, on a prospective basis.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, determining
whether instruments granted in share-based payment transactions are
participating securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses
whether instruments granted in share-based payment transactions are
participating securities prior to vesting, and therefore need to be
included in the computation of earnings per share under the two-class
method as described in FASB Statement of Financial Accounting Standards No.
128, "Earnings per Share." FSP EITF 03-6-1 is effective for financial
statements issued for fiscal years beginning on or after December 15, 2008
and earlier adoption is prohibited. We are not required to adopt FSP EITF
03-6-1; neither do we believe that FSP EITF 03-6-1 would have material
effect on our consolidated financial position and results of operations if
adopted.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims liabilities.
This statement also requires expanded disclosures about financial guarantee
insurance contracts. SFAS No. 163 is effective for fiscal years beginning
on or after December 15, 2008, and interim periods within those years. SFAS
No. 163 has no effect on the Company's financial position, statements of
operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS
No. 162 sets forth the level of authority to a given accounting
pronouncement or document by category. Where there might be conflicting
guidance between two categories, the more authoritative category will
prevail. SFAS No. 162 will become effective 60 days after the SEC approves
the PCAOB's amendments to AU Section 411 of the AICPA Professional
Standards. SFAS No. 162 has no effect on the Company's financial position,
statements of operations, or cash flows at this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities--an amendment of FASB Statement No. 133. This standard requires
companies to provide enhanced disclosures about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect an entity's financial position, financial performance, and
cash flows. This Statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with
early application encouraged. The Company has not yet adopted the
provisions of SFAS No. 161, but does not expect it to have a material
impact on its consolidated financial position, results of operations or
cash flows.
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h. Basic Income (Loss) Per Share
In accordance with SFAS No. 128-"Earnings Per Share", the basic loss per
common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding.
Diluted loss per common share is computed similar to basic loss per common
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive. At July 31, 2009, the Company has no stock equivalents that were
anti-dilutive and excluded in the earnings per share computation.
i. Cash and Cash Equivalents
For purposes of the statement of cash flows, the company considers all
highly liquid investments purchased with maturity of three months or less
to be cash equivalents. As of July 31, 2009 the company had no cash.
j. Liabilities
Liabilities are made up of current liabilities and long-term liabilities.
Current liabilities include accounts payable of $10,200. There is a long
term liability of $6,316 outstanding for the company. The loan of $6,316 is
a related part loan as it is lent from a director. The loan is non-interest
bearing loan with no fixed due date.
Share Capital
a) Authorized:
75,000,000 common shares with a par value of $0.001
b) Issued:
The authorized capital of the Company is 75,000,000 common shares with a
par value of $0.001 per share. In February 2008, the Company issued
30,000,000 shares of common stock at a price of $0.0001 per share for total
cash proceeds of $3,000.
In February 2008, the Company issued 21,000,000 shares of common stock at a
price of $0.001 per share for total cash proceeds of $21,000.
In March 2008, the Company also issued 1,500,000 shares of common stock at
a price of $0.005 per share for total cash proceeds of $7,500.
On February 1, 2009, the Company issued 1,000,000 shares of common stock at
a price of $0.021 per share for total cash proceeds of $21,000.
On March 15, 2009, the Company also issued 100,000 shares of common stock
at a price of $0.075 per share for total cash proceeds of $7,500.
On March 10, 2009, the Company completed a forward stock split of its
common stock on a ratio of ten shares for every one share of the Company.
The record date of the forward stock split was February 27, 2009, the
payment date of the forward split was March 9, 2009, and the ex-dividend
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date of the forward split was March 10, 2009. The forward split was payable
as a dividend, thereby requiring no action by shareholders, nor any
amendment to the articles of incorporation of the Company.
On May 15, 2009, the Company issued a total of 3,020,000 shares of common
stock at an average price of $0.01 per share for the services provided to
the Company during the three months ended July 31, 2009.
There are no preferred shares authorized. The Company has issued no
preferred shares.
The Company has no stock option plan, warrants or other dilutive
securities.
k. Advertising
The Company expenses advertising as incurred. To this date, the Company has
incurred no advertising expenses.
l. Property Note
The Company does not own or rent any property. The office space is
contributed by a director at no charge.
NOTE 3 - REALATED PARTY
As of July 31, 2009 the Company owes a director $6,316 for expenses paid on
behalf of the Company. The amount is non interest bearing and due upon
demand. Imputed interest is not considered to material.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal
course of business. However, the Company has accumulated a loss and is new.
This raises substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from this uncertainty.
As shown in the accompanying financial statements, the Company has incurred
a net loss of $101,766 for the period from inception to July 31, 2009 and
has not generated any revenues. The future of the Company is dependent upon
its ability to obtain financing and upon future profitable operations from
the development of acquisitions. Management has plans to seek additional
capital through a private placement and public offering of its common
stock. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets, or the amounts of
and classification of liabilities that might be necessary in the event the
Company cannot continue in existence.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
The information in this discussion contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements involve risks and uncertainties,
including statements regarding Air Transport Group Holdings, Inc (the "Company")
capital needs, business strategy and expectations. Any statements contained
herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "expect", "plan",
"intend", "anticipate", "believe", "estimate", "predict", "potential" or
"continue", the negative of such terms or other comparable terminology. Actual
events or results may differ materially. In evaluating these statements, you
should consider various factors, including the risks outlined below, and, from
time to time, in other reports the Company files with the SEC. These factors may
cause the Company's actual results to differ materially from any forward-looking
statement. The Company disclaims any obligation to publicly update these
statements, or disclose any difference between its actual results and those
reflected in these statements. The information constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.
As used in this quarterly report, the terms "we," "us," "our," and "our company"
mean Air Transport Group Holdings, Inc. unless otherwise indicated. All dollar
amounts in this quarterly report are in U.S. dollars unless otherwise stated.
OVERVIEW
Air Transport Group Holdings, Inc ("the Company") wascompany incorporated under the laws of British Columbia, Canada, whereby the State of Nevada, U.S. on November 26, 2007 under the name Azure
International, Inc. On October 30, 2008, and effective asCompany acquired all of the same date,issued and outstanding shares of WFS Pharmagreen Inc. in exchange for 37,704,500 shares of common stock of the Company. Upon completion of this transaction, the shareholders of WFS Pharmagreen hold 95.5% of voting control of the Company.
Immediately prior to closing of the Agreement, the majority shareholder of the Company filed Articleswas also the majority shareholder of Merger ("Articles") with the Secretary of State of the
State of Nevada, to effect a merger by and between Air Transport Group Holdings,
Inc., a Nevada corporation and Azure International, Inc.WFS. As a result of the merger,common ownership upon closing of the transaction, the acquisition was considered a common-control transaction and was outside the scope of the business combination guidance in ASC 805-50. The entities are deemed to be under common control as of February 27, 2018, which was the date that the majority shareholder acquired control of the Company and, therefore, held control over both companies. On May 2, 2018, the Share Exchange Agreement was effected. In connection with this transaction, the Company changed its name on May 8, 2018 to Air Transport Group Holdings,Pharmagreen Biotech Inc. STRATEGY
Air Transport Group Holdingsand changed its year end from April 30th to September 30th.
Our principal executive offices are temporarily located at 2987 Blackbear Court, Coquitlam, British Columbia, Canada. Our telephone number is (702-803-9404). Our internet address is www.pharmagreen.ca.
On August 7, 2020, our company (including subsidiaries) filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the businessUnited States Bankruptcy Court for the District of acquiring aviation, travel,
and leisure companies. By acquiring multiple small to mid size companies AITG
plans to increase its efficienciesNevada, Case No. 20-13886.
On October 9, 2020, a stay order was lifted by consolidate management expenses, negotiate
preferred rates with vendors, and increasing its asset base.
RESULTS OF OPERATIONS FOR THE PERIOD ENDED JULY 31, 2009
The accompanying financial statements show thata United States District Judge of the United States District Court for the Southern District of New York, on an action filed by a lender. This effectively removed the Company has incurred a net
loss of $30,415from its Chapter 11 bankruptcy proceedings and protection.
We expect to continue to incur losses for at least the three month period ended July 31, 2009 and has not yet
generated any revenues that can offset operating expenses.next 12 months. We anticipate that we
will not earn revenues until such time as we have further advanced the
development of our company. We are presently in the development stage of our
business and we can provide no assurance of our ability to obtain future
profitable operation of our cooperation.
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LIQUIDITY AND FINANCIAL CONDITION
Based on our current operating plan, we do not expect to generate revenue that is sufficient to cover our expenses, for at least the next year. In addition,and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next year.twelve months. We will need to obtain additional financing, through equity security sales, debt instruments and private financing, to operateconduct our day-to-day operations, and to fully execute our business for the next twelve months.plan. We willplan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. These factors raise substantial doubt upon the Company’s ability to continue as a going concern. This report does not reflect all the adjustments that may be necessary if the Company is unable to continue as a going concern.
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Our Current Business
Pharmagreen Biotech Inc. (the “Company”) was incorporated under the laws of the State of Nevada on November 26, 2007. The Company is headquartered in Coquitlam, British Columbia. The Company’s mission is to advance the technology of tissue culture science and to provide the highest quality 100% germ free, disease free and all genetically the same plantlets of high CBD hemp and other flora and offering full spectrum DNA testing for plant identification, live genetics preservation using low temperature storage for various cannabis and horticulture plants; extraction of botanical oils mainly CBD oil, and to deliver laboratory based services to the North American high CBD hemp, Cannabis and agriculture sectors.
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favourable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company has decided that immediate business development in the hemp industry provides a much greater opportunity in the United States. The project at Deroche has been placed on hold while the Company moves forward to build out a similar infrastructure planned for Deroche within the United States.
On July 25, 2021, the Company entered into a Memorandum of Understanding to acquire all the assets and cannabis business operations (includes 12 acres property, structure and cannabis licenses, existing sales channels and distribution networks) from a private placementcompany situated in Northern California. Upon reaching a definitive agreement, the Company intends to further develop a state-of-the-art flowering greenhouse of approximately 12,000 square feet or the maximum allowed by California State and public offeringRegional County. The acquisition price is $2.4 million to be paid through a combination of cash and shares. The Company also has an option from the seller to acquire an additional 120 acres or more of land for business expansion and development. The Company currently lacks funds with which to consummate the contemplated transaction and has not negotiated a definitive agreement with respect to the contemplated transaction. Thus, there is no assurance that the Company will ever enter into, and consummate, a definitive agreement with respect to the contemplated transaction.
The outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Company’s supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Company’s operations and the operations of the Company’s suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. Specifically, the Company attributes the pandemic to a delay in a planned financing which was to be used for the construction of the biotech complex, resulting in an impairment of the capitalized construction-in-progress at September 30, 2020. The extent to which the COVID-19 pandemic further impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company’s customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources, and financial results.
Capital Resources and Liquidity
Our auditors have issued a “going concern” opinion, meaning that there is substantial doubt if we can continue as an on-going business unless we obtain additional capital. No substantial revenues from our planned business model are anticipated until we have completed financing the Company. As at March 31, 2022, the Company has a working capital deficit of $2,358,624 and an accumulated deficit of $12,716,434. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
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We need to seek capital from resources such as the sale of private placements in the Company’s common stock. Additional financing, whether through public or private equitystock or debt financing, arrangementswhich may not even be available to the Company. However, if such financing were available, because we are a, early-stage company with shareholdersno or other sourceslimited operations to date, it would likely have to pay additional costs associated with such financing and in the case of high risk loans be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such financing. If the Company cannot raise additional proceeds via such financing, it may be required to cease business operations.
As of March 31, 2022, we had $3,045 in cash, amounts receivable of $70, and prepaid expenses and deposits of $195,288, as compared to $25,300 in cash, amounts receivable of $290 and prepaid expenses and deposits of $347,491 as of September 30, 2021. As of the date of this Form 10-Q, the current funds available to the Company will not be sufficient to fund operations,the expenses related to maintaining our planned operations. We are in the process of seeking additional equity financing in the form of private placements, loans and registration statements to fund our intended business operations.
Management believes that if subsequent private placements are successful or we are successful in raising funds from registered securities, we will generate sales revenue within twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or if available, may be on terms unacceptableat all, and thus we could fail to us. Our
abilitysatisfy our future cash requirements.
We do not anticipate researching any further products nor the purchase or sale of any significant equipment. We also do not expect any significant additions to maintain sufficient liquidity is dependent on our ability to raise
additional capital. If we issue additional equity securities to raise funds, the ownership percentagenumber of our existing shareholders would be reduced. New
investors may demand rights, preferences or privileges senior to thoseemployees.
Results of existing holders of our common stock. Debt incurred by us would be senior to
equityOperations
Three Months Ended March 31, 2022
We had no revenue for the three months ended March 31, 2022 and 2021.
Operating expenses in the abilitythree months ended March 31, 2022 were $458,860 as compared to operating expenses for the three months ended March 31, 2021 of $136,949. The net increase in expenses during the current period is mainly due to an increase in consulting fees from $56,053 in 2021 to $424,363 in 2022, which was mainly related to an infomercial production agreement entered into with New to the Street Group LLC on May 13, 2021 and August 23, 2021.
We incurred a comprehensive loss of $1,053,211 during the three months ended March 31, 2022, compared to a comprehensive loss of $3,154,134 during the three months ended March 31, 2021. The decrease in comprehensive loss in 2022 was mainly attributable to a change in fair value of derivative liabilities from a loss of $2,509,926 in 2021 to a loss of $563,917 in 2022, as the Company had significantly more convertible debt holdersin the prior year which resulted in more fluctuations of the derivative liability due to make claimsthe floating rates attached to the conversion rights to the convertible debt.
During the three months ended March 31, 2022 and 2021, we incurred a net loss of $1,035,741 and $3,141,434 respectively.
Six Months Ended March 31, 2022
We had no revenue for the six months ended March 31, 2022 and 2021.
Operating expenses in the six months ended March 31, 2022 were $662,520 as compared to operating expenses for the six months ended March 31, 2021 of $238,573. The net increase in expenses during the current period is mainly due to an increase in consulting fees from $106,193 in 2021 to $563,891 in 2022, which was mainly related to infomercial production agreements entered into with New to the Street Group LLC on our assets.May 13, 2021 and August 23, 2021.
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We incurred a comprehensive loss of $1,036,950 during the six months ended March 31, 2022, compared to a comprehensive loss of $3,613,698 during the six months ended March 31, 2021. The termsdecrease in comprehensive loss in 2022 was mainly attributable to a change in fair value of anyderivative liabilities from a loss of $3,184,838 in 2021 to a loss of $329,643 in 2022, as we had significantly more convertible debt issued could impose restrictions on our operations. If adequate funds
are not availablein the prior year which resulted in more fluctuations of the derivative liability due to satisfy either short or long-term capital requirements, our
operationsthe floating rates attached to the conversion rights to the convertible debt and liquidity could be materially adversely affecteda decrease in interest and finance costs from $663,037 in 2021 to $20,162 in 2022 due to a lower overall face value of outstanding convertible debentures in the current period compared to last year. The decreases were offset by a gain of $613,526 for a settlement of convertible notes in 2021 that was a one-time settlement.
During the six months ended March 31, 2022 and 2021, we could be
forced to cease operations.
OFF-BALANCE SHEET ARRANGEMENTS
We haveincurred a net loss of $1,017,017 and $3,558,544 respectively.
Off-balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on our financial condition,
changes inthe company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that isare material to stockholders.
INFLATION
Ininvestors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the opinioncompany is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of management, inflation hasthe Exchange Act and are not had a material effect on our
operations.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our
incorporation.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patent or trademark.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEMrequired to provide the information required under this item.
Item 4. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We evaluated the effectivenessControls and Procedures.
Evaluation of our disclosureDisclosure Controls and Procedures
Disclosure controls and procedures as of
the date of this report. This evaluation was conducted by our President and
Chief Executive Officer, Arnold Leonora.
Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclosebe disclosed in theour reports we file
pursuant to the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported.
15
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f)filed or 15d-15(f) promulgatedsubmitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as amended,appropriate, to allow timely decisions regarding required disclosure.
In connection with this quarterly report, as a process designedrequired by orRule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the company'sour company’s management, including our company’s principal executive officer and principal financial officersofficer. Based upon that evaluation, our company’s principal executive officer and effected
by the company's boardprincipal financial officer concluded that as of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policiesMarch 31, 2022 our disclosure controls and procedures that:
- Pertainwere not effective due to the maintenanceexistence of records thatmaterial weaknesses in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations,our internal controlcontrols over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because ofreporting.
Changes in Internal Control Over Financial Reporting
There were no changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of July 31, 2009 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal
control over financial reporting established(as defined in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"Rule 13a-15(f) or 15d-15(f)) and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This
was due to deficienciesquarter ended March 31, 2022 that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
16
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of July 31, 2009.
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2009. Additionally, we plan to test our updated
controls and remediate our deficiencies by December 31, 2009.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially affected, or isare reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We
Saturna Group Chartered Professional Accountants LLP, our independent auditors, are not required to and have not performed an assessment of our internal controls over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
On July 22, 2020, the Company received a preliminary statement of claim from a convertible note holder for failure of the Company to deliver shares of common stock upon receipt of notices of conversion. Pursuant to the claim, the plaintiff has requested receipt of all shares of common stock requested in the notices of conversion, and also damages in an amount to be determined at trial but in any event in excess of principal amount of $78,000 for a total sum of $180,000, including without limitation the balance of any portion of the convertible note that ultimately is not converted into shares of common stock, along with default interest, liquidated damages, and damages as provided for in the convertible note.
On October 9, 2020, a stay order was lifted by a United States District Judge of the United States District Court for the Southern District of New York, on an action filed by a lender. This effectively removed the Company from its Chapter 11 bankruptcy proceedings and protection. The lifting of the stay order further allowed the convertible note holders to convert thereby increasing the number of shares issued and outstanding.
On October 29, 2020 a second note holder filed a statement of claim. This lender, as of December 24, 2020, has completely converted the full amount of the note of $100,000, interest of $8,690 and penalty and fees aggregating $19,500.
Also, as mentioned above, the Company filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada on August 7, 2020. The Company’s filing with the Court was designated as Case No. 20-13886. During the pendency of this matter, the Company has also filed motions with the Court seeking authorization to continue to operate its businesses as “debtors-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. Due to the stay order mentioned, the Company did not file a plan of reorganization with the Court for approval.
On March 12, 2021, the Company entered into a settlement agreement with the convertible noteholder that had filed a preliminary statement of claim on July 22, 2020. Pursuant to the agreement the Company was required to honor various conversion notices and the noteholder agreed to wave all principal, interest and penalties incurred.
On March 10, 2021, the promissory note holder referred to in Note 4 (a) of the accompanying consolidated financial statements filed a Notice of Motion For Summary Judgement in Lieu of Complaint (the “Notice”) with the State of New York Supreme Court, County of New York for $40,504 plus interest at the rate of 10% per annum from January 6, 2021 plus costs. On July 31, 2021, the Notice was dismissed without prejudice by the State of New York Supreme Court. On October 20, 2021, the promissory note holder filed an Amended Notice of Motion for Summary Judgment in Lieu of Complaint with the State of New York Supreme Court, County of New York for $44,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs and attorney fees. The Company believes the claim is without merit, as evidenced by the initial claim being dismissed by the same courts, and will vigorously defend its position.
Except as mentioned in the preceding paragraphs, there are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or stockholder is a party adverse to anythe Company or has a material legal proceedings andinterest adverse to our knowledge, no
such proceedings are threatened or contemplated.
ITEMthe Company.
Item 1A. RISK FACTORS.
Not applicable.
17
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to our security holders forRisk Factors.
As a vote during the period
ending January 31, 2009.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit Number Description of Exhibit
- -------------- ----------------------
31.1 Certification by Chief Executive Officer and Chief Financial
Officer required by“smaller reporting company,” as defined in Rule 13a-14(a) or Rule 15d-14(a)12b-2 of the Exchange Act, promulgated pursuantwe are not required to Section 302provide the information called for by this Item.
Item 2. Unregistered Sales of Securities and Use of Proceeds.
None
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Item 3. Defaults Upon Senior Securities.
The commencement of the Sarbanes-Oxley ActChapter 11 Cases discussed above constituted an event of 2002, filed herewith
32.1 Certification by Chief Executive Officer and Chief Financial
Officer, required by Rule 13a-14(b) or Rule 15d-14(b)default under certain of the Exchange Act and Section 1350 of Chapter 63 of Title 18Company’s debt instruments, including various convertible notes, which resulted in automatic acceleration of the United States Code, promulgated pursuantCompany’s obligations under such debt instruments. Any efforts to Section 906enforce payment obligations under the aforementioned debt instruments are automatically stayed as a result of the Sarbanes-Oxley Actfiling of 2002the Chapter 11 Cases and the creditors’ rights of enforcement in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.
Item 4. Mine Safety Disclosure.
N/A
Item 5. Other Information.
None
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Item 6. Exhibits.
The following documents are filed herewith
18
SIGNATURES
In accordanceas a part of this report or are incorporated by reference to previous filings, if so indicated:
Exhibit Number | Description | |
(3) | Articles of Incorporation; and (ii) Bylaws | |
(10) | Material Contracts | |
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(31) | Rule 13a-14(a)/15d-14(a) Certifications | |
31.2 | Certification of Principle Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.* | |
(32) | Section 1350 Certifications | |
32.2 | Certification of Principle Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document). | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Included in Exhibit 31.1
** Included in Exhibit 32.1
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SIGNATURES*
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 15, 2009
SIGNATURE TITLE DATE
--------- ----- ----
By: /s/ Arnold Leonora President and Director October 15, 2009
-----------------------------
Arnold Leonora
19
Pharmagreen Biotech Inc. | |||
Dated May 16, 2022 | By: | /s/ Peter Wojcik | |
Peter Wojcik | |||
President and Director Principal Executive Officer | |||
By: | /s/ Terry Kwan | ||
Terry Kwan | |||
Principal Accounting Officer |
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