Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Oct. 29, 2020 | Jan. 31, 2020 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Digerati Technologies, Inc. | ||
Entity Central Index Key | 0001014052 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --07-31 | ||
Document Type | 10-K | ||
Document Period End Date | Jul. 31, 2020 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 121,932,410 | ||
Entity Public Float | $ 11,427,383 | ||
Entity File Number | 001-15687 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | NV |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 31, 2020 | Jul. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 685 | $ 406 |
Accounts receivable, net | 208 | 262 |
Prepaid and other current assets | 361 | 107 |
Total current assets | 1,254 | 775 |
LONG-TERM ASSETS: | ||
Intangible assets, net | 1,451 | 1,832 |
Goodwill, net | 810 | 810 |
Property and equipment, net | 431 | 579 |
Other assets | 43 | 58 |
Investment in Itellum | 185 | 185 |
Right-of-use asset | 176 | |
Total assets | 4,350 | 4,239 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,487 | 1,264 |
Accrued liabilities | 1,840 | 1,493 |
Equipment financing | 62 | 65 |
Convertible note payable, current, net $295 and $547, respectively | 548 | 1,005 |
Note payable, current, related party, net of $0 and $7, respectively | 78 | 383 |
Note payable, current, net $0 and $0, respectively | 1,571 | 1,218 |
Deferred income | 279 | 285 |
Derivative liability | 606 | 927 |
Operating lease liability, current | 99 | |
Total current liabilities | 6,570 | 6,640 |
LONG-TERM LIABILITIES: | ||
Convertible debenture, net $0 and $29, respectively | 21 | |
Notes payable, related party, net $6 and $17, respectively | 85 | 136 |
Note payable, net $0 and $0, respectively | 193 | |
Equipment financing | 38 | 100 |
Operating lease liability | 77 | |
Total long-term liabilities | 393 | 257 |
Total liabilities | 6,963 | 6,897 |
Commitments and contingencies | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock,Value | ||
Common stock, $0.001, 150,000,000 shares authorized, 101,323,590 and 23,740,406 issued and outstanding, respectively (9,000,000 reserved in Treasury) | 101 | 24 |
Additional paid in capital | 86,364 | 82,972 |
Accumulated deficit | (88,697) | (85,320) |
Other comprehensive income | 1 | 1 |
Total Digerati's stockholders' deficit | (2,231) | (2,323) |
Noncontrolling interest | (382) | (335) |
Total stockholders' deficit | (2,613) | (2,658) |
Total liabilities and stockholders' deficit | 4,350 | 4,239 |
Series A Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock,Value | ||
Series B Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock,Value | ||
Series C Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock,Value | ||
Series F Super Voting Preferred stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock,Value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jul. 31, 2020 | Jul. 31, 2019 |
Convertible note payable, current, net | $ 295 | $ 547 |
Note payable, current, net | 0 | 7 |
Note payable, current, related party, net | 0 | 0 |
Convertible debenture, net | 0 | 29 |
Notes payable, related party, net | 6 | 17 |
Note payable non-current, net | $ 0 | $ 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 101,323,590 | 23,740,406 |
Common stock, shares outstanding | 101,323,590 | 23,740,406 |
Treasury Stock Shares | 9,000,000 | 9,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Preferred stock, shares issued | 225,000 | 225,000 |
Preferred stock, shares outstanding | 225,000 | 225,000 |
Series B Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 407,477 | 407,477 |
Preferred stock, shares outstanding | 0 | 0 |
Series C Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series F Super Voting Preferred stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100 | 100 |
Preferred stock, shares issued | 100 | 100 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
OPERATING REVENUES: | ||
Cloud software and service revenue | $ 6,279 | $ 6,040 |
Total operating revenues | 6,279 | 6,040 |
OPERATING EXPENSES: | ||
Cost of services (exclusive of depreciation and amortization) | 3,035 | 3,128 |
Selling, general and administrative expense | 4,106 | 4,208 |
Legal and professional fees | 642 | 390 |
Bad debt | (5) | 6 |
Depreciation and amortization expense | 613 | 669 |
Total operating expenses | 8,391 | 8,401 |
OPERATING LOSS | (2,112) | (2,361) |
OTHER INCOME (EXPENSE): | ||
Gain (loss) on derivative instruments | 263 | (74) |
Gain on settlement of debt | 129 | |
Income tax benefit (expense) | 33 | (47) |
Other income | 116 | |
Interest expense | (1,853) | (2,166) |
Total other income (expense) | (1,312) | (2,287) |
NET LOSS INCLUDING NONCONTROLLING INTEREST | (3,424) | (4,648) |
Less: Net loss attributable to the noncontrolling interests | 47 | 128 |
NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS | (3,377) | (4,520) |
Deemed dividend on Series A Convertible preferred stock | (19) | (29) |
NET LOSS ATTRIBUTABLE TO DIGERATI'S COMMON SHAREHOLDERS | $ (3,396) | $ (4,549) |
LOSS PER COMMON SHARE - BASIC | $ (0.06) | $ (0.27) |
LOSS PER COMMON SHARE - DILUTED | $ (0.06) | $ (0.27) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 53,883,966 | 16,650,507 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 53,883,966 | 16,650,507 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Deficit - USD ($) $ in Thousands | Convertible Series A Shares | Convertible Series B Shares | ConvertibleSeries F Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income | Stockholders Equity | Noncontrolling Interest | Total |
BALANCE at Jul. 31, 2018 | $ 13 | $ 79,993 | $ (80,800) | $ 1 | $ (793) | $ (207) | $ (1,000) | |||
BALANCE, Shares at Jul. 31, 2018 | 12,775,143 | |||||||||
Amortization of employee stock options | 419 | 419 | 419 | |||||||
Common stock issued for services, to employees | $ 2 | 310 | 312 | 312 | ||||||
Common stock issued for services, to employees, shares | 1,827,926 | |||||||||
Common stock issued for services | $ 1 | 248 | 249 | 249 | ||||||
Common stock issued for services, shares | 925,000 | |||||||||
Common stock issued for accrued interest payments on debt | 60 | 60 | 60 | |||||||
Common stock issued for accrued interest payments on debt, shares | 375,000 | |||||||||
Common Stock issued for debt conversion | $ 5 | 311 | 316 | 316 | ||||||
Common Stock issued for debt conversion, shares | 4,592,002 | |||||||||
Common stock issued concurrent with convertible debt | $ 1 | (1) | ||||||||
Common stock issued concurrent with convertible debt, Shares | 1,050,000 | |||||||||
Derivative liability resolved to APIC due to note conversion | 823 | 823 | 823 | |||||||
Net Ioss | (4,520) | (4,520) | (128) | 4,648 | ||||||
Common stock issued for settlement of accounts payable | 37 | 37 | 37 | |||||||
Common stock issued for settlement of accounts payable, shares | 138,714 | |||||||||
Common stock and warrants issued for cash | $ 1 | 264 | 265 | 265 | ||||||
Common stock and warrants issued for cash, shares | 938,621 | |||||||||
Common stock issued for investment in Itellum | $ 1 | 84 | 85 | 85 | ||||||
Common stock issued for investment in Itellum, shares | 500,000 | |||||||||
Common stock issued for debt | 43 | 43 | 43 | |||||||
Common stock issued for debt, shares | 288,000 | |||||||||
Common stock issued for debt extension | 54 | 54 | 54 | |||||||
Common stock issued for debt extension, Shares | 255,000 | |||||||||
Common Stock issued for accrued interest payments on debt | 60 | 60 | 60 | |||||||
Common Stock issued for accrued interest payments on debt, Shares | 375,000 | |||||||||
Common stock issued, exercise of warrants | 7 | 7 | 7 | |||||||
Common Stock issued, exercise of warrants, Shares | 75,000 | |||||||||
Convertible Series A Preferred stock issued for cash | 225 | 225 | 225 | |||||||
Convertible Series A Preferred stock issued for cash, shares | 225,000 | |||||||||
Debt discount from warrants issued with debt | 31 | 31 | 31 | |||||||
Warrants expense amortization | 64 | 64 | 64 | |||||||
Beneficial conversion feature on Convertible Series A Preferred stock | 29 | 29 | 29 | |||||||
Deemed dividend from beneficial conversion feature on Convertible Series A Preferred stock | (29) | (29) | (29) | |||||||
BALANCE at Jul. 31, 2019 | $ 24 | 82,972 | (85,320) | 1 | (2,323) | (335) | (2,658) | |||
BALANCE, Shares at Jul. 31, 2019 | 225,000 | 23,740,406 | ||||||||
Amortization of employee stock options | 377 | 377 | 377 | |||||||
Common stock issued for services, to employees | $ 22 | 780 | 802 | 802 | ||||||
Common stock issued for services, to employees, shares | 21,811,100 | |||||||||
Common stock issued for services | $ 1 | 15 | 16 | 16 | ||||||
Common stock issued for services, shares | 400,000 | |||||||||
Common stock issued for cash | $ 4 | 95 | 99 | 99 | ||||||
Common stock issued for cash, shares | 3,893,625 | |||||||||
Common stock issued, settlement of debt | 5 | 5 | 5 | |||||||
Common stock issued, settlement of debt | 200,000 | |||||||||
Common stock issued, extension of debt | 50 | 50 | 50 | |||||||
Common stock issued, extension of debt, shares | 780,000 | |||||||||
Common Stock issued for debt conversion | $ 36 | 489 | 525 | 525 | ||||||
Common Stock issued for debt conversion, shares | 35,936,326 | |||||||||
Common stock issued concurrent with convertible debt | 12 | 12 | 12 | |||||||
Common stock issued concurrent with convertible debt, Shares | 500,000 | |||||||||
Convertible Series B Preferred stock and common stock issued for debt settlement | $ 14 | 672 | 686 | 686 | ||||||
Convertible Series B Preferred stock and common stock issued for debt settlement, shares | 407,477 | 13,582,554 | ||||||||
Common stock issued for conversion of Convertible Series A Preferred stock | ||||||||||
Common stock issued for conversion of Convertible Series A Preferred stock, shares | (25,000) | 86,667 | ||||||||
Derivative liability resolved to APIC due to note conversion | 872 | 872 | 872 | |||||||
Convertible Series A Preferred stock and warrants issued for AP settlement | 25 | 25 | 25 | |||||||
Convertible Series A Preferred stock and warrants issued for AP settlement, shares | 25,000 | |||||||||
Super Voting Preferred Stock Series F | ||||||||||
Super Voting Preferred Stock Series F, shares | 100 | |||||||||
Dividends declared | (19) | (19) | (19) | |||||||
Net Ioss | (3,377) | (3,377) | (47) | 3,424 | ||||||
BALANCE at Jul. 31, 2020 | $ 101 | $ 86,364 | $ (88,697) | $ 1 | $ (2,231) | $ (382) | $ (2,613) | |||
BALANCE, Shares at Jul. 31, 2020 | 225,000 | 407,477 | 100 | 101,323,590 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,424) | $ (4,648) |
Adjustments to reconcile net loss to cash used in by operating activities: | ||
Depreciation and amortization | 613 | 669 |
Stock compensation and warrant expense | 1,127 | 1,044 |
Bad debt expense (recovery) | (5) | 6 |
Loss on AP settled with stock | 5 | |
Interest expense from stock issued for debt extension | 24 | |
Amortization of ROU asset - operating | 140 | |
Amortization of debt discount | 1,228 | 1,466 |
Loss (Gain) on derivative liabilities | (263) | 74 |
Gain settlement of debt | (134) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 60 | (40) |
Prepaid expenses and other current assets | (23) | 18 |
Right of use operating lease liability | (140) | |
Accounts payable | 235 | 171 |
Accrued expenses | 646 | 661 |
Deferred income | (6) | 23 |
Net cash provided by (used in) operating activities | 54 | (527) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid in acquisition of equipment | (85) | (52) |
Cash paid for escrow deposit related to acquisition | (127) | (83) |
Net cash used in investing activities | (212) | (135) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of stock and warrants | 99 | 473 |
Borrowings from convertible debt, net of original issuance cost and discounts | 435 | 1,044 |
Borrowings from related party note, net | 70 | 25 |
Borrowings from third party promissory notes, net | 556 | 100 |
Principal payments on convertible notes, net | (140) | (651) |
Principal payments on related party notes, net | (443) | (153) |
Principal payments on third party promissory notes, net | (125) | |
Principal payment on equipment financing | (65) | (33) |
Payment of debt financing cost | (75) | |
Net cash provided by financing activities | 437 | 680 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 279 | 18 |
CASH AND CASH EQUIVALENTS, beginning of period | 406 | 388 |
CASH AND CASH EQUIVALENTS, end of period | 685 | 406 |
SUPPLEMENTAL DISCLOSURES: | ||
Cash paid for interest | 547 | 541 |
Income tax paid | ||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Debt discount from warrants issued with debt | 31 | |
Debt discount from common stock issued with debt | 12 | 43 |
Debt discount from derivative liabilities | 814 | 1,044 |
Debt from assignment of accrued interest | 113 | |
Capitalization of ROU assets and liabilities - operating | 316 | |
Preferred Stock Series A and warrants issued for AP settlement | 25 | |
Preferred Stock Series B issued for debt conversion and settlement | 408 | |
Common Stock issued for debt conversion | 525 | 316 |
Common Stock issued for interest payment | 18 | 60 |
Common Stock issued for debt extension | 50 | 29 |
Deemed dividend on Series A Convertible preferred stock | (29) | |
Dividend declared | 19 | |
Derivative liability resolved to APIC due to debt conversion | 872 | 823 |
Capitalized expense related to debt financing cost | 13 | |
Equipment Financing on purchased assets | 104 | |
Stock issued for investment in Itellum | 85 | |
Note payable issued for investment in Itellum | $ 18 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business. provide cloud services specializing in Only in the Cloud™ Principles of Consolidation. Cost Method Investment. Prepaid Acquisition costs & debt financing costs. provider in South Florida of UCaaS and managed services, offering a portfolio of cloud-based solutions to the high-growth SMB market. Gain on settlement of debt Reclassifications. Use of Estimates. Beneficial conversion features. Related parties. Concentration of Credit Risk. Revenue Recognition. Sources of revenue: Cloud-based hosted Services. The Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company's revenue is recognized at the time control of the products transfers to the customer. Service Revenue Service revenue from subscriptions to the Company's cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively, customers may choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally as services are activated for the customer. Product Revenue The Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience. Disaggregation of Cloud-based hosted revenues Summary of disaggregated revenue is as follows (in thousands): For the Years ended July 31, 2020 2019 Cloud software and service revenue $ 6,212 $ 5,847 Product revenue 67 193 Total operating revenues $ 6,279 $ 6,040 Contract Assets Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement; for example, when the initial month's services or equipment are discounted. Contract assets are included in prepaid and other current assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract assets as of July 31, 2020 and July 31, 2019, were $5,980 and $22,967, respectively. Deferred Income Deferred income represents billings or payment received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding 12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other noncurrent liabilities in the consolidated balance sheets. Deferred income as of July 31, 2020 and July 31, 2019, were $148,000 and $153,000, respectively. Customer deposits. The Company in some instances requires customers to make deposits for equipment, installation charges and training. As equipment is installed and training takes places the deposits are then applied to revenue. As of July 31, 2020, and 2019, Digerati's customer deposits balance was $131,000 and $132,000, respectively. Costs to Obtain a Customer Contract Sales commissions are paid upon collections of related revenue and are expensed during the same period. Sales commissions for the year ended July 31, 2020 and the year ended July 31, 2019, were $38,976 and $52,613, respectively. Direct Costs - Cloud-based hosted Services We incur bandwidth and colocation charges in connection with our UCaaS or cloud communication services. The bandwidth charges are incurred as part of the connectivity between our customers to allow them access to our various services. We also incur costs from underlying providers for fiber, Internet broadband, and telecommunication circuits in connection with our data and connectivity solutions. Cash and cash equivalents. Allowance for Doubtful Accounts. Bad debt expense is recognized based on management's estimate of likely losses each year based on past experience and an estimate of current year uncollectible amounts. As of July 31, 2020, and 2019, Digerati's allowance for doubtful accounts balance was $124,000 and $115,000, respectively. Property and equipment. Goodwill, Intangible Assets, and Long-Lived Assets Goodwill is carried at cost and is not amortized. The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350. The Company completed an evaluation of goodwill at July 31, 2020 and determined that there was no impairment. The fair value of the Company's reporting unit is dependent upon the Company's estimate of future cash flows and other factors. The Company's estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company's market capitalization plus a suitable control premium at date of the evaluation. The financial and credit market volatility directly impacts the Company's fair value measurement through the Company's weighted average cost of capital that the Company uses to determine its discount rate and through the Company's stock price that the Company uses to determine its market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded. The Company recognizes an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value. The Company reviews its long-lived assets, including property and equipment, identifiable intangibles, and goodwill annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets. Impairment of Long-Lived Assets. Business combinations. Derivative financial instruments For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, any changes in fair value is recorded as non-operating, non-cash income or expense for each reporting period. For option-based derivative financial instruments, warrants and notes payable conversion options Digerati uses the Black-Scholes option-pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date. Notes payable conversion options are recorded as debt discounts and are amortized as interest expense over the term of the related debt instrument. Treasury Shares. Fair Value of Financial Instruments. Level 1 Level 2 Level 3 For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities. Our derivative liabilities as of July 31, 2020 and 2019 of $606,000 and $927,000, respectively. The following table provides the fair value of the derivative financial instruments measured at fair value using significant unobservable inputs: Fair value measurements at reporting date using: Quoted prices in active markets Significant other Significant Description Fair Value (Level 1) (Level 2) (Level 3) Convertible promissory notes derivative liability at July 31, 2019 $ 927,171 - - $ 927,171 Convertible promissory notes derivative liability at July 31, 2020 $ 606,123 - - $ 606,123 The fair market value of all derivatives during the year ended July 31, 2020 was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 83.28% - 268.02% Risk-free interest rate 0.09% -2.67% Expected term 0.01 - 1.00 years Level 3 inputs. The following table provides a summary of the changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant unobservable inputs: Balance at July 31, 2018 $ 632,268 Derivative from new convertible promissory notes recorded as debt discount 1,043,834 Derivative liability resolved to additional paid in capital due to debt conversion (822,922 ) Derivative loss 73,991 Balance at July 31, 2019 $ 927,171 Derivative from new convertible promissory notes recorded as debt discount 814,180 Derivative liability resolved to additional paid in capital due to debt conversion (872,914 ) Derivative loss (262,314 ) Balance at July 31, 2020 $ 606,123 Income taxes. Since January 1, 2007, Digerati accounts for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, Digerati recognizes a tax benefit only if it is "more likely than not" that a particular tax position will be sustained upon examination or audit. To the extent the "more likely than not" standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. As of July 31, 2020, we have no liability for unrecognized tax benefits. Stock-based compensation. Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. Basic and diluted net income (loss) per share. 7/31/2020 7/31/2019 Options to purchase common stock 5,000,000 4,940,000 Warrants to purchase common stock 2,240,000 2,700,000 Convertible debt 37,304,080 13,113,643 Total: 44,544,080 20,753,643 Noncontrolling interest. Consolidation, The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss). For the year ended July 31, 2020 and 2019, the Company recognized a noncontrolling deficits of $47,000 and $128,000, respectively. Recently issued accounting pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments under this pronouncement will change the way all leases with a duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or Operating lease liability. The right-of-use asset represents the lessee's right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee's obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases are under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. This update is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2018. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provided additional implementation guidance on the previously issued ASU. The C In August 2020, the FASB issued "ASU 2020-06, Debt with Conversion and Other Options (Subtopic 47020) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)" which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the potential on its financial statements. |
Going Concern
Going Concern | 12 Months Ended |
Jul. 31, 2020 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 2 – GOING CONCERN Financial Condition Digerati’s consolidated financial statements for the year ending July 31, 2020 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Digerati has incurred net losses and accumulated a deficit of approximately $88,697,000 and a working capital deficit of approximately $5,316,000 which raises substantial doubt about Digerati’s ability to continue as a going concern. Management Plans to Continue as a Going Concern Management believes that current available resources will not be sufficient to fund the Company’s operations over the next 12 months. The Company’s ability to continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional capital or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company will seek to secure such additional funding from various possible sources, including the public equity market, private financings, sales of assets, collaborative arrangements, and debt. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to delay or reduce the scope of its operations, and the Company may not be able to pay off its obligations, if and when they come due. The Company will continue to work with various funding sources to secure additional debt and equity financings. However, Digerati cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern. Digerati’s consolidated financial statements as of July 31, 2020 do not include any adjustments that might result from the inability to implement or execute Digerati’s plans to improve our ability to continue as a going concern. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Jul. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 3 – INTANGIBLE ASSETS During FY 2008, Digerati made a loan of $150,000 to NetSapiens Inc. The note receivable had a maturity date of June 26, 2008 with interest at 8% per year. The note was secured by NetSapiens' proprietary Starter Platform License and SNAPsolution modules. On June 26, 2008 Digerati converted the outstanding interest and principal balance into a lifetime and perpetual NetSapiens' License. The License provides Digerati with the ability to offer Hosted PBX ( On December 1, 2017, Shift8 and Synergy Telecom, Inc., a Delaware corporation ("Synergy"), closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy. The total purchase price was $425,000, the acquisition was accounted for under the purchase method of accounting, with Digerati identified as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by Digerati was allocated to customer contracts acquired, software licenses, and goodwill based on their fair values as of December 1, 2017. The following information summarizes the allocation of the fair values assigned to the assets. The allocation of fair values is based on an extensive analysis and is subject to changes in the future during the measurement period. Synergy Useful life Customer relationship $ 40,000 5 License - software 105,000 3 Goodwill 280,000 - Total Purchase price $ 425,000 For the years ended July 31, 2020 and 2019, amortization expense for the acquired intangible was $25,504 and $60,500, respectively. On May 2, 2018, the Company closed on the Merger Agreement with T3 Communications, Inc. to increase its customer base and obtain higher efficiency of its existing infrastructure. The total purchase price was $3,211,945 paid in cash at closing. The acquisition was accounted for under the purchase method of accounting, with the Company identified as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by the Company was allocated to cash, customer contracts acquired, current assets, property plant and equipment and assumed payables based on their estimated fair values as of May 2, 2018. The following information summarizes the allocation of the purchase price assigned to intangible assets. The allocation of fair values is based on an extensive analysis and is subject to changes in the future during the measurement period. T3 Useful life Customer relationships $ 1,480,000 7 Marketing & Non-compete 800,000 5 Goodwill 530,353 - Total $ 2,810,353 For the years ended July 31, 2020 and 2019, amortization expense for the acquired assets totaled approximately $371,000 and $371,000, respectively. Intangible assets at July 31, 2020 and 2019 are summarized in the tables below: July 31, 2020 Gross Accumulated Net Carrying NetSapiens - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (20,672 ) 19,328 Customer relationships, 7 years 1,480,000 (487,505 ) 992,495 Marketing & Non-compete, 5 years 800,000 (360,000 ) 440,000 Total Define-lived Assets 2,470,000 (1,018,177 ) 1,451,823 Goodwill, Indefinite 810,353 - 810,353 Balance, July 31, 2020 $ 3,280,353 $ (1,018,177 ) $ 2,262,176 July 31, 2019 Gross Accumulated Amortization Net Carrying Amount NetSapiens - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (12,672 ) 27,328 Customer relationships, 7 years 1,480,000 (276,077 ) 1,203,923 Marketing & Non-compete, 5 years 800,000 (200,000 ) 600,000 Total Define-lived Assets 2,470,000 (638,749 ) 1,831,251 Goodwill, Indefinite 810,353 - 810,353 Balance, July 31, 2019 $ 3,280,353 $ (638,749 ) $ 2,641,604 Total amortization expense for the periods ended July 31, 2020 and 2019 was approximately $379,000 and $379,000, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jul. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Following is a summary of Digerati’s property and equipment at July 31, 2020 and 2019 (in thousands): Useful lives 2020 2019 Telecom equipment & software 1-5 years $ 1,064 $ 978 Less: accumulated depreciation (633 ) (399 ) Net–property and equipment $ 431 $ 579 The Company uses straight-line depreciation, for the years ended July 31, 2020 and 2019, depreciation totaled approximately $234,000 and $289,000, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Jul. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 5 – INCOME TAXES Digerati files a consolidated tax return. The current tax year is subject to examination by the Internal Revenue Service and certain state taxing authorities. As of July 31, 2020, Digerati had net operating loss carryforwards of approximately $8,157,234 to reduce future federal income tax liabilities; the loss carryforwards will start to expire in 2020. Under the recently enacted Tax Cuts and Jobs Act (TCJA), the new effective Corporate flat tax rate is 21% (effective for tax years beginning after December 31, 2017). Income tax benefit (provision) for the years ended July 31, 2020 and 2019 are as follows: The effective tax rate for Digerati is reconciled to statutory rates as follows: 2020 2019 Expected Federal benefit (provision), at statutory rate 21.0 % 21.0 % Change in valuation allowance (21.0 )% (21.0 )% 0.0 % 0.0 % Deferred tax assets are comprised of the following as of July 31, 2020 and 2019: 2020 2019 Net operating loss carryover $ 1,713,019 $ 1,805,310 Valuation allowance (1,713,019 ) (1,805,310 ) Total deferred tax asset, net $ - $ - At July 31, 2020, realization of Digerati’s deferred tax assets was not considered likely to be realized. The change in the valuation allowance for 2020 was resulted in a decrease of approximately $92,291. Management has evaluated and concluded that there are no significant uncertain tax positions requiring recognition in Digerati’s combined financial statements. The current year remains open to examination by the major taxing jurisdictions in which Digerati is subject to tax. The Company files a calendar year return, and the net operating loss was adjusted for the fiscal year ended July 31, 2020. During the year ended July 31, 2020 the Company issued 77,583,184 common shares, and under our initial assessment this will likely result in a change of control and the net operation loss (NOL’s) became subject to the separate return limitation year. We will evaluate during the tax year and consider the limitations. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluate on new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Jul. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 6 – STOCK-BASED COMPENSATION In November 2015, Digerati adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the "Plan"). The Plan authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards to employees, directors, and certain other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals who will contribute to the overall success of Digerati. Digerati's Board of Directors determines the terms of any grants under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock as of the date of grant. The stock options, restricted common stock, non-restricted common stock and other awards vest based on the terms of the individual grant. During the year ended July 31, 2019, we issued: ● 635,156 common shares to various employees as part of the Company's Non-Standardized profit-sharing plan contribution. The Company recognized stock-based compensation expense of approximately $114,000 equivalent to the value of the shares calculated based on the share's closing price at the grant dates. ● 100,000 options to purchase common shares to a member of the Board of Directors with an exercise price of $0.18 per share and a term of 5 years. The options vest equally over a period of one year. At the time of issuance the options had a fair market value of $11,406. ● 1,725,000 options to purchase common shares to members of the Management team with an exercise price of $0.19 per share and a term of 5 years. The options vest equally over a period of one year. At the time of issuance the options had a fair market value of $217,263. ● 250,000 options to purchase common shares to an employee with an exercise price of $0.25 per share and a term of 5 years. The options vest equally over a period of two years. At the time of issuance the options had a fair market value of $39,175. ● 1,192,770 common shares to members of the Management team for services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $198,000 equivalent to the value of the shares calculated based on the share's closing price at the grant dates. ● 1,350,000 shares of common stock to the Executive Officers, with a market value at time of issuance of $256,500, the Stock Grant will vest upon the earlier of the Company achieving $15 million in annualized revenue or listing on a primary stock exchange (e.g. NASDAQ or NYSE American) and will be subject to adjustment for any forward or reverse split of the Company's stock. The Company recognized approximately $85,500 in stock-based compensation expense related to this issuance during the year ended July 31, 2019. Unamortized compensation cost totaled $171,000 at July 31, 2019. During the year ended July 31, 2019 we issued the following to non-employee professionals: ● In November 2018, the Company issued an aggregate of 200,000 shares of common stock with a market value at time of issuance of $69,600. The shares were issued for consulting services. ● In February 2019, the Company issued an aggregate of 325,000 shares of common stock with a market value at time of issuance of $78,000. The shares were issued for consulting services. ● In February 2019, the Company issued an aggregate of 400,000 shares of common stock with a market value at time of issuance of $100,000. The shares were issued for consulting services. The fair market value of all options issued was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 178.79% - 260.07% Risk-free interest rate 1.84% - 2.73% Expected term 1.0 - 2.0 years During the year ended July 31, 2020, we issued: ● On August 26, 2019, the Company issued 60,000 options to purchase common shares to an employee with an exercise price of $0.12 per share and a term of 5 years. The options vest equally over a period of three years. At the time of issuance, the options had a fair market value of $7,158. ● October 31, 2019, the Company issued 3,952,095 common shares to the Executive Officers for services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $276,646 equivalent to the value of the shares calculated based on the share's closing price at the grant dates. ● On October 31, 2019, the Company issued 1,337,325 shares of common stock to the Executive Officers, with a market value at time of issuance of $93,612 the stock was issued as payment for $26,612 of outstanding compensation expense and released of accrued liability of $67,000. ● On January 2, 2020, the Company issued 5,012,658 common shares to the Executive Officers for services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $198,000 equivalent to the value of the shares calculated based on the share's closing price at the grant dates. ● On February 24, 2020, the Company issued 11,509,022 common shares to various employees as part of the Company's Non-Standardized profit-sharing plan contribution. The Company recognized stock-based compensation expense of approximately $233,633 equivalent to the value of the shares calculated based on the share's closing price at the grant date. During the year ended July 31, 2020 we issued the following to non-employee professionals: ● In December 2019, the Company issued 400,000 shares of common stock with a market value at time of issuance of $15,240. The shares were issued for consulting services. The fair market value of all options issued was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 317.52% Risk-free interest rate 1.47% Expected term 3.0 year Digerati recognized approximately $1,112,000 and $733,000 in stock-based compensation expense to employees during the years ended July 31, 2020 and 2019, respectively. Unamortized compensation cost totaled $63,203 and $433,608 at July 31, 2020 and July 31, 2019, respectively. A summary of the stock options as of July 31, 2020 and July 31, 2019 and the changes during the years ended July 31, 2020 and July 31,2019: Options Weighted-average Weighted-average Outstanding at July 31, 2018 3,415,000 $ 0.33 4.58 Granted 2,075,000 $ 0.20 4.58 Exercised - - - Forfeited and cancelled (550,000 ) $ 0.36 3.39 Outstanding at July 31, 2019 4,940,000 $ 0.27 3.65 Granted 60,000 $ 0.12 4.07 Exercised - - - Forfeited and cancelled - - - Outstanding at July 31, 2020 5,000,000 $ 0.27 2.66 Exercisable at July 31, 2020 4,717,699 $ 0.26 2.62 The aggregate intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) of the 5,000,000 and 4,940,000 stock options outstanding at July 31, 2020 and July 31, 2019 was $0 and $0, respectively. The aggregate intrinsic value of 4,717,699 and 3,452,405 stock options exercisable at July 31, 2020 and July 31, 2019 was $0 and $0, respectively. |
Warrants
Warrants | 12 Months Ended |
Jul. 31, 2020 | |
Warrants [Abstract] | |
WARRANTS | NOTE 7 – WARRANTS During the year ended July 31, 2019, the Company issued the following warrants: In August 2018, Digerati secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants with fixed exercise price were excluded from derivative consideration. In October 2018, Digerati issued 200,000 warrants under an extension of payments to existing promissory notes, with a combined current principal balance of $75,000, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $31,000 and was recognized as a discount on the promissory note, the company amortized the fair market value as interest expense over 3 months. In January 2019, Digerati cancelled 260,000 warrants with an exercise price of $0.15. Additionally, the Company issued 260,000 common shares to replace these warrants, in conjunction with two promissory notes with a principal balance of $50,000, in addition at the time of issuance we recognized a discount of $36,000 for the common stock issued in replacement of warrants. In February 2019, the Company received $1,500 for the exercise of 15,000 warrants, with an exercise price of $0.10 per warrant. In March 2019, the Company received $6,000 for the exercise of 60,000 warrants, with an exercise price of $0.10 per warrant. In April 2019, the Company secured $50,000 from accredited investors under a private placement and issued 50,000 shares of Series A Convertible Preferred Stock at a conversion price of $0.30 per share and warrants to purchase an additional 100,000 shares of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants with fixed exercise price were excluded from derivative consideration. In May 2019, the Company secured $175,000 from accredited investors under a private placement and issued 175,000 shares of Series A Convertible Preferred Stock at a conversion price of $0.30 per share and warrants to purchase an additional 350,000 shares of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants with fixed exercise price were excluded from derivative consideration. The fair market value of all warrants issued was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 153.99% - 330.94% Risk-free interest rate 2.00% -2.93% Expected term 3.0 years During the year ended July 31, 2020, we issued the following warrants. In March 2020, the Company received $25,000 in professional services and issued 25,000 shares of Series A Convertible Preferred Stock at an conversion price of $0.30 per share and warrants to purchase an additional 50,000 shares of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued in connection with the services received were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy and determined that the warrants with fixed exercise price were excluded from derivative consideration. A summary of the warrants as of July 31, 2020 and 2019 and the changes during the years ended July 31, 2020 and 2019 are presented below: Weighted-average Weighted-average remaining contractual Warrants exercise price term (years) Outstanding at July 31, 2018 2,370,000 $ 0.28 2.90 Granted 665,000 $ 0.18 2.61 Exercised (75,000 ) $ 0.10 2.15 Forfeited and cancelled (260,000 ) $ 0.15 3.75 Outstanding at July 31, 2019 2,700,000 $ 0.32 2.19 Granted 50,000 $ 0.20 2.25 Exercised - - - Expired (510,000 ) $ 0.29 - Outstanding at July 31, 2020 2,240,000 $ 0.33 1.61 Exercisable at July 31, 2020 1,940,000 $ 0.22 1.49 \ The aggregate intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money warrants) of the 2,240,000 and 2,700,000 warrants outstanding at July 31, 2020 and July 31, 2019 was $6,160 and $63,602, respectively. The aggregate intrinsic value of 1,940,000 and 2,400,000 warrants exercisable at July 31, 2020 and July 31, 2019 was $6,160 and $63,602, respectively. Warrant expense for the years ended July 31, 2020 and 2019 was $0 and $64,000, respectively. Unamortized warrant expense totaled $0 and $0 respectively as of July 31, 2020 and July 31, 2019. In January 2020, 300,000 warrants expired with an exercise price pf $0.136. These warrants were issued in January 2015. In July 2020, 210,000 warrants expired with an exercise price pf $0.50. These warrants were issued in July 2017. In December 2017, the Company issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.50. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $49,000, the Company amortized the fair market value as warrant expense over 12 months. Additionally, the Company committed to issue 100,000 warrants if the Company's stock price traded at $0.75 per share for 10 consecutive days, to issue 100,000 warrants if the Company's stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants if the Company's stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $143,000, and the Company amortized the expense during FY2018. The 300,000 commitment warrants have not vested and have not been issued since the requirements were not achieved during the year ended July 31, 2020. |
Non-Standardized Profit-Sharing
Non-Standardized Profit-Sharing Plan | 12 Months Ended |
Jul. 31, 2020 | |
Non-Standarized Profit Sharing Plan [Abstract] | |
NON-STANDARDIZED PROFIT-SHARING PLAN | NOTE 8 – NON-STANDARDIZED PROFIT-SHARING PLAN We currently provide a Non-Standardized Profit-Sharing Plan, adopted September 15, 2006. Under the plan our employees qualify to participate in the plan after one year of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000 per year. Contributions under the plan are fully vested upon funding. During the years ended July 31, 2020 and July 31, 2019, the Company issued 11,509,022 and 635,156 respectively, common shares to various employees as part of the Company's profit-sharing plan contribution. The Company recognized stock-based compensation expense for July 31, 2020 and July 31, 2019 of $233,633 and $114,000, respectively, equivalent to the value of the shares calculated based on the share's closing price at the grant dates. |
Significant Customers
Significant Customers | 12 Months Ended |
Jul. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
SIGNIFICANT CUSTOMERS | NOTE 9 – SIGNIFICANT CUSTOMERS During the years ended July 31, 2020 and 2019, the Company did not derive a significant amount of revenue from one single customer. As of the year ended July 31, 2020, the company derived 12% of total accounts receivable from one customer. During the year ended July 31, 2019, the company did not derive a significant balance on accounts receivable from one single customer. |
Notes Payable Non-Convertible
Notes Payable Non-Convertible | 12 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE NON-CONVERTIBLE | NOTE 10 – NOTES PAYABLE NON-CONVERTIBLE On April 30, 2018, T3 Communications, Inc., a Nevada corporation ("T3"), our majority owned subsidiary, entered into a secured promissory note for $650,000 with an effective annual interest rate of 0% and a maturity date of May 14, 2018, provided, however, the Maturity Date will automatically be extended by one (1) additional period of thirty (30) days, until June 14, 2018. In addition, T3 entered into a Security Agreement, whereby T3 agreed to pledge one third of the outstanding shares of its Florida operations, T3 Communications, Inc., the secured interest will continue until the principal balance is paid in full. Furthermore, a late fee of $3,000 per calendar week was accessed beginning on May 15, 2018 and will continue until the principal balance is paid in full. On May 6, 2020, the Company received an additional $50,000 from the lender and increased the principal of the promissory note to $700,000. On October 14, 2020, the lender agreed to extend the maturity date until October 31, 2020, we are currently paying a $3,250 per week late fee. As of July 31, 2020, and July 31, 2019, the outstanding principal balance were $700,000 and $650,000, respectively. On April 30, 2018, T3 entered into a credit facility under a secured promissory note of $500,000, interest payment for the first twenty-three months with a balloon payment on the twenty-fourth month and a maturity date of April 30, 2020. Collateralized by T3's accounts receivables and with an effective annual interest rate of prime plus 5.25%, adjusted quarterly on the first day of each calendar quarter. However, the rate will never be less than 9.50% per annum. In the event of default, the interest rate will be the maximum non-usurious rate of interest per annum permitted by whichever of applicable United States federal law or Louisiana law permits the higher interest rate. T3 agreed to pay the lender a commitment fee of 1.00% upon payment of the first interest payment under the credit facility and 1.00% on the first anniversary of the credit facility. In addition, T3 agreed to pay a monitoring fee of 0.33% of the credit facility, payable in arrears monthly. T3 also agreed to pay an over-advance fee of 3.00% of the amount advanced in excess of the borrowing base or maximum amount of the credit facility, payable in arrears monthly. As of July 31, 2020, the Lender agreed to waive the following financial covenants: 1) A consolidated debt service coverage ratio, as of the last day of each fiscal quarter, of at least 1.25 to 1.00, 2) A fixed charge coverage ratio, as of the last day of each fiscal quarter, of at least 1.25 to 1.00, and 3) A tangible net worth, at all times of at least $100,000. On April 10, 2020, the Company increased the credit facility to $600,000 and the lender agreed to extend the maturity date until April 10, 2022. In addition, the Company agreed to a revised effective annual interest rate of prime plus 5.75%, adjusted quarterly on the first day of each calendar quarter. However, the rate will never be less than 11.00% per annum. During the year ended July 31, 2020, the Company received an additional $100,000 from the lender. As of July 31, 2020, and July 31, 2019, the outstanding principal balance were $600,000 and $500,000, respectively. On October 22, 2018, the Company issued a secured promissory note for $50,000, bearing interest at a rate of 8% per annum, with maturity date of December 31, 2018. In February 2020, the maturity date was extended to December 31, 2020. In conjunction with the extension, the Company issued 40,000 shares of common stock. At issuance, the fair market value of the shares was recorded as interest expense of $800. The promissory note is secured by a Pledge and Escrow Agreement, whereby the Company agreed to pledge rights to a collateral due under certain Agreement. The outstanding balance as of July 31, 2020 and July 31, 2019 was $50,000. On June 14, 2019, the Company, entered into a Stock Purchase Agreement (the "Agreement") to acquire a 12% minority interest in Itellum Comunicacions Costa Rica, S.R.L. In conjunction with this transaction, we entered into a non-recourse promissory note for $17,500 with an effective annual interest rate of 8% and an initial maturity date of September 14, 2019. On February 15, 2020, the maturity date was extended to July 31, 2020. In addition, the holder agreed to accept 200,000 shares of common stock as a principal payment on the note for $10,000, at the time of issuance the Company recognized $5,400 as a gain on settlement of debt. On August 1, 2020, the lender agreed to extend the maturity date to October 31, 2020. The outstanding balance as of July 31, 2020 and July 31, 2019, were $7,500 and $17,500, respectively. On February 26, 2020, the Company entered into a secured promissory note for $30,000 with an effective annual interest rate of 12% and a maturity date of May 1, 2020. Subsequently, the note holder agreed to extend the maturity date until August 31, 2020. As of the date of this filing, the Company is working with the lender to extend the maturity date. The proceeds from this note were used to extend the closing date of the acquisition of Nexogy, the funds are for the benefit of owners of Nexogy, and the funds will be credited to the purchase price at Closing of the acquisition. The Company included the prepaid amounts in other current assets as of July 31, 2020. The promissory note is secured by the Company's receivables. The outstanding balance as of July 31, 2020 and 2019, were $30,000 and $0, respectively. On April 22, 2020, the Company, entered into two unsecured promissory notes (the "Notes") for $62,500 and $86,000 made to the Company under the Paycheck Protection Program (the "PPP"). In addition, on May 4, 2020, the Company, entered into a third unsecured promissory note (the "Note") for $213,100 made to the Company under the Paycheck Protection Program (the "PPP"). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and is administered by the U.S. Small Business Administration (the "SBA"). The loans to the Company was made through The Bank of San Antonio (the "Lender"). The Notes provide for an interest rate of 1.00% per year and matures two years after the issuance date. Beginning on the seventh month following the date of the Notes, the Company is required to make 18 monthly payments of principal and interest in the amount of $8,316 and $11,933, respectively. The Notes may be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that were incurred before February 15, 2020. The Notes contain events of default and other conditions customary for a Note of this type. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the SBA may adopt. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the Notes in whole or in part. On July 2, 2020, the Company entered into an unsecured promissory note for $15,000 with an effective annual interest rate of 10% and a maturity date of October 31, 2020. As of July 31, 2020, and 2019, the principal balance outstanding, were $15,000 and $0, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jul. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 11 – RELATED PARTY TRANSACTIONS On April 30, 2018, T3 entered into a convertible secured promissory note for $525,000 with an effective annual interest rate of 8% and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823 due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder (such total amount, the “Conversion Amount”) into shares of Common Stock (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount (the numerator); divided by On May 1, 2018, T3 entered into a secured promissory note for $275,000 with an effective annual interest rate of 8.08% with an interest and principal payment of $6,000 per month and shall continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed to the lender by 15% of the stock owned by T3 in its Florida operations, T3 Communications, Inc., the secured interest will continue until the principal balance is paid in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $26,543 and was recognized as a discount on the promissory note. The company amortized as interest expense during the year ended July 31, 2020 and July 31, 2019, $10,386 and $7,738, respectively. The total unamortized discount as of July 31, 2020 and July 31, 2019 were $6,300 and $16,686, respectively. During the year ended July 31, 2020, the Company paid $57,098, of the principal balance. The total principal outstanding as of July 31, 2020 and July 31, 2019 were $152,634 and $209,732, respectively. The note holder also serves as Board Member of T3 Communications, Inc., a Florida Corporation, one of our operating subsidiaries. On February 27, 2020, the Company entered into an unsecured promissory note for $70,000 with an effective annual interest rate of 12% and a maturity date of May 1, 2020. Subsequently, the note holder agreed to extend the maturity date until August 31, 2020. In addition, the Company agreed to pay the lender in services provided by the Company, and any unpaid principal and accrued interest will be paid in cash. During the years ended July 31, 2020 and July 31, 2019, the Company provided VoIP Hosted and fiber services of $173,065 and $108,634, respectively. The proceeds from this note were used to extend the closing date of the Nexogy acquisition, the funds are an advance to the purchase price for the benefit of Nexogy owners , the funds will be credited to the purchase price at Closing of the Acquisition. The Company included the prepaid amounts in other current assets as of July 31, 2020. The total principal outstanding as of July 31, 2020 was $16,298. On August 3, 2020, the promissory note was paid in full. The note holder also serves as a Board Member of T3 Communications, Inc., a Florida Corporation, one of our operating subsidiaries. |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Jul. 31, 2020 | |
Convertible Notes Payable [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 12 – CONVERTIBLE NOTES PAYABLE At July 31, 2020 and 2019, convertible notes payable consisted of the following: July 31, CONVERTIBLE NOTES PAYABLE NON-DERIVATIVE 2020 2019 Two (2) Convertible Notes payable for $250,000 each issued in March 2018, bearing interest at a rate of 12% per annum and a maturity date of September 15, 2018, subsequently extended until December 14, 2018. In conjunction with the notes, the Company issued 300,000 warrants, the warrants vested at time of issuance. The warrants had a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $126,538 and was recognized as a discount on the promissory notes. The company amortized $84,433 as a non-cash interest during the years ended July 31, 2019. The total unamortized discount as of July 31, 2019 was $0. The Conversion Price shall be the greater of: (i) the Variable Conversion Price or (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall be equal to the average closing price for Digerati's Common Stock (the "Shares") for the ten (10) Trading Day period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The "Fixed Conversion Price" shall mean $0.50. On December 27, 2018, the noteholders agreed to extend the maturity date on the notes until September 14, 2019. In addition, as part of the amendment, the Company agreed to modify the "Fixed Conversion Price" to $0.35. In November 2019, the Company issued 110,830 shares of common stock for payment of $7,500 in accrued interest. On October 7, 2019, the holders agreed to extend the maturity date until March 30, 2020. As part of the amendments, the Company agreed to issue 400,000 shares of common stock. Under a Black-Scholes valuation the relative fair market value of the shares of common at time of issuance was approximately $40,000 and was recognized as a discount on the promissory notes over the extended period. The Company amortized the total discount of $40,000 during the year ended July 31, 2020. The total unamortized discount as of July 31, 2020 and July 31, 2019 were $0 and $0, respectively. On April 30, 2020, the Company settled the total debt of $500,000 and accrued interest of $37,500 and issued 8,958,334 shares of common stock and 268,750 shares of Convertible Series B preferred stock for the settlement. At the time of issuance, the Company recognized a gain in settlement of debt $85,104. $ - $ 500,000 Convertible promissory notes for $272,000 issued on June 19, 2018, bearing interest at a rate of 10% per annum, with an initial maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 255,000 warrants under the promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $118,400 and was recognized as a discount on the promissory notes. The Company amortized $109,552 as a non-cash interest during the year ended July 31, 2019. On March 29, 2019, the Company entered into a First Amendment to the Promissory Notes, under the amendments the note holders agreed to extend the maturity date until June 30, 2019. In addition, as part of the amendments, the Company agreed to issue 85,000 shares of common stock. The shares were recorded as debt discount of $17,425 and amortized over the remaining term of the notes. The Company amortized $17,425 as a non-cash interest during the years ended July 31, 2019. The holders may elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after 90 days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price or (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall be equal to the average closing price for Digerati's Common Stock (the "Shares") for the ten (10) Trading Day period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The "Fixed Conversion Price" shall mean $0.50. On June 30, 2019, the Company entered into a Second Amendment to the Promissory Notes, under the amendments the note holders agreed to extend the maturity date until November 30, 2019. In addition, as part of the amendments, the Company agreed to issue 85,000 shares of common stock. The shares were recorded as debt discount of $14,450 and amortized over the remaining term of the notes. The Company amortized $11,560 and $2,890 as a non-cash interest during the year ended July 31, 2020 and July 31, 2019, respectively. The total unamortized discount as July 31, 2020 and July 31, 2019 for the issuance of the second amendment shares were $0 and $11,560, respectively. In addition, in November 2019, the Company issued 172,055 shares of common stock for payment of $6,882 in accrued interest On February 19, 2020, the Company issued 110,027 shares of common stock for payment of accrued interest and a fair market value of $4,401. Also, in November 2019 and February 2020, the holders agreed to extend the maturity date of the notes until April 30, 2020. As part of the amendments, the Company agreed to issue 340,000 shares of common stock. The shares were recorded as debt discount of $10,090 and amortized during the note extension agreement. On April 30, 2020, the Company and the debtholder agreed to settle $240,000 of the debt and $37,454 of accrued interest, as a result the Company issued 4,624,220 shares of common stock and 138,727 shares of Convertible Series B Preferred Stock for the settlement. At the time of issuance, the Company recognized a gain in settlement of debt $43,930. The gain on settlement was generated from the difference between principal and accrued interest settled and fair value of the common stock on settlement date. In June 2020, one of the note holders for $32,000 agreed to extend the maturity date until August 31, 2020. 32,000 272,000 On July 27, 2020, the Company entered into a variable convertible promissory note with an aggregate principal amount of $275,000, annual interest rate of 8% and a maturity date of March 27, 2021. After payment of transaction-related expenses and closing fees of $35,000, net proceeds to the Company from the Note totaled $240,000. The Company recorded these discounts and cost of $35,000 as a discount to the Note and amortized over the term of the note. In connection with the execution of the note, the Company issued 500,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $11,626 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock The Note Conversion Price shall equal the greater of $0.05 (five) cents or 25% discount to up-listing price or offering/underwriting price concurrent with the Company listing on Nasdaq or NYSE American., subject to adjustment as provided in this Note. If an Event of Default occurs, the Conversion Price shall be the lesser of (a). $0.05 (five) cents or (b). 75% of the lowest traded price in the prior fifteen trading days immediately preceding the Notice of Conversion. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a fix conversion price at issuance, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. The total unamortized discount on the Note as of July 31, 2020 was $46,626. The total principal balance outstanding as of July 31, 2020 was $275,000. 275,000 - Total convertible notes payables non-derivative: 307,000 772,000 CONVERTIBLE NOTES PAYABLE - DERIVATIVE On January 16, 2019, the Company entered into various Securities Purchase Agreements (the SPAs") with four (4) different investors (each an "Investor", and together the "Investors") pursuant to which each Investor purchased a 10% unsecured convertible promissory note (each a "Note", and together the "Notes") from the Company. Three of the notes are in the aggregate principal amount of $140,000 each and a maturity date of October 16, 2019. One of the notes is in the aggregate principal amount of $57,750 and a maturity date of January 24, 2020. The purchase price of $140,000 of each of three Notes were paid in cash on January 16, 2019. After payment of transaction-related expenses of $51,000, net proceeds to the Company from the three Notes totaled $369,000. The purchase price of $57,750 Note was paid in cash on January 24, 2019. After payment of transaction-related expenses of $7,750, net proceeds to the Company from Note totaled $50,000. The Company recorded these discounts and cost of $58,750 as a discount to the Notes and fully amortized as interest expense during the period. In connection with the execution of the Notes, we issued 500,000 shares of our common stock to the Note holders, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the four (4) new convertible notes of $655,345, of which $419,000 was recorded as debt discount and will be amortized during the term of the Notes, and $236,345 was recorded as day 1 derivative loss. On July 12, 2019, the Company redeemed the full outstanding principal balance on two of the convertible notes for $280,000, at a redemption price of $382,726. The Company recognized the difference between the redemption price and principal balance paid as interest expense of $102,726. On July 12, 2019, the Company redeemed $70,000 of the principal outstanding on one of the convertible notes, at a redemption price of $91,000. The Company recognized the difference between the redemption price and principal balance paid as interest expense of $21,000. On July 19, 2019, the Company issued 156,202 shares of common stock for the conversion of $9,500 of the principal outstanding and $500 in fees under one of the convertible notes. On July 25, 2019, the Company issued 312,500 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of the principal outstanding under a convertible debenture. On August 6, 2019, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC (the "Assignor") assigned a principal amount of $25,000, representing a portion of a Convertible Promissory Note dated January 24, 2019 to Armada Investment Fund LLC (the "Assignee"). The note is in the aggregate principal amount of $25,000 and a maturity date of January 24, 2020. During the year ended July 31, 2020, the Company issued 2,658,888 shares of common stock for the conversion of $73,250 of the principal outstanding and $14,796 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $29,765, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019, were $0 and $98,250. During the years ended July 31, 2020 and 2019, the Company amortized $29,765 and $389,235, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below Variable Conversion terms No.1) - 98,250 On February 22, 2019, the Company entered into a variable convertible note for $57,750 with net proceeds of $50,000, maturity date of February 22, 2020 and effective interest rate of 10%. The Company recorded a discount of $7,750 and amortized as interest expense during the period of the note. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $79,729, of which $50,000 was recorded as debt discount and amortized during the term of the Note, and $29,729 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 3,430,700 shares of common stock for the conversion of $57,750 of the principal outstanding and $6,962 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $29,166, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019, were $0 and $57,750. During the years ended July 31, 2020 and 2019, the Company amortized $29,166 and $20,834, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - 57,750 On April 20, 2019, the Company entered into a variable convertible note for $44,000, with net proceeds of $40,000, maturity date of January 19,2020 and effective interest rate of 10%. The Company recorded $4,000 as a discount and amortized as interest expense during the period of the note. In connection with the execution of the Note, we issued 50,000 shares of our common stock to the Note holder, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $55,592, of which $40,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,592 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 2,529,562 shares of common stock for the conversion of $44,000 of the principal outstanding and $5,854 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $26,668, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019, were $0 and $44,000. During the years ended July 31, 2020 and 2019, the Company amortized $26,668 and $13,332, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - 44,000 In July 2019, the Company entered into multiple variable convertible notes with four (4) different investors. Three of the notes are in the aggregate principal amount of $146,625 each, 3% interest rate and a maturity date of April 11, 2020. After payment of transaction-related expenses of $57,375, net proceeds to the Company from the three Notes totaled $382,500. The Company also secured an additional variable convertible note in the aggregate principal amount of $140,000, interest rate of 10% and a maturity date of April 10, 2020. After payment of transaction-related expenses of $17,000, net proceeds to the Company from the Note totaled $123,000. The Company recorded these discounts and cost of $74,375 as a discount to the Notes and fully amortized as interest expense during the period. In connection with the execution of the Notes, we issued 450,000 shares of our common stock to the Note holders, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the four (4) new convertible notes of $959,180, of which $505,500 was recorded as debt discount and will be amortized during the term of the Notes, and $453,680 was recorded as day 1 derivative loss. On January 9, 2020, the Company issued 200,000 shares of common stock for the conversion of $1,328 of the principal outstanding and accrued interest of $2,212 under one of the convertible notes. On January 10, 2020, the Company assigned a convertible note with a $145,297 principal and accrued interest of $13,500 and a second convertible note with a $35,750 principal balance and accrued interest of $15,453 for $210,000. On January 22, 2020, the Company assigned two promissory notes with a $293,250 principal balance outstanding and accrued interest of $66,750. The total assignment was for $360,000. On July 30, 2020, the Company paid the total principal outstanding in one of the notes for $140,000, plus a redemption interest of $46,000. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $449,332, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019 were $0 and $579,875, respectively. During the years ended July 31, 2020 and 2019, the Company amortized $449,332 and $56,168, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - 579,875 On August 6, 2019, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC assigned a principal amount of $25,000, representing a portion of a Convertible Promissory Note dated January 24, 2019 to Armada Investment Fund LLC. The note is in the aggregate principal amount of $25,000, bearing interest at a rate of 10% and a maturity date of January 24, 2020.The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. During the year ended July 31, 2020, the Company issued 555,859 shares of common stock for the conversion of $25,000 principal balance and accrued interest and administrative fees of $1,579. The total unamortized discount on the Note as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $0. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - - On August 30, 2019, the Company entered into variable convertible note for $93,500, bearing interest at a rate of 10% per annum and a maturity date of May 30, 2020. On August 10, 2020, the noteholder agreed to extend the maturity date until October 31, 2020. After payment of transaction-related expenses of $8,500, net proceeds to the Company from the Note totaled $85,000. The Company recorded these discounts and cost of $8,500 as a discount to the Note and fully amortized as interest expense during the period. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $100,978, of which $85,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,978 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $93,500. The Company amortized $93,500 of debt discount as interest expense during the year ending July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 93,500 - In October 2019, the Company entered into two variable convertible notes are in the aggregate principal amount of $71,500, bearing interest at a rate of 8% and a maturity date of July 18, 2020. After payment of transaction-related expenses of $6,500, net proceeds to the Company from the notes totaled $65,000. The Company recorded these discounts and cost of $6,500 as a discount to the notes and fully amortized as interest expense during the period. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible notes of $82,462 of which $65,000 was recorded as debt discount and will be amortized during the term of the notes, and $17,462 was recorded as day 1 derivative loss. On January 10, 2020, the Company entered into an Assignment Agreement whereby Armada Investment Fund LLC assigned the principal amount of $35,750 and accrued interest of $627, representing the balance outstanding on the Convertible Promissory Note dated October 2019 to Platinum Point Capital LLC. The total assignment for note was for $36,377. On July 28, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC assigned the principal amount of $35,750 and accrued interest and penalty of $17,081, representing the balance outstanding on the Convertible Promissory Note dated October 2019 to Platinum Point Capital LLC. The total assignment for note was for $52,831. The total unamortized discount on the Notes as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $0. The Company amortized $71,500 of debt discount as interest expense during the year ending July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - - On January 10, 2020, the Company entered into an Assignment Agreement whereby Armada Investment Fund LLC (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $145,297 and $35,750, representing the outstanding principal balance on the Convertible Promissory Notes dated July 11, 2019 and October 18, 2019, respectively, plus accrued interest of $28,953. The new notes are is in the aggregate principal amount of $210,000, annual interest rate of 3% and a maturity date of January 10, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby BHP Capital NY Inc. (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of the assignment, the Company recognized derivative liability for the new convertible notes of $784,565, of which $570,000 was recorded as debt discount and amortized over the term of the notes, and $214,565 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 25,312,983 shares of common stock for the conversion of $230,000 of the principal outstanding and $12,000 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 was $172,611, and the total principal balance outstanding as of July 31, 2020 was $340,000. The Company amortized $397,389 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 340,000 - On February 13, 2020, the Company entered into a variable convertible note. The note is in the aggregate principal amount of $33,500, annual interest rate of 10% and a maturity date of February 13, 2021. After payment of transaction-related expenses of $3,500, net proceeds to the Company from the note totaled $30,000. The Company recorded these discounts and cost of $3,500 as a discount to the note and fully amortized as interest expense during the period. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $42,976, of which $30,000 was recorded as debt discount and will be amortized during the term of the Note, and $12,976 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $15,000. The total principal balance outstanding as of July 31, 2020 was $33,500. The Company amortized $18,500 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 33,500 - On April 28, 2020, the Company entered into a variable convertible note. The note is in the principal amount of $15,000, annual interest rate of 10% and a maturity date of April 28, 2021. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $26,629, of which $15,000 was recorded as debt discount and will be amortized during the term of the Note, and $11,629 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $11,250. The total principal balance outstanding as of July 31, 2020 was $15,000. The Company amortized $3,750 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 15,000 - On July 28, 2020, the Company entered into an Assignment Agreement whereby one of the variable noteholders assigned a principal amount of $35,750 and accrued interest and penalties of $17,081. The new variable convertible note is for $52,831, annual interest rate of 10% and a maturity date of July 28, 2021. The Company analyzed the assignment of the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $70,888, of which $49,180 was recorded as debt discount and will be amortized during the term of the Note, and $21,708 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $49,180. The total principal balance outstanding as of July 31, 2020 was $52,831. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 52,831 - Convertible debenture issued on July 31, 2018 in the principal amount of $220,000 for a purchase price of $198,000 and 0% percent stated interest rate. At issuance, the Company incurred $5,000 in legal and compliance fees, these fees were deducted from the proceeds at time of issuance. The Company recorded these discounts and cost of $22,000 as a discount to the debenture and amortized to interest expense. The Company analyzed the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. Therefore, the Company recognized derivative liability of $189,171. In connection with the execution of the Debenture, we issued 130,000 shares of our common stock, the shares were recorded with a relative fair value of $3,627 and $192,798 was recorded as debt discount and amortized during the term of the note. During the year ending July 31, 2019, the Company issued 2,615,309 shares of common stock for the conversion of $170,000 of the principal outstanding under the convertible debenture. During the year ending July 31, 2020, the Company issued 1,248,335 shares of common stock for the conversion of $50,000 of the principal outstanding under the convertible debenture. During the years ended July 31, 2020 and 2019, the Company amortized $29,214 and $163,584, respectively of the debt discount as interest expense. The total unamortized discount as July 31, 2020 and July 31, 2019, were $0 and $29,214, respectively. The total principal outstanding balance as of July 31, 2020 and July 31, 2019 were $0 and $50,000, respectively. - 50,000 Total convertible notes payable - derivative: $ 534,831 $ 829,875 Total convertible notes payable derivative and non-derivative 841,831 1,601,875 Less: discount on convertible notes payable (294,667 ) (575,681 ) Total convertible notes payable, net of discount 547,164 1,026,194 Less: current portion of convertible notes payable (547,164 ) (1,005,408 ) Long-term portion of convertible notes payable $ - $ 20,786 Variable Conversion No.1: The total unamortized discount on the convertible notes as of July 31, 2020 and 2019 were $294,667 and $575,681, respectively, and the total principal balance outstanding as of July 31, 2020 and 2019, were $841,831 and $1,601,875, respectively. During the years ended July 31, 2020 and 2019, the Company amortized $1,228,000 and $1,466,000, respectively, of debt discount as interest expense. Fair Value of Financial Instruments. Level 1 Level 2 Level 3 For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities. Our derivative liabilities as of July 31, 2020 and 2019 of $606,000 and $927,000, respectively. The following table provides the fair value of the derivative financial instruments measured at fair value using significant unobservable inputs: Fair value measurements at reporting date using: Quoted prices in Significant active markets other for identical observa |
Equipment Financing
Equipment Financing | 12 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
EQUIPMENT FINANCING | NOTE 13 – EQUIPMENT FINANCING The Company entered into three financing agreements for equipment purchased. Under the terms of these transactions, assets with a cost of approximately $37,255, $60,408, and $103,509, were financed under three separate financing agreements as of the May 2018, June 2018, and July 2019, respectively. The equipment financing is net of costs associated with the assets such as maintenance, insurance and property taxes are for the account of the Company. The equipment financing agreements are for 36 months, with the first payments starting June 20, 2018, July 20, 2018, and July 12, 2019, respectively and monthly principal and interest payments of $1,176, $1,856, and $3,172, respectively. The interest rate under the financing agreements range from 6.50% to 8.50% per annum. During the years ended July 31, 2020 and 2019, the Company made total principal payments of $65,465 and $32,943, respectively. The future payments under the equipment financing agreements are as follows: Year Amount 2021 70,233 2022 34,897 Total future payments: $ 105,130 Less: amounts representing interest 5,635 Present value of net minimum equipment financing payments $ 99,495 Less current maturities 61,850 Long-term equipment financing obligation $ 37,645 Lease cost: Amortization of ROU assets $ 65,465 Interest on lease liabilities 9,201 Cash paid for amounts included in the measurement of lease liabilities: Operating cashflow from financing leases: $ 9,201 Financing cashflows from finance leases 65,465 Weighted-average remaining lease term - finance lease: 1.52 years Weighted-average discount rate: 6.76 % |
Leases
Leases | 12 Months Ended |
Jul. 31, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 14 – LEASES Digerati leases its corporate facilities, sales office and network facilities in Texas and Florida. The annual rent expense under the operating leases was $160,574 and $141,546, for 2020 and 2019, respectively. Below is a list of our primary operating leases: Location Lease Annual Business Use Approx. Sq. Ft. 825 W. Bitters, Suite 104, Jul-22 $ 23,654 Executive offices 1,546 2401 First Street, Suite 300, Ft. Lease of network facilities and Myers, FL 34901 Nov-20 $ 107,534 office space 6,800 7218 McNeail Dr, Austin, TX 78729 Apr-21 $ 14,222 Lease of network facilities 25 6606 Lyndon B. Johnson, Fwy., FL1, Suite 125, Dallas, TX 75240 Apr-21 $ 25,161 Lease of network facilities 25 9701 S. John Young Parkway, May-23 $ 30,528 Lease of network facilities 540 Effective August 1, 2019, the Company adopted ASC 842, "Leases" ("ASC 842") on a modified retrospective basis. Accordingly, information presented for periods prior to FY2019 have not been recast. In addition, the Company elected the optional practical expedient permitted under the transition guidance which allows the Company to carry forward the historical accounting treatment for existing lease upon adoption. No impact was recorded to the income statement or beginning retained earnings for Topic 842. The leased properties have a remaining lease term of sixteen to forty-six months as of August 1, 2019. At the option of the Company, it can elect to extend the term of the leases. As of the date of this filing, the Company is working on finalizing a new office lease agreement. The new lease will commence on January 1, 2021, the initial term will of 5 years, at an annual base rent of $57,000. The Company will have the option to renew the lease for an additional 5 years. The Company is working with the landlord on the final buildout of the office space. From October 1, 2020 through December 31, 2020, the Company entered into a Sublease Agreement with the current tenant, for a monthly rate of $4,791. Beginning August 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments, including annual rent increases, over the lease term at commencement date. Operating leases in effect prior to August 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of August 1, 2019. Because none of our leases included an implicit rate of return, we used our incremental secured borrowing rate based on lease term information available as of the adoption date or lease commencement date in determining the present value of lease payments. The incremental borrowing rate on the leases is 8.0%. The Company has not entered into any sale and leaseback transactions during the year ended July 31, 2020. The impact of ASU No. 2016-02 ("Leases (Topic 842)" on our consolidated balance sheet beginning August 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized on August 1, 2019 and July 31, 2020 for operating leases are as follows: ROU Asset August 1, 2019 $ 316,411 Amortization $ (140,314 ) ROU Asset July 31, 2020 $ 176,097 Lease Liability August 1, 2019 $ 316,411 Amortization $ (140,314 ) Lease Liability July 31, 2020 $ 176,097 Lease Liability Short term $ 99,443 Lease Liability Long term $ 76,654 Lease Liability Total: $ 176,097 Operating lease cost: $ 160,574 Cash paid for amounts included in the measurement of lease labilities Operating cashflow from operating leases: $ 160,574 Weighted-average remain lease term-operating lease: 1.88 years Weighted-average discount rate 8 % For the year ended July 31, 2020 amortization of operating ROU assets was $140,314. For the year ended July 31, 2020 amortization of operating lease liabilities was $140,314. The future minimum lease payment under the operating leases are as follows: Years Ending July 31, Lease 2021 108,409 2022 57,057 2023 25,440 Total: $ 190,906 |
Noncontrolling Interest
Noncontrolling Interest | 12 Months Ended |
Jul. 31, 2020 | |
Noncontrolling Interest [Abstract] | |
NONCONTROLLING INTEREST | NOTE 15 – NONCONTROLLING INTEREST On May 1, 2018, T3 Communications, Inc. (“T3”), a Nevada Corporation, entered into a Stock Purchase Agreement (“SPA”), whereby in an exchange for $250,000, T3 agreed to sell to the buyers 199,900 shares of common stock equivalent to 19.99% of the issued and outstanding common share of T3 Communications, Inc. The $250,000 of the cash received under this transaction was recognized as an adjustment to the carrying amount of the noncontrolling interest and as an increase in additional paid-in capital in T3. At the option of the Company, and for a period of five years following the date of the SPA, the 199,900 shares of common stock in T3 may be converted into Common Stock of Digerati at a ratio of 3.4 shares of DTGI Common stock for every one (1) share of Shift8 at any time after the DTGI Common Stock has a current market price of $1.50 or more per share for 20 consecutive trading days. For the years ending July 31, 2020 and 2019, the Company accounted for a noncontrolling interest of $47,000 and $128,000, respectively. Additionally, one of the buyers serves as a Board Member of T3 Communications, Inc., a Florida Corporation, one of our operating subsidiaries. |
Investment in Itellum
Investment in Itellum | 12 Months Ended |
Jul. 31, 2020 | |
Extractive Industries [Abstract] | |
INVESTMENT IN ITELLUM | NOTE 16 – INVESTMENT IN ITELLUM On June 14, 2019, the Company, entered into a Stock Purchase Agreement (the “Agreement”) to acquire a 12% minority interest in Itellum Comunicacions Costa Rica, S.R.L. The Company paid $82,500 upon execution of the agreement, issued 500,000 shares of common stock with a market value of $85,000, and entered into a promissory note for $17,500 with an effective annual interest rate of 8% and an initial maturity date of September 14, 2019, subsequentially the maturity date was extended until October 31, 2020. The outstanding balance as of July 31, 2020 was $7,500. The minority interest in Itellum was accounted for as a cost-basis investment, and based on the agreed cash and stock issued, the Company accounted for an initial investment value of $185,000. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Jul. 31, 2020 | |
Preferred Stock | |
PREFERRED STOCK | NOTE 17 – PREFERRED STOCK CONVERTIBLE SERIES A PREFERRED STOCK In March 2019, the Company’s Board of Directors designated and authorized the issuance up to 1,500,000 shares of the Series A Preferred Stock. Each share of Series A Preferred Stock has a par value of $0.001 per share and a stated value equal to one dollar ($1.00) (the “Stated Value”) and are entitled to a dividend at an annual rate of eight percent (8%) per share. The Company had 225,000 shares of Series A Preferred Stock outstanding as of July 31, 2020. During the year ending July 31, 2020 the Company declared a dividend of $19,000. The terms of our Series A Preferred Stock allow for: Voting Rights. Optional Conversion. Mandatory Conversion. CONVERTIBLE SERIES B PREFERRED STOCK In April 2020, the Company’s Board of Directors designated and authorized the issuance up to 1,000,000 shares of the Series B Preferred Stock. The Series B Preferred Stock is only issuable to the Company’s debt holders as of March 25, 2020 (“Existing Debt Holders”) who may purchase shares of Series B Preferred Stock at the Stated Value by converting all or part of the debt owed to them by the Corporation as of March 25, 2020. Each share of Series B Preferred Stock has a par value of $0.001 per share and a stated value equal to one dollar ($1.00) (the “Stated Value”). In April 2020, the Company issued a total of 407,477 shares of Series B Preferred Stock for settlement of debt of $370,000 on various promissory notes and $37,477 in accrued interest. No dividends are payable on the Series B Preferred Stock. The terms of our Series B Preferred Stock allow for: Voting Rights Mandatory Conversion Redemption . CONVERTIBLE SERIES C PREFERRED STOCK In July 2020, the Company’s Board of Directors designated and authorized the issuance up to 1,000,000 shares of the Series C Preferred Stock. Each share of Series C Preferred Stock has a par value of $0.001 per share and a stated value equal to ten dollars ($10.00) (the “Stated Value”). As of July 31, 2020, the Company has not issued any shares of Series C Preferred Stock. The terms of our Series C Preferred Stock allow for: Designation, Amount and Par Value; Eligible Recipients. Dividends. Voting Rights. Automatic Conversion. Upon (i) an up-listing of the Corporation’s Common Stock to Nasdaq or a US national securities exchange, (ii) a financing or offering involving the sale of $5,000,000 or more of the Corporation’s Common Stock or Common Stock Equivalents (a “Material Financing”), (iii) the Corporation ceases to be a public corporation as the result of a going private transaction, (iv) the Corporation, directly or indirectly, effects any sale, lease, exclusive license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions (including a transaction involving the Corporation’s spin-off of its Nevada subsidiary, T3 Communications, Inc.), (v) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (vi) the Corporation, directly or indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (vii) the Corporation, directly or indirectly, in one or more related transactions, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person, other than an officer or director of the Company, whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), all issued shares of Series C Preferred Stock shall be automatically converted, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, into the number of fully paid and nonassessable shares of Common Stock in an amount equal, following conversion, to 22% of the Corporation’s issued and outstanding shares of Common Stock. Each of (i)-(vii) above shall be hereafter referred to as a “Conversion Event” and the date of a Conversion Event shall be hereafter referred to as a “Conversion Date”. Upon any such mandatory conversion and the issuance of Conversion Shares further thereto, the shares of Series C Preferred Stock shall be deemed cancelled and of no further force or effect. A mandatory conversion is the only means by which Series C Preferred Stock is convertible as the shares of Series C Preferred Stock are not convertible at the option of the Holder. For purposes of the foregoing Conversion Events, conversion will be deemed to have taken place immediately prior to the Conversion Event. By way of example, if the Corporation engages in a Material Financing, the Series C Preferred Stock will be treated as having been converted immediately prior to the issuance of the securities in the Material Underwriting. Redemption. SERIES F SUPER VOTING PREFERRED STOCK In July 2020, the Company’s Board of Directors designated and authorized the issuance up to 100 shares of the Series F Super Voting Preferred Stock. Each share of Series F Super Voting Preferred Stock has a par value of $0.001 per share and a stated value equal to one cent ($0.01) (the “Stated Value”). As of July 31, 2020, the Company has 100 shares outstanding of the Series F Super Voting Preferred Stock. The terms of our Series F Super Voting Preferred Stock allow for: Designation, Amount and Par Value; Eligible Recipients Voting Rights. Holder of the Series F Preferred Stock shall be entitled to vote on all matters subject to a vote or written consent of the holders of the Corporation’s Common Stock, and on all such matters, the shares of Series F Preferred Stock shall be entitled to that number of votes equal to the number of votes that all issued and outstanding shares of Common Stock and all other securities of the Corporation are entitled to, as of any such date of determination, on a fully diluted basis, plus Conversion. Redemption. |
Equity
Equity | 12 Months Ended |
Jul. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | NOTE 18 – EQUITY During the year ended July 31, 2019, the Company issued the following shares of common stock that are not disclosed in other footnotes: On September 28, 2018, the Company issued an aggregate of 21,672 shares of common stock with a market value at time of issuance of $5,794. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $507 upon issuance of the shares. On November 5, 2018, the Company issued an aggregate of 16,883 shares of common stock with a market value at time of issuance of $5,875. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $588 upon issuance of the shares. On November 14, 2018, the Company secured $75,000 from an accredited investor under a Securities Purchase Agreement and issued 258,621 shares of its common stock at a price of $0.29. On November 29, 2018, the Company issued an aggregate of 39,444 shares of common stock with a market value at time of issuance of $11,833. The shares were issued to settle accounts payables of $10,545 to a professional, the Company recognized a loss of $1,288 upon issuance of the shares. On February 5, 2019, the Company issued an aggregate of 60,715 shares of common stock with a market value at time of issuance of $13,357. The shares were issued to settle accounts payables of $10,382 to a professional, the Company recognized a loss of $2,975 upon issuance of the shares. On February 8, 2019, the Company secured $150,000 from an accredited investor under a Securities Purchase Agreement and issued 600,000 shares of its common stock at a price of $0.25. On February 8, 2019, the Company issued an aggregate of 400,000 shares of common stock with a market value at time of issuance of $100,000 and recognized the total fair market value as stock-based compensation expense at the time of issuance. The shares were issued for consulting services. During the year ending July 31, 2020, the Company issued the following shares of common stock that are not disclosed in other footnotes: In November 2019, the Company issued 86,667 shares of common stock in conjunction to the conversion of 25,000 shares of the Series A Convertible Preferred stock and $1,189 in accrued dividends. On July 13, 2020, the Company issued 2,073,925 shares of common stock for cash proceeds of $51,629, net of administration fees of $2,500. On July 29, 2020, the Company issued 1,819,700 shares of common stock for cash proceeds of $42,337, net of administration fees of $2,500. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jul. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 19 – SUBSEQUENT EVENTS Equity Issuance On August 1, 2020, the Company issued 2,000,000 common shares for professional services. The Company recognized as stock-based compensation expense of approximately $58,000 equivalent to the value of the shares calculated based on the share’s closing price at the time of issuance. On August 4, 2020, the Company issued 5,000,000 shares of common stock for the conversion of $75,000 of the principal outstanding and accrued interest of $1,500 under one of the convertible notes. On August 7, 2020, the Company issued 7,608,820 common shares to various employees as part of the Company’s Non-Standardized profit-sharing plan contribution. The Company recognized stock-based compensation expense of approximately $247,287 equivalent to the value of the shares calculated based on the share’s closing price at the grant date. On August 14, 2020, the Company issued 5,000,000 shares of common stock for the conversion of $80,000 of the principal outstanding under one of the convertible notes. On October 13, 2020, the Company entered into a $330,000 promissory note, in conjunction with the promissory note, we issued 1,000,000 shares of common stock. At the time of issuance, the Company recognized the relative fair market value of the shares of $36,244 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Convertible Promissory Notes On October 13, 2020, the Company entered into a convertible promissory note with an aggregate principal amount of $330,000, annual interest rate of 8% and a maturity date of October 31, 2021. After payment of transaction-related expenses and legal fees of $32,000, net proceeds to the Company from the Note totaled $298,000. The Company recorded these discounts and cost of $32,000 as a discount to the note and will amortize over the term of the note. I n connection with the execution of the note, we issued 1,000,000 shares of our common stock to the note holder, a On October 15, 2020, the Company entered into a convertible promissory note with an aggregate principal amount of $27,500, annual interest rate of 8% and a maturity date of October 31, 2021. On July 2, 2020, the Company received a $15,000 advance on this note. The Company accounted for the advance as a current note payable as of July 31, 2020. On August 12, 2020, the Company received an additional advance of $10,000. After payment of transaction-related expenses and legal fees of $2,500, net proceeds to the Company from the Note totaled $25,000. The Company recorded these discounts and cost of $2,500 as a discount to the note and will amortize over the term of the note. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a fix conversion price at issuance, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. Other Terms October 2020 Convertible Notes Notes shall bear interest at a rate of eight percent (8%) per annum (the “Interest Rate”), which interest shall be paid by the Company to the Investor in shares of Common Stock at any time the Investor sends a notice of conversion to the Company. The Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but unpaid interest of the Note into shares of the Company’s Common Stock, at any time, at a conversion price for each share of Common Stock shall equal (1) $0.05; provided however At any time, the Company shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note, to prepay up to fifty percent (50%) of the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to one hundred twenty (120%) multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, if any. Subject to the terms of this Note, the Company may prepay the amounts outstanding, less any amounts paid under the Company’s right to prepay up to the fifty percent (50%), hereunder at any time, subject to the consent of the Holder. Such consent by the Holder may be withheld for any reason in its discretion, or for no reason at all. Pay-off of Convertible Notes On October 15, 2020, the Company paid in full the Convertible Note with Platinum Point Capital LLC with a principal balance outstanding of $52,831and accrued interest and penalty of $13,639. On October 15, 2020, the Company paid in full the Convertible Note with Platinum Point Capital LLC with a principal balance outstanding of $50,000 and accrued interest and penalty of $22,530. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business. provide cloud services specializing in Only in the Cloud™ |
Principles of Consolidation | Principles of Consolidation. |
Cost Method Investment | Cost Method Investment. |
Prepaid Acquisition costs & debt financing costs | Prepaid Acquisition costs & debt financing costs. provider in South Florida of UCaaS and managed services, offering a portfolio of cloud-based solutions to the high-growth SMB market. |
Gain on settlement of debt | Gain on settlement of debt |
Reclassifications | Reclassifications. |
Use of Estimates | Use of Estimates. |
Beneficial conversion features | Beneficial conversion features. |
Related parties | Related parties. |
Concentration of Credit Risk | Concentration of Credit Risk. |
Revenue Recognition | Revenue Recognition. Sources of revenue: Cloud-based hosted Services. The Company recognizes cloud-based hosted services revenue, mainly from subscription services for its cloud telephony applications that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call recording, messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized applications. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company’s revenue is recognized at the time control of the products transfers to the customer. Service Revenue Service revenue from subscriptions to the Company’s cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively, customers may choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally as services are activated for the customer. Product Revenue The Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience. Disaggregation of Cloud-based hosted revenues Summary of disaggregated revenue is as follows (in thousands): For the Years ended July 31, 2020 2019 Cloud software and service revenue $ 6,212 $ 5,847 Product revenue 67 193 Total operating revenues $ 6,279 $ 6,040 Contract Assets Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement; for example, when the initial month’s services or equipment are discounted. Contract assets are included in prepaid and other current assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract assets as of July 31, 2020 and July 31, 2019, were $5,980 and $22,967, respectively. Deferred Income Deferred income represents billings or payment received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding 12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other noncurrent liabilities in the consolidated balance sheets. Deferred income as of July 31, 2020 and July 31, 2019, were $148,000 and $153,000, respectively. |
Customer deposits | Customer deposits. The Company in some instances requires customers to make deposits for equipment, installation charges and training. As equipment is installed and training takes places the deposits are then applied to revenue. As of July 31, 2020, and 2019, Digerati’s customer deposits balance was $131,000 and $132,000, respectively. Costs to Obtain a Customer Contract Sales commissions are paid upon collections of related revenue and are expensed during the same period. Sales commissions for the year ended July 31, 2020 and the year ended July 31, 2019, were $38,976 and $52,613, respectively. Direct Costs - Cloud-based hosted Services We incur bandwidth and colocation charges in connection with our UCaaS or cloud communication services. The bandwidth charges are incurred as part of the connectivity between our customers to allow them access to our various services. We also incur costs from underlying providers for fiber, Internet broadband, and telecommunication circuits in connection with our data and connectivity solutions. |
Cash and cash equivalents | Cash and cash equivalents. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts. Bad debt expense is recognized based on management’s estimate of likely losses each year based on past experience and an estimate of current year uncollectible amounts. As of July 31, 2020, and 2019, Digerati’s allowance for doubtful accounts balance was $124,000 and $115,000, respectively. |
Property and equipment | Property and equipment. |
Goodwill, Intangible Assets, and Long-Lived Assets | Goodwill, Intangible Assets, and Long-Lived Assets Goodwill is carried at cost and is not amortized. The Company tests goodwill for impairment on an annual basis at the end of each fiscal year, relying on a number of factors including operating results, business plans, economic projections, anticipated future cash flows and marketplace data. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests according to specifications set forth in ASC 350. The Company completed an evaluation of goodwill at July 31, 2020 and determined that there was no impairment. The fair value of the Company’s reporting unit is dependent upon the Company’s estimate of future cash flows and other factors. The Company’s estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from the Company’s market capitalization plus a suitable control premium at date of the evaluation. The financial and credit market volatility directly impacts the Company’s fair value measurement through the Company’s weighted average cost of capital that the Company uses to determine its discount rate and through the Company’s stock price that the Company uses to determine its market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded. The Company recognizes an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value. The Company reviews its long-lived assets, including property and equipment, identifiable intangibles, and goodwill annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets. |
Business combinations | Business combinations. |
Derivative financial instruments | Derivative financial instruments For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, any changes in fair value is recorded as non-operating, non-cash income or expense for each reporting period. For option-based derivative financial instruments, warrants and notes payable conversion options Digerati uses the Black-Scholes option-pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date. Notes payable conversion options are recorded as debt discounts and are amortized as interest expense over the term of the related debt instrument. |
Treasury Shares | Treasury Shares. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. Level 1 Level 2 Level 3 For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities. Our derivative liabilities as of July 31, 2020 and 2019 of $606,000 and $927,000, respectively. The following table provides the fair value of the derivative financial instruments measured at fair value using significant unobservable inputs: Fair value measurements at reporting date using: Quoted prices in active markets Significant other Significant Description Fair Value (Level 1) (Level 2) (Level 3) Convertible promissory notes derivative liability at July 31, 2019 $ 927,171 - - $ 927,171 Convertible promissory notes derivative liability at July 31, 2020 $ 606,123 - - $ 606,123 The fair market value of all derivatives during the year ended July 31, 2020 was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 83.28% - 268.02% Risk-free interest rate 0.09% -2.67% Expected term 0.01 - 1.00 years Level 3 inputs. The following table provides a summary of the changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant unobservable inputs: Balance at July 31, 2018 $ 632,268 Derivative from new convertible promissory notes recorded as debt discount 1,043,834 Derivative liability resolved to additional paid in capital due to debt conversion (822,922 ) Derivative loss 73,991 Balance at July 31, 2019 $ 927,171 Derivative from new convertible promissory notes recorded as debt discount 814,180 Derivative liability resolved to additional paid in capital due to debt conversion (872,914 ) Derivative loss (262,314 ) Balance at July 31, 2020 $ 606,123 |
Income taxes | Income taxes. Since January 1, 2007, Digerati accounts for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, Digerati recognizes a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. As of July 31, 2020, we have no liability for unrecognized tax benefits. |
Stock-based compensation | Stock-based compensation. Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. |
Basic and diluted net income (loss) per share | Basic and diluted net income (loss) per share. 7/31/2020 7/31/2019 Options to purchase common stock 5,000,000 4,940,000 Warrants to purchase common stock 2,240,000 2,700,000 Convertible debt 37,304,080 13,113,643 Total: 44,544,080 20,753,643 |
Noncontrolling interest | Noncontrolling interest. Consolidation, The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss). For the year ended July 31, 2020 and 2019, the Company recognized a noncontrolling deficits of $47,000 and $128,000, respectively. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments under this pronouncement will change the way all leases with a duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or Operating lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases are under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. This update is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2018. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provided additional implementation guidance on the previously issued ASU. The C In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 47020) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the potential on its financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of disaggregated revenue | For the Years ended July 31, 2020 2019 Cloud software and service revenue $ 6,212 $ 5,847 Product revenue 67 193 Total operating revenues $ 6,279 $ 6,040 |
Schedule of derivative financial instruments measured at fair value using significant unobservable inputs | Fair value measurements at reporting date using: Quoted prices in active markets Significant other Significant Description Fair Value (Level 1) (Level 2) (Level 3) Convertible promissory notes derivative liability at July 31, 2019 $ 927,171 - - $ 927,171 Convertible promissory notes derivative liability at July 31, 2020 $ 606,123 - - $ 606,123 |
Schedule of derivatives using the Black-Scholes option pricing model | Expected dividend yield 0.00% Expected stock price volatility 83.28% - 268.02% Risk-free interest rate 0.09% -2.67% Expected term 0.01 - 1.00 years |
Summary of fair value of the derivative financial instruments | Balance at July 31, 2018 $ 632,268 Derivative from new convertible promissory notes recorded as debt discount 1,043,834 Derivative liability resolved to additional paid in capital due to debt conversion (822,922 ) Derivative loss 73,991 Balance at July 31, 2019 $ 927,171 Derivative from new convertible promissory notes recorded as debt discount 814,180 Derivative liability resolved to additional paid in capital due to debt conversion (872,914 ) Derivative loss (262,314 ) Balance at July 31, 2020 $ 606,123 |
Schedule of dilutive weighted average shares | 7/31/2020 7/31/2019 Options to purchase common stock 5,000,000 4,940,000 Warrants to purchase common stock 2,240,000 2,700,000 Convertible debt 37,304,080 13,113,643 Total: 44,544,080 20,753,643 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of fair values measurement period | Synergy Useful life Customer relationship $ 40,000 5 License - software 105,000 3 Goodwill 280,000 - Total Purchase price $ 425,000 T3 Useful life Customer relationships $ 1,480,000 7 Marketing & Non-compete 800,000 5 Goodwill 530,353 - Total $ 2,810,353 |
Schedule of indefinite intangible assets | July 31, 2020 Gross Accumulated Net Carrying NetSapiens - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (20,672 ) 19,328 Customer relationships, 7 years 1,480,000 (487,505 ) 992,495 Marketing & Non-compete, 5 years 800,000 (360,000 ) 440,000 Total Define-lived Assets 2,470,000 (1,018,177 ) 1,451,823 Goodwill, Indefinite 810,353 - 810,353 Balance, July 31, 2020 $ 3,280,353 $ (1,018,177 ) $ 2,262,176 July 31, 2019 Gross Accumulated Amortization Net Carrying Amount NetSapiens - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (12,672 ) 27,328 Customer relationships, 7 years 1,480,000 (276,077 ) 1,203,923 Marketing & Non-compete, 5 years 800,000 (200,000 ) 600,000 Total Define-lived Assets 2,470,000 (638,749 ) 1,831,251 Goodwill, Indefinite 810,353 - 810,353 Balance, July 31, 2019 $ 3,280,353 $ (638,749 ) $ 2,641,604 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property plant and equipment | Useful lives 2020 2019 Telecom equipment & software 1-5 years $ 1,064 $ 978 Less: accumulated depreciation (633 ) (399 ) Net–property and equipment $ 431 $ 579 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective tax rate reconciliation of statutory rates | 2020 2019 Expected Federal benefit (provision), at statutory rate 21.0 % 21.0 % Change in valuation allowance (21.0 )% (21.0 )% 0.0 % 0.0 % |
Schedule of deferred tax assets | 2020 2019 Net operating loss carryover $ 1,713,019 $ 1,805,310 Valuation allowance (1,713,019 ) (1,805,310 ) Total deferred tax asset, net $ - $ - |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Schedule of stock options | Options Weighted-average Weighted-average Outstanding at July 31, 2018 3,415,000 $ 0.33 4.58 Granted 2,075,000 $ 0.20 4.58 Exercised - - - Forfeited and cancelled (550,000 ) $ 0.36 3.39 Outstanding at July 31, 2019 4,940,000 $ 0.27 3.65 Granted 60,000 $ 0.12 4.07 Exercised - - - Forfeited and cancelled - - - Outstanding at July 31, 2020 5,000,000 $ 0.27 2.66 Exercisable at July 31, 2020 4,717,699 $ 0.26 2.62 |
Nonemployee [Member] | |
Schedule of fair market value of all options issued Black-Scholes option pricing model | Expected dividend yield 0.00% Expected stock price volatility 317.52% Risk-free interest rate 1.47% Expected term 3.0 year |
Black-Scholes option [Member] | |
Schedule of fair market value of all options issued Black-Scholes option pricing model | Expected dividend yield 0.00% Expected stock price volatility 178.79% - 260.07% Risk-free interest rate 1.84% - 2.73% Expected term 1.0 - 2.0 years |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Warrants [Abstract] | |
Schedule of fair market value assumptions | Expected dividend yield 0.00% Expected stock price volatility 153.99% - 330.94% Risk-free interest rate 2.00% -2.93% Expected term 3.0 years |
Schedule of warrants | Weighted-average Weighted-average remaining contractual Warrants exercise price term (years) Outstanding at July 31, 2018 2,370,000 $ 0.28 2.90 Granted 665,000 $ 0.18 2.61 Exercised (75,000 ) $ 0.10 2.15 Forfeited and cancelled (260,000 ) $ 0.15 3.75 Outstanding at July 31, 2019 2,700,000 $ 0.32 2.19 Granted 50,000 $ 0.20 2.25 Exercised - - - Expired (510,000 ) $ 0.29 - Outstanding at July 31, 2020 2,240,000 $ 0.33 1.61 Exercisable at July 31, 2020 1,940,000 $ 0.22 1.49 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Convertible Notes Payable | |
Schedule of convertible notes payable | July 31, CONVERTIBLE NOTES PAYABLE NON-DERIVATIVE 2020 2019 Two (2) Convertible Notes payable for $250,000 each issued in March 2018, bearing interest at a rate of 12% per annum and a maturity date of September 15, 2018, subsequently extended until December 14, 2018. In conjunction with the notes, the Company issued 300,000 warrants, the warrants vested at time of issuance. The warrants had a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $126,538 and was recognized as a discount on the promissory notes. The company amortized $84,433 as a non-cash interest during the years ended July 31, 2019. The total unamortized discount as of July 31, 2019 was $0. The Conversion Price shall be the greater of: (i) the Variable Conversion Price or (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall be equal to the average closing price for Digerati's Common Stock (the "Shares") for the ten (10) Trading Day period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The "Fixed Conversion Price" shall mean $0.50. On December 27, 2018, the noteholders agreed to extend the maturity date on the notes until September 14, 2019. In addition, as part of the amendment, the Company agreed to modify the "Fixed Conversion Price" to $0.35. In November 2019, the Company issued 110,830 shares of common stock for payment of $7,500 in accrued interest. On October 7, 2019, the holders agreed to extend the maturity date until March 30, 2020. As part of the amendments, the Company agreed to issue 400,000 shares of common stock. Under a Black-Scholes valuation the relative fair market value of the shares of common at time of issuance was approximately $40,000 and was recognized as a discount on the promissory notes over the extended period. The Company amortized the total discount of $40,000 during the year ended July 31, 2020. The total unamortized discount as of July 31, 2020 and July 31, 2019 were $0 and $0, respectively. On April 30, 2020, the Company settled the total debt of $500,000 and accrued interest of $37,500 and issued 8,958,334 shares of common stock and 268,750 shares of Convertible Series B preferred stock for the settlement. At the time of issuance, the Company recognized a gain in settlement of debt $85,104. $ - $ 500,000 Convertible promissory notes for $272,000 issued on June 19, 2018, bearing interest at a rate of 10% per annum, with an initial maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 255,000 warrants under the promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $118,400 and was recognized as a discount on the promissory notes. The Company amortized $109,552 as a non-cash interest during the year ended July 31, 2019. On March 29, 2019, the Company entered into a First Amendment to the Promissory Notes, under the amendments the note holders agreed to extend the maturity date until June 30, 2019. In addition, as part of the amendments, the Company agreed to issue 85,000 shares of common stock. The shares were recorded as debt discount of $17,425 and amortized over the remaining term of the notes. The Company amortized $17,425 as a non-cash interest during the years ended July 31, 2019. The holders may elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after 90 days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price or (ii) the Fixed Conversion Price. The "Variable Conversion Price" shall be equal to the average closing price for Digerati's Common Stock (the "Shares") for the ten (10) Trading Day period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The "Fixed Conversion Price" shall mean $0.50. On June 30, 2019, the Company entered into a Second Amendment to the Promissory Notes, under the amendments the note holders agreed to extend the maturity date until November 30, 2019. In addition, as part of the amendments, the Company agreed to issue 85,000 shares of common stock. The shares were recorded as debt discount of $14,450 and amortized over the remaining term of the notes. The Company amortized $11,560 and $2,890 as a non-cash interest during the year ended July 31, 2020 and July 31, 2019, respectively. The total unamortized discount as July 31, 2020 and July 31, 2019 for the issuance of the second amendment shares were $0 and $11,560, respectively. In addition, in November 2019, the Company issued 172,055 shares of common stock for payment of $6,882 in accrued interest On February 19, 2020, the Company issued 110,027 shares of common stock for payment of accrued interest and a fair market value of $4,401. Also, in November 2019 and February 2020, the holders agreed to extend the maturity date of the notes until April 30, 2020. As part of the amendments, the Company agreed to issue 340,000 shares of common stock. The shares were recorded as debt discount of $10,090 and amortized during the note extension agreement. On April 30, 2020, the Company and the debtholder agreed to settle $240,000 of the debt and $37,454 of accrued interest, as a result the Company issued 4,624,220 shares of common stock and 138,727 shares of Convertible Series B Preferred Stock for the settlement. At the time of issuance, the Company recognized a gain in settlement of debt $43,930. The gain on settlement was generated from the difference between principal and accrued interest settled and fair value of the common stock on settlement date. In June 2020, one of the note holders for $32,000 agreed to extend the maturity date until August 31, 2020. 32,000 272,000 On July 27, 2020, the Company entered into a variable convertible promissory note with an aggregate principal amount of $275,000, annual interest rate of 8% and a maturity date of March 27, 2021. After payment of transaction-related expenses and closing fees of $35,000, net proceeds to the Company from the Note totaled $240,000. The Company recorded these discounts and cost of $35,000 as a discount to the Note and amortized over the term of the note. In connection with the execution of the note, the Company issued 500,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $11,626 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock The Note Conversion Price shall equal the greater of $0.05 (five) cents or 25% discount to up-listing price or offering/underwriting price concurrent with the Company listing on Nasdaq or NYSE American., subject to adjustment as provided in this Note. If an Event of Default occurs, the Conversion Price shall be the lesser of (a). $0.05 (five) cents or (b). 75% of the lowest traded price in the prior fifteen trading days immediately preceding the Notice of Conversion. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a fix conversion price at issuance, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. The total unamortized discount on the Note as of July 31, 2020 was $46,626. The total principal balance outstanding as of July 31, 2020 was $275,000. 275,000 - Total convertible notes payables non-derivative: 307,000 772,000 CONVERTIBLE NOTES PAYABLE - DERIVATIVE On January 16, 2019, the Company entered into various Securities Purchase Agreements (the SPAs") with four (4) different investors (each an "Investor", and together the "Investors") pursuant to which each Investor purchased a 10% unsecured convertible promissory note (each a "Note", and together the "Notes") from the Company. Three of the notes are in the aggregate principal amount of $140,000 each and a maturity date of October 16, 2019. One of the notes is in the aggregate principal amount of $57,750 and a maturity date of January 24, 2020. The purchase price of $140,000 of each of three Notes were paid in cash on January 16, 2019. After payment of transaction-related expenses of $51,000, net proceeds to the Company from the three Notes totaled $369,000. The purchase price of $57,750 Note was paid in cash on January 24, 2019. After payment of transaction-related expenses of $7,750, net proceeds to the Company from Note totaled $50,000. The Company recorded these discounts and cost of $58,750 as a discount to the Notes and fully amortized as interest expense during the period. In connection with the execution of the Notes, we issued 500,000 shares of our common stock to the Note holders, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the four (4) new convertible notes of $655,345, of which $419,000 was recorded as debt discount and will be amortized during the term of the Notes, and $236,345 was recorded as day 1 derivative loss. On July 12, 2019, the Company redeemed the full outstanding principal balance on two of the convertible notes for $280,000, at a redemption price of $382,726. The Company recognized the difference between the redemption price and principal balance paid as interest expense of $102,726. On July 12, 2019, the Company redeemed $70,000 of the principal outstanding on one of the convertible notes, at a redemption price of $91,000. The Company recognized the difference between the redemption price and principal balance paid as interest expense of $21,000. On July 19, 2019, the Company issued 156,202 shares of common stock for the conversion of $9,500 of the principal outstanding and $500 in fees under one of the convertible notes. On July 25, 2019, the Company issued 312,500 shares of common stock. The shares were issued in conjunction with a conversion of $20,000 of the principal outstanding under a convertible debenture. On August 6, 2019, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC (the "Assignor") assigned a principal amount of $25,000, representing a portion of a Convertible Promissory Note dated January 24, 2019 to Armada Investment Fund LLC (the "Assignee"). The note is in the aggregate principal amount of $25,000 and a maturity date of January 24, 2020. During the year ended July 31, 2020, the Company issued 2,658,888 shares of common stock for the conversion of $73,250 of the principal outstanding and $14,796 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $29,765, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019, were $0 and $98,250. During the years ended July 31, 2020 and 2019, the Company amortized $29,765 and $389,235, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below Variable Conversion terms No.1) - 98,250 On February 22, 2019, the Company entered into a variable convertible note for $57,750 with net proceeds of $50,000, maturity date of February 22, 2020 and effective interest rate of 10%. The Company recorded a discount of $7,750 and amortized as interest expense during the period of the note. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $79,729, of which $50,000 was recorded as debt discount and amortized during the term of the Note, and $29,729 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 3,430,700 shares of common stock for the conversion of $57,750 of the principal outstanding and $6,962 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $29,166, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019, were $0 and $57,750. During the years ended July 31, 2020 and 2019, the Company amortized $29,166 and $20,834, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - 57,750 On April 20, 2019, the Company entered into a variable convertible note for $44,000, with net proceeds of $40,000, maturity date of January 19,2020 and effective interest rate of 10%. The Company recorded $4,000 as a discount and amortized as interest expense during the period of the note. In connection with the execution of the Note, we issued 50,000 shares of our common stock to the Note holder, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $55,592, of which $40,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,592 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 2,529,562 shares of common stock for the conversion of $44,000 of the principal outstanding and $5,854 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $26,668, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019, were $0 and $44,000. During the years ended July 31, 2020 and 2019, the Company amortized $26,668 and $13,332, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - 44,000 In July 2019, the Company entered into multiple variable convertible notes with four (4) different investors. Three of the notes are in the aggregate principal amount of $146,625 each, 3% interest rate and a maturity date of April 11, 2020. After payment of transaction-related expenses of $57,375, net proceeds to the Company from the three Notes totaled $382,500. The Company also secured an additional variable convertible note in the aggregate principal amount of $140,000, interest rate of 10% and a maturity date of April 10, 2020. After payment of transaction-related expenses of $17,000, net proceeds to the Company from the Note totaled $123,000. The Company recorded these discounts and cost of $74,375 as a discount to the Notes and fully amortized as interest expense during the period. In connection with the execution of the Notes, we issued 450,000 shares of our common stock to the Note holders, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the four (4) new convertible notes of $959,180, of which $505,500 was recorded as debt discount and will be amortized during the term of the Notes, and $453,680 was recorded as day 1 derivative loss. On January 9, 2020, the Company issued 200,000 shares of common stock for the conversion of $1,328 of the principal outstanding and accrued interest of $2,212 under one of the convertible notes. On January 10, 2020, the Company assigned a convertible note with a $145,297 principal and accrued interest of $13,500 and a second convertible note with a $35,750 principal balance and accrued interest of $15,453 for $210,000. On January 22, 2020, the Company assigned two promissory notes with a $293,250 principal balance outstanding and accrued interest of $66,750. The total assignment was for $360,000. On July 30, 2020, the Company paid the total principal outstanding in one of the notes for $140,000, plus a redemption interest of $46,000. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $449,332, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019 were $0 and $579,875, respectively. During the years ended July 31, 2020 and 2019, the Company amortized $449,332 and $56,168, respectively, of debt discount as interest expense. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - 579,875 On August 6, 2019, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC assigned a principal amount of $25,000, representing a portion of a Convertible Promissory Note dated January 24, 2019 to Armada Investment Fund LLC. The note is in the aggregate principal amount of $25,000, bearing interest at a rate of 10% and a maturity date of January 24, 2020.The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. During the year ended July 31, 2020, the Company issued 555,859 shares of common stock for the conversion of $25,000 principal balance and accrued interest and administrative fees of $1,579. The total unamortized discount on the Note as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $0. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - - On August 30, 2019, the Company entered into variable convertible note for $93,500, bearing interest at a rate of 10% per annum and a maturity date of May 30, 2020. On August 10, 2020, the noteholder agreed to extend the maturity date until October 31, 2020. After payment of transaction-related expenses of $8,500, net proceeds to the Company from the Note totaled $85,000. The Company recorded these discounts and cost of $8,500 as a discount to the Note and fully amortized as interest expense during the period. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $100,978, of which $85,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,978 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $93,500. The Company amortized $93,500 of debt discount as interest expense during the year ending July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 93,500 - In October 2019, the Company entered into two variable convertible notes are in the aggregate principal amount of $71,500, bearing interest at a rate of 8% and a maturity date of July 18, 2020. After payment of transaction-related expenses of $6,500, net proceeds to the Company from the notes totaled $65,000. The Company recorded these discounts and cost of $6,500 as a discount to the notes and fully amortized as interest expense during the period. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible notes of $82,462 of which $65,000 was recorded as debt discount and will be amortized during the term of the notes, and $17,462 was recorded as day 1 derivative loss. On January 10, 2020, the Company entered into an Assignment Agreement whereby Armada Investment Fund LLC assigned the principal amount of $35,750 and accrued interest of $627, representing the balance outstanding on the Convertible Promissory Note dated October 2019 to Platinum Point Capital LLC. The total assignment for note was for $36,377. On July 28, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC assigned the principal amount of $35,750 and accrued interest and penalty of $17,081, representing the balance outstanding on the Convertible Promissory Note dated October 2019 to Platinum Point Capital LLC. The total assignment for note was for $52,831. The total unamortized discount on the Notes as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $0. The Company amortized $71,500 of debt discount as interest expense during the year ending July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) - - On January 10, 2020, the Company entered into an Assignment Agreement whereby Armada Investment Fund LLC (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $145,297 and $35,750, representing the outstanding principal balance on the Convertible Promissory Notes dated July 11, 2019 and October 18, 2019, respectively, plus accrued interest of $28,953. The new notes are is in the aggregate principal amount of $210,000, annual interest rate of 3% and a maturity date of January 10, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby BHP Capital NY Inc. (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of the assignment, the Company recognized derivative liability for the new convertible notes of $784,565, of which $570,000 was recorded as debt discount and amortized over the term of the notes, and $214,565 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 25,312,983 shares of common stock for the conversion of $230,000 of the principal outstanding and $12,000 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 was $172,611, and the total principal balance outstanding as of July 31, 2020 was $340,000. The Company amortized $397,389 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 340,000 - On February 13, 2020, the Company entered into a variable convertible note. The note is in the aggregate principal amount of $33,500, annual interest rate of 10% and a maturity date of February 13, 2021. After payment of transaction-related expenses of $3,500, net proceeds to the Company from the note totaled $30,000. The Company recorded these discounts and cost of $3,500 as a discount to the note and fully amortized as interest expense during the period. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $42,976, of which $30,000 was recorded as debt discount and will be amortized during the term of the Note, and $12,976 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $15,000. The total principal balance outstanding as of July 31, 2020 was $33,500. The Company amortized $18,500 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 33,500 - On April 28, 2020, the Company entered into a variable convertible note. The note is in the principal amount of $15,000, annual interest rate of 10% and a maturity date of April 28, 2021. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $26,629, of which $15,000 was recorded as debt discount and will be amortized during the term of the Note, and $11,629 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $11,250. The total principal balance outstanding as of July 31, 2020 was $15,000. The Company amortized $3,750 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 15,000 - On July 28, 2020, the Company entered into an Assignment Agreement whereby one of the variable noteholders assigned a principal amount of $35,750 and accrued interest and penalties of $17,081. The new variable convertible note is for $52,831, annual interest rate of 10% and a maturity date of July 28, 2021. The Company analyzed the assignment of the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $70,888, of which $49,180 was recorded as debt discount and will be amortized during the term of the Note, and $21,708 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $49,180. The total principal balance outstanding as of July 31, 2020 was $52,831. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) 52,831 - Convertible debenture issued on July 31, 2018 in the principal amount of $220,000 for a purchase price of $198,000 and 0% percent stated interest rate. At issuance, the Company incurred $5,000 in legal and compliance fees, these fees were deducted from the proceeds at time of issuance. The Company recorded these discounts and cost of $22,000 as a discount to the debenture and amortized to interest expense. The Company analyzed the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. Therefore, the Company recognized derivative liability of $189,171. In connection with the execution of the Debenture, we issued 130,000 shares of our common stock, the shares were recorded with a relative fair value of $3,627 and $192,798 was recorded as debt discount and amortized during the term of the note. During the year ending July 31, 2019, the Company issued 2,615,309 shares of common stock for the conversion of $170,000 of the principal outstanding under the convertible debenture. During the year ending July 31, 2020, the Company issued 1,248,335 shares of common stock for the conversion of $50,000 of the principal outstanding under the convertible debenture. During the years ended July 31, 2020 and 2019, the Company amortized $29,214 and $163,584, respectively of the debt discount as interest expense. The total unamortized discount as July 31, 2020 and July 31, 2019, were $0 and $29,214, respectively. The total principal outstanding balance as of July 31, 2020 and July 31, 2019 were $0 and $50,000, respectively. - 50,000 Total convertible notes payable - derivative: $ 534,831 $ 829,875 Total convertible notes payable derivative and non-derivative 841,831 1,601,875 Less: discount on convertible notes payable (294,667 ) (575,681 ) Total convertible notes payable, net of discount 547,164 1,026,194 Less: current portion of convertible notes payable (547,164 ) (1,005,408 ) Long-term portion of convertible notes payable $ - $ 20,786 |
Schedule of fair value using significant unobservable inputs | Fair value measurements at reporting date using: Quoted prices in Significant active markets other for identical observable Significant liabilities inputs unobservable inputs Description Fair Value (Level 1) (Level 2) (Level 3) Convertible promissory notes derivative liability at July 31, 2019 $ 927,171 - - $ 927,171 Convertible promissory notes derivative liability at July 31, 2020 $ 606,123 - - $ 606,123 |
Schedule of fair market value of all derivatives determined using the Black-Scholes option pricing model | Expected dividend yield 0.00% Expected stock price volatility 83.28% - 268.02% Risk-free interest rate 0.09% -2.67% Expected term 0.01 - 1.00 years |
Schedule of changes in fair value of derivative financial instruments | Balance at July 31, 2018 $ 632,268 Derivative from new convertible promissory notes recorded as debt discount 1,043,834 Derivative liability resolved to additional paid in capital due to debt conversion (822,922 ) Derivative loss 73,991 Balance at July 31, 2019 $ 927,171 Derivative from new convertible promissory notes recorded as debt discount 814,180 Derivative liability resolved to additional paid in capital due to debt conversion (872,914 ) Derivative loss (262,314 ) Balance at July 31, 2020 $ 606,123 |
Schedule of future principal payments | FY Payments 2021 $ 2,501,809 2022 251,957 2023 23,596 2024 - Total principal payments $ 2,777,362 |
Equipment Financing (Tables)
Equipment Financing (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of future payments under the equipment financing agreements | Year Amount 2021 70,233 2022 34,897 Total future payments: $ 105,130 Less: amounts representing interest 5,635 Present value of net minimum equipment financing payments $ 99,495 Less current maturities 61,850 Long-term equipment financing obligation $ 37,645 Lease cost: Amortization of ROU assets $ 65,465 Interest on lease liabilities 9,201 Cash paid for amounts included in the measurement of lease liabilities: Operating cashflow from financing leases: $ 9,201 Financing cashflows from finance leases 65,465 Weighted-average remaining lease term - finance lease: 1.52 years Weighted-average discount rate: 6.76 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
Leases [Abstract] | |
Schedule of operating leases | Location Lease Annual Business Use Approx. Sq. Ft. 825 W. Bitters, Suite 104, Jul-22 $ 23,654 Executive offices 1,546 2401 First Street, Suite 300, Ft. Lease of network facilities and Myers, FL 34901 Nov-20 $ 107,534 office space 6,800 7218 McNeail Dr, Austin, TX 78729 Apr-21 $ 14,222 Lease of network facilities 25 6606 Lyndon B. Johnson, Fwy., FL1, Suite 125, Dallas, TX 75240 Apr-21 $ 25,161 Lease of network facilities 25 9701 S. John Young Parkway, May-23 $ 30,528 Lease of network facilities 540 |
Schedule of recognition of ROU assets and lease liabilities for operating leases | ROU Asset August 1, 2019 $ 316,411 Amortization $ (140,314 ) ROU Asset July 31, 2020 $ 176,097 Lease Liability August 1, 2019 $ 316,411 Amortization $ (140,314 ) Lease Liability July 31, 2020 $ 176,097 Lease Liability Short term $ 99,443 Lease Liability Long term $ 76,654 Lease Liability Total: $ 176,097 Operating lease cost: $ 160,574 Cash paid for amounts included in the measurement of lease labilities Operating cashflow from operating leases: $ 160,574 Weighted-average remain lease term-operating lease: 1.88 years Weighted-average discount rate 8 % |
Schedule of future minimum lease payment | Years Ending July 31, Lease 2021 108,409 2022 57,057 2023 25,440 Total: $ 190,906 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Accounting Policies [Abstract] | ||
Cloud software and service revenue | $ 6,212 | $ 5,847 |
Product revenue | 67 | 193 |
Total operating revenues | $ 6,279 | $ 6,040 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 |
Convertible promissory notes derivative liability | $ 606,123 | $ 927,171 | |
Quoted prices in active markets for identical liabilities (Level 1) [Member] | |||
Convertible promissory notes derivative liability | |||
Significant other observable inputs (Level 2) [Member] | |||
Convertible promissory notes derivative liability | |||
Significant unobservable inputs (Level 3) [Member] | |||
Convertible promissory notes derivative liability | $ 606,123 | $ 927,171 | $ 632,268 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - Fair market value of all derivatives [Member] | 12 Months Ended |
Jul. 31, 2020 | |
Expected dividend yield | 0.00% |
Maximum [Member] | |
Expected stock price volatility | 268.02% |
Risk-free interest rate | 2.67% |
Expected term | 1 year |
Minimum [Member] | |
Expected stock price volatility | 83.28% |
Risk-free interest rate | 0.09% |
Expected term | 4 days |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Beginning Balance | $ 927,171 | |
Derivative loss | 263,000 | $ (74,000) |
Ending Balance | 606,123 | 927,171 |
Level 3 inputs [Member] | ||
Beginning Balance | 927,171 | 632,268 |
Derivative from new convertible promissory notes recorded as debt discount | 814,180 | 1,043,834 |
Derivative liability resolved to additional paid in capital due to debt conversion | (872,914) | (822,922) |
Derivative loss | (262,314) | 73,991 |
Ending Balance | $ 606,123 | $ 927,171 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - shares | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Total: | 44,544,080 | 20,753,643 |
Options to purchase common stock [Member] | ||
Total: | 5,000,000 | 4,940,000 |
Warrants to purchase common stock [Member] | ||
Total: | 2,240,000 | 2,700,000 |
Convertible debt [Member] | ||
Total: | 37,304,080 | 13,113,643 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Aug. 02, 2019 | |
Summary of Significant Accounting Policies (Textual) | |||
Customer deposits balance | $ 131,000 | $ 132,000 | |
Property plant and equipment depreciation, description | Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are one (1) to seven (7) years. | ||
Derivative liabilities | $ 606,123 | 927,171 | |
Noncontrolling deficits | 47,000 | 128,000 | |
Contract assets | 5,980 | 22,967 | |
Deferred income | 148,000 | 153,000 | |
Sales commission | $ 38,976 | $ 52,613 | |
Treasury shares, description | As a result of entering into various convertible debt instruments, warrants with fixed exercise price, and convertible notes with fixed conversion price or with a conversion price floor, we reserved 9,000,000 treasury shares for consideration for future conversions and exercise of warrants. | ||
Right-of-use assets | $ 316,411 | ||
Acquisition costs | $ 127,000 | ||
Multiple extension fees | 240,000 | ||
Financing costs | 325,000 | ||
Other income | 100,000 | ||
Legal costs incurred as financing costs | $ 13,000 | ||
Various Employees [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Common shares issued for services | 21,811,100 | 1,827,927 | |
Recognized stock-based compensation expense | $ 1,127,000 | $ 1,044,000 |
Going Concern (Details)
Going Concern (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Going Concern (Textual) | ||
Accumulated deficit | $ (88,697) | $ (85,320) |
Working capital deficit | $ 5,316 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | May 02, 2018 | Dec. 02, 2017 |
Customer relationships [Member] | ||
Useful life (years) | 7 years | 5 years |
License - software [Member] | ||
Useful life (years) | 3 years | |
Goodwill [Member] | ||
Useful life (years) | 0 years | 0 years |
Marketing & Non-compete [Member] | ||
Useful life (years) | 5 years | |
Synergy [Member] | ||
Total Purchase price | $ 425,000 | |
Synergy [Member] | Customer relationships [Member] | ||
Total Purchase price | 40,000 | |
Synergy [Member] | License - software [Member] | ||
Total Purchase price | 105,000 | |
Synergy [Member] | Goodwill [Member] | ||
Total Purchase price | $ 280,000 | |
T3 Communications, Inc. [Member] | ||
Total Purchase price | $ 2,810,353 | |
T3 Communications, Inc. [Member] | Customer relationships [Member] | ||
Total Purchase price | 1,480,000 | |
T3 Communications, Inc. [Member] | Goodwill [Member] | ||
Total Purchase price | 530,353 | |
T3 Communications, Inc. [Member] | Marketing & Non-compete [Member] | ||
Total Purchase price | $ 800,000 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
Gross Carrying Value | $ 2,470,000 | $ 2,470,000 |
Accumulated Amortization | (1,018,177) | (638,749) |
Net Carrying Amount | 1,451,000 | 1,832,000 |
Goodwill, Indefinite, Gross Carrying Value | 810,000 | 810,000 |
Goodwill, Indefinite, Accumulated Amortization | ||
Goodwill, Indefinite, Net Carrying Amount | 810,353 | 810,353 |
Balance, Gross Carrying Value | 3,280,353 | 3,280,353 |
Balance, Accumulated Amortization | (1,018,177) | (638,749) |
Balance, Net Carrying Amount | 2,262,176 | 2,641,604 |
NetSapiens - license, 10 years [Member] | ||
Gross Carrying Value | 150,000 | 150,000 |
Accumulated Amortization | (150,000) | (150,000) |
Net Carrying Amount | ||
Customer relationships, 5 years [Member] | ||
Gross Carrying Value | 40,000 | 40,000 |
Accumulated Amortization | (20,672) | (12,672) |
Net Carrying Amount | 19,328 | 27,328 |
Customer relationships, 7 years [Member] | ||
Gross Carrying Value | 1,480,000 | 1,480,000 |
Accumulated Amortization | (487,505) | (276,077) |
Net Carrying Amount | 992,495 | 1,203,923 |
Marketing & Non-compete, 5 years [Member] | ||
Gross Carrying Value | 800,000 | 800,000 |
Accumulated Amortization | (360,000) | (200,000) |
Net Carrying Amount | $ 440,000 | $ 600,000 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Jun. 14, 2019 | Jun. 26, 2008 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2008 | May 02, 2018 | Dec. 01, 2017 | |
Intangible Assets (Textual) | |||||||
Due date | Oct. 31, 2019 | ||||||
Amortization expense for acquired intangible | $ 25,504 | $ 60,500 | |||||
Amortization expense for the acquired assets | 371,000 | 371,000 | |||||
Total amortization expense | $ 379,000 | 379,000 | |||||
License amount amortization, description | The NetSapiens' License, in the amount of $150,000, is being amortized equally over a period of 10 years. | ||||||
Synergy Telecom Inc [Member] | |||||||
Intangible Assets (Textual) | |||||||
Purchase price | $ 3,211,945 | $ 425,000 | |||||
NetSapiens - license [Member] | |||||||
Intangible Assets (Textual) | |||||||
Loan amount | $ 150,000 | ||||||
Due date | Jun. 26, 2008 | ||||||
Interest rate | 8.00% | ||||||
License amount | $ 150,000 | ||||||
Amortization | $ 0 | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Telecom equipment & software | $ 1,064 | $ 978 |
Less: accumulated depreciation | (633) | (399) |
Net-property and equipment | $ 431 | $ 579 |
Minimum [Member] | ||
Property and equipment, Useful lives | 1 year | |
Maximum [Member] | ||
Property and equipment, Useful lives | 5 years |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Property and Equipment (Textual) | ||
Depreciation | $ 234,000 | $ 289,000 |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Expected Federal benefit (provision), at statutory rate | 21.00% | 21.00% |
Change in valuation allowance | (21.00%) | (21.00%) |
Effective income tax rate net, total | 0.00% | 0.00% |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryover | $ 1,713,019 | $ 1,805,310 |
Valuation allowance | (1,713,019) | (1,805,310) |
Total deferred tax asset, net |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended |
Jul. 31, 2020USD ($)shares | |
Income Taxes (Textual) | |
Loss carryforwards expiration, description | The current tax year is subject to examination by the Internal Revenue Service and certain state taxing authorities. As of July 31, 2020, Digerati had net operating loss carryforwards of approximately $8,157,234 to reduce future federal income tax liabilities; the loss carryforwards will start to expire in 2020. Under the recently enacted Tax Cuts and Jobs Act (TCJA), the new effective Corporate flat tax rate is 21% (effective for tax years beginning after December 31, 2017). |
Change in valuation allowance | $ | $ 92,291 |
Common shares issued | shares | 77,583,184 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 12 Months Ended |
Jul. 31, 2020 | |
Non-employee [Member] | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Expected dividend yield | 0.00% |
Expected stock price volatility | 317.52% |
Risk-free interest rate | 1.47% |
Expected term | 3 years |
Black-Scholes option [Member] | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Expected dividend yield | 0.00% |
Black-Scholes option [Member] | Minimum [Member] | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Expected stock price volatility | 178.79% |
Risk-free interest rate | 1.84% |
Expected term | 1 year |
Black-Scholes option [Member] | Maximum [Member] | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Expected stock price volatility | 260.07% |
Risk-free interest rate | 2.73% |
Expected term | 2 years |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Options, Outstanding | 4,940,000 | 3,415,000 |
Options, Granted | 60,000 | 2,075,000 |
Options, Exercised | ||
Options, Forfeited and cancelled | (550,000) | |
Options, Outstanding Ending Balance | 5,000,000 | 4,940,000 |
Options, Exercisable | 4,717,699 | |
Options, Weighted-average exercise price, Outstanding Beginning Balance | $ 0.27 | $ 0.33 |
Options, Weighted-average exercise price, Granted | 0.12 | 0.20 |
Options, Weighted-average exercise price, Exercised | ||
Options, Weighted-average exercise price, Forfeited and cancelled | 0.36 | |
Options, Weighted-average exercise price, Outstanding Ending Balance | 0.27 | $ 0.27 |
Options, Weighted-average exercise price, Exercisable | $ 0.26 | |
Options, Weighted-average remaining contractual term (years), Outstanding | 3 years 7 months 24 days | 4 years 6 months 29 days |
Options, Weighted-average remaining contractual term (years), Granted | 4 years 6 months 29 days | 4 years 6 months 29 days |
Options, Weighted-average remaining contractual term (years), Forfeited and cancelled | 3 years 4 months 20 days | |
Options, Weighted-average remaining contractual term (years), Outstanding | 2 years 7 months 28 days | 3 years 7 months 24 days |
Options, Weighted-average remaining contractual term (years), Exercisable | 2 years 7 months 13 days |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||
Feb. 24, 2020 | Jan. 02, 2020 | Dec. 31, 2019 | Oct. 31, 2019 | Aug. 26, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Nov. 30, 2015 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Stock-Based Compensation (Textual) | |||||||||||
Options to purchase common shares | 60,000 | ||||||||||
Recognized stock-based compensation expense | $ 1,112,000 | $ 733,000 | |||||||||
Exercise price | $ 0.12 | ||||||||||
Term | 5 years | ||||||||||
Fair market value | $ 7,158 | ||||||||||
Unamortized compensation cost | 63,203 | 433,608 | |||||||||
Aggregate intrinsic value of stock options outstanding | 4,717,699 | 3,452,405 | |||||||||
Aggregate intrinsic value stock options exercisable | $ 0 | $ 0 | |||||||||
Employees [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Options to purchase common shares | 250,000 | ||||||||||
Exercise price | $ 0.25 | ||||||||||
Term | 5 years | ||||||||||
Vesting period | The options vest equally over a period of two years. | ||||||||||
Fair market value | $ 39,175 | ||||||||||
Various Employees [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Common shares issued | 11,509,022 | 635,156 | |||||||||
Options to purchase common shares | 11,509,022 | ||||||||||
Recognized stock-based compensation expense | $ 233,633 | $ 233,633 | $ 114,000 | ||||||||
Closing stock price, description | The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) of the 5,000,000 and 4,940,000 stock options outstanding at July 31, 2020 and July 31, 2019 was $0 and $0, respectively. | ||||||||||
Board of Directors [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Options to purchase common shares | 100,000 | ||||||||||
Exercise price | $ 0.18 | ||||||||||
Term | 5 years | ||||||||||
Vesting period | The options vest equally over a period of one year. | ||||||||||
Fair market value | $ 11,406 | ||||||||||
Management Team [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Options to purchase common shares | 1,725,000 | ||||||||||
Exercise price | $ 0.19 | ||||||||||
Term | 5 years | ||||||||||
Vesting period | The options vest equally over a period of one year. | ||||||||||
Fair market value | $ 217,263 | ||||||||||
Management Team One [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Options to purchase common shares | 1,192,770 | ||||||||||
Recognized stock-based compensation expense | $ 198,000 | ||||||||||
Executive Officer [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Common shares issued | 1,350,000 | ||||||||||
Options to purchase common shares | 3,952,095 | ||||||||||
Recognized stock-based compensation expense | $ 276,646 | $ 85,500 | |||||||||
Fair market value | 256,500 | ||||||||||
Annualized revenue | 15,000 | ||||||||||
Unamortized compensation cost | $ 171,000 | ||||||||||
Executive Officer [Member] | Lieu [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Options to purchase common shares | 5,012,658 | 1,337,325 | |||||||||
Recognized stock-based compensation expense | $ 198,000 | ||||||||||
Fair market value | $ 93,612 | ||||||||||
Stock options outstanding | 26,612 | ||||||||||
Accrued liability | $ 67,000 | ||||||||||
Non-employee [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Common shares issued | 200,000 | ||||||||||
Options to purchase common shares | 400,000 | ||||||||||
Fair market value | $ 15,240 | $ 69,600 | |||||||||
Non-employee [Member] | Consulting Services [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Common shares issued | 325,000 | ||||||||||
Fair market value | $ 78,000 | ||||||||||
Non-employee [Member] | Consulting Services One [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Common shares issued | 400,000 | ||||||||||
Fair market value | $ 100,000 | ||||||||||
Employee Stock Option [Member] | |||||||||||
Stock-Based Compensation (Textual) | |||||||||||
Stock options authorizes to grant | 7,500,000 | ||||||||||
Stock options outstanding | 5,000,000 | 4,940,000 | 3,415,000 | ||||||||
Stock options exercisable |
Warrants (Details)
Warrants (Details) | 12 Months Ended |
Jul. 31, 2020 | |
Class of Warrant or Right [Line Items] | |
Expected dividend yield | 0.00% |
Warrants [Member] | |
Class of Warrant or Right [Line Items] | |
Expected dividend yield | 0.00% |
Expected term | 3 years |
Minimum [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-free interest rate | 0.09% |
Expected term | 4 days |
Minimum [Member] | Warrants [Member] | |
Class of Warrant or Right [Line Items] | |
Expected stock price volatility | 153.99% |
Risk-free interest rate | 2.00% |
Maximum [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-free interest rate | 2.67% |
Expected term | 1 year |
Maximum [Member] | Warrants [Member] | |
Class of Warrant or Right [Line Items] | |
Expected stock price volatility | 330.94% |
Risk-free interest rate | 2.93% |
Warrants (Details 1)
Warrants (Details 1) - $ / shares | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | ||
Warrants, Outstanding | 2,700,000 | 2,370,000 |
Warrants, Granted | 50,000 | 665,000 |
Warrants, Exercised | (75,000) | |
Warrants, Expired | (510,000) | |
Warrants, Forfeited and cancelled | (260,000) | |
Warrants, Outstanding | 2,240,000 | 2,700,000 |
Warrants, Exercisable | 1,940,000 | |
Weighted-average exercise price, Outstanding | $ 0.32 | $ 0.28 |
Weighted-average exercise price, Granted | 0.20 | 0.18 |
Weighted-average exercise price, Exercised | 0.10 | |
Weighted-average exercise price, Expired | 0.29 | |
Weighted-average exercise price, Forfeited and cancelled | 0.15 | |
Weighted-average exercise price, Outstanding | 0.32 | $ 0.32 |
Weighted-average exercise price, Exercisable | $ 0.22 | |
Weighted-average remaining contractual term (years), Outstanding | 2 years 10 months 25 days | |
Weighted-average remaining contractual term (years), Granted | 2 years 2 months 30 days | 2 years 7 months 10 days |
Weighted-average remaining contractual term (years), Exercised | 2 years 1 month 24 days | |
Weighted-average remaining contractual term (years), Forfeited and cancelled | 3 years 9 months | |
Weighted-average remaining contractual term (years), Outstanding | 1 year 7 months 10 days | 2 years 2 months 8 days |
Weighted-average remaining contractual term (years), Exercisable | 1 year 5 months 27 days |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) | 1 Months Ended | ||||||||||||
Mar. 31, 2020 | Aug. 26, 2019 | May 31, 2019 | Apr. 30, 2019 | Jan. 31, 2019 | Oct. 31, 2018 | Aug. 31, 2018 | Dec. 31, 2017 | Jul. 31, 2020 | Jan. 31, 2020 | Jul. 31, 2019 | Mar. 31, 2019 | Feb. 28, 2019 | |
Warrants (Textual) | |||||||||||||
Warrants exercise price | $ 0.20 | ||||||||||||
Warrants outstanding | 2,240,000 | 2,700,000 | |||||||||||
Purchase an additional shares | 50,000 | ||||||||||||
Warrants, description | The Company issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.50. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $49,000, the Company amortized the fair market value as warrant expense over 12 months. Additionally, the Company committed to issue 100,000 warrants if the Company’s stock price traded at $0.75 per share for 10 consecutive days, to issue 100,000 warrants if the Company’s stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants if the Company’s stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $143,000, and the Company amortized the expense during FY2018. The 300,000 commitment warrants have not vested and have not been issued since the requirements were not achieved during the year ended July 31, 2020. | ||||||||||||
Warrants term | 5 years | ||||||||||||
Preferred stock, share issued | 25,000 | ||||||||||||
Preferred stock price per share | $ 0.30 | ||||||||||||
Aggregate intrinsic value | $ 1,940,000 | $ 2,400,000 | |||||||||||
Warrant outstanding | $ 25,000 | 6,160 | 63,602 | ||||||||||
Warrants exercisable | 6,160 | 63,602 | |||||||||||
Warrant expense | 0 | 64,000 | |||||||||||
Unamortized warrant expense | $ 0 | $ 0 | |||||||||||
Private placement [Member] | | Accredited investors [Member] | |||||||||||||
Warrants (Textual) | |||||||||||||
Secured amount | $ 40,000 | ||||||||||||
Common stock, shares issued | 80,000 | ||||||||||||
Common stock price per share | $ 0.50 | ||||||||||||
Common stock exercise price | $ 0.20 | $ 0.20 | $ 0.50 | ||||||||||
Warrants to purchase of common stock | 175,000 | 50,000 | 15,000 | ||||||||||
Warrants issued | 175,000 | 50,000 | 200,000 | ||||||||||
Warrants exercise price | $ 0.30 | $ 0.30 | $ 0.15 | $ 0.10 | |||||||||
Purchase an additional shares | 350,000 | 100,000 | |||||||||||
Warrants term | 3 years | ||||||||||||
fair market value of the warrant | $ 31,000 | ||||||||||||
principal amount | $ 50,000 | $ 75,000 | |||||||||||
Cancellation of warrant | 260,000 | ||||||||||||
Common stock discount | $ 36,000 | ||||||||||||
Common shares replace | 260,000 | ||||||||||||
Warrant [Member] | |||||||||||||
Warrants (Textual) | |||||||||||||
Warrants issued | 60,000 | 15,000 | |||||||||||
Warrants exercise price | $ 0.50 | $ 0.136 | $ 0.10 | $ 0.10 | |||||||||
Warrants expired | 210,000 | 300,000 | |||||||||||
Warrant outstanding | $ 6,000 | $ 1,500 |
Non-Standardized Profit-Shari_2
Non-Standardized Profit-Sharing Plan (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 24, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | |
Non Standarized Profit Sharing Plan [Line Items] | |||
Non-Standarized profit sharing plan description | Under the plan our employees qualify to participate in the plan after one year of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000 per year. Contributions under the plan are fully vested upon funding. | ||
Recognized stock-based compensation expense | $ 1,112,000 | $ 733,000 | |
Various Employees [Member] | |||
Non Standarized Profit Sharing Plan [Line Items] | |||
Common shares issued | 11,509,022 | 635,156 | |
Recognized stock-based compensation expense | $ 233,633 | $ 233,633 | $ 114,000 |
Significant Customers (Details)
Significant Customers (Details) - Customer One [Member] - Accounts Receivable [Member] | 12 Months Ended |
Jul. 31, 2020Customers | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 12.00% |
Number of customers | 1 |
Notes Payable Non-Convertible (
Notes Payable Non-Convertible (Details) - USD ($) | Jul. 02, 2020 | May 06, 2020 | Apr. 10, 2020 | Jun. 14, 2019 | Oct. 22, 2018 | Feb. 26, 2020 | Jun. 14, 2019 | Apr. 30, 2018 | Jul. 31, 2020 | Jul. 31, 2019 | Oct. 14, 2020 | Jul. 03, 2020 | Apr. 22, 2020 | Mar. 31, 2020 | May 15, 2018 |
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Maturity date | Oct. 31, 2019 | ||||||||||||||
Unamortized discount | $ 0 | $ 7,297 | |||||||||||||
Principal payment | 57,098 | ||||||||||||||
Principal amount outstanding | $ 17,500 | $ 17,500 | 30,000 | 0 | |||||||||||
Warrant exercise price | $ 0.20 | ||||||||||||||
Discount on promissory note | $ 1,228,000 | 1,466,000 | |||||||||||||
Non-convertible debt [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 50,000 | ||||||||||||||
Annual interest rate | 8.00% | ||||||||||||||
Maturity date | Dec. 31, 2018 | ||||||||||||||
Issuance of warrants | 200,000 | ||||||||||||||
Principal amount outstanding | $ 7,500 | 17,500 | |||||||||||||
Debt instrument, description of variable rate basis | The Notes provide for an interest rate of 1.00% per year and matures two years after the issuance date. Beginning on the seventh month following the date of the Notes, the Company is required to make 18 monthly payments of principal and interest in the amount of $8,316 and $11,933, respectively. The Notes may be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that were incurred before February 15, 2020. The Notes contain events of default and other conditions customary for a Note of this type. | ||||||||||||||
Debt discount as interest expense | $ 800 | ||||||||||||||
Promissory note, the company issued shares | 40,000 | 200,000 | |||||||||||||
Debt settlement | $ 5,400 | ||||||||||||||
Non-convertible debt [Member] | Secured promissory note [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 30,000 | ||||||||||||||
Annual interest rate | 12.00% | ||||||||||||||
Maturity date | May 1, 2020 | ||||||||||||||
Principal amount outstanding | 50,000 | 50,000 | |||||||||||||
Non-convertible debt [Member] | Unsecured Promissory Notes One [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 62,500 | ||||||||||||||
Non-convertible debt [Member] | Unsecured Promissory Notes Two [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | 86,000 | ||||||||||||||
Non-convertible debt [Member] | Unsecured Promissory Notes Three [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 213,100 | ||||||||||||||
Non-convertible debt [Member] | Unsecured Promissory Notes [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 15,000 | ||||||||||||||
Annual interest rate | 10.00% | ||||||||||||||
Maturity date | Oct. 31, 2020 | ||||||||||||||
Principal amount outstanding | 15,000 | 0 | |||||||||||||
T3 Communications, Inc. [Member] | Non-convertible debt [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 650,000 | ||||||||||||||
Annual interest rate | 0.00% | ||||||||||||||
Additional amount received | $ 50,000 | ||||||||||||||
Maturity date | Oct. 31, 2020 | ||||||||||||||
Principal amount outstanding | $ 700,000 | 700,000 | 650,000 | ||||||||||||
Late fee | $ 3,250 | $ 3,000 | |||||||||||||
T3 Communications, Inc. [Member] | Non-convertible debt [Member] | Secured promissory note [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 600,000 | $ 500,000 | |||||||||||||
Annual interest rate | 5.75% | 5.25% | |||||||||||||
Additional amount received | 100,000 | ||||||||||||||
Maturity date | Apr. 10, 2022 | Apr. 30, 2020 | |||||||||||||
Principal amount outstanding | $ 600,000 | $ 500,000 | |||||||||||||
Debt instrument, description of variable rate basis | T3 agreed to pay the lender a commitment fee of 1.00% upon payment of the first interest payment under the credit facility and 1.00% on the first anniversary of the credit facility. In addition, T3 agreed to pay a monitoring fee of 0.33% of the credit facility, payable in arrears monthly. T3 also agreed to pay an over-advance fee of 3.00% of the amount advanced in excess of the borrowing base or maximum amount of the credit facility, payable in arrears monthly. As of July 31, 2020, the Lender agreed to waive the following financial covenants: 1) A consolidated debt service coverage ratio, as of the last day of each fiscal quarter, of at least 1.25 to 1.00, 2) A fixed charge coverage ratio, as of the last day of each fiscal quarter, of at least 1.25 to 1.00, and 3) A tangible net worth, at all times of at least $100,000. | ||||||||||||||
Stock Purchase Agreement [Member] | Non-convertible debt [Member] | |||||||||||||||
Notes Payable Non-Convertible (Textual) | |||||||||||||||
Promissory note | $ 17,500 | $ 17,500 | |||||||||||||
Annual interest rate | 8.00% | 8.00% | |||||||||||||
Maturity date | Sep. 14, 2019 | ||||||||||||||
Acquire minority interest percentage | 12.00% | 12.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Feb. 27, 2020 | Aug. 26, 2019 | Jun. 14, 2019 | May 01, 2018 | Apr. 30, 2018 | Jul. 31, 2020 | Jul. 31, 2019 | Mar. 31, 2020 | |
Related Party Transactions (Textual) | ||||||||
Promissory note | $ 57,098 | |||||||
Unamortized discount | 0 | $ 7,297 | ||||||
Debt maturity date | Oct. 31, 2019 | |||||||
Principal balance | 332,985 | 220,000 | ||||||
Warrants terms | 5 years | |||||||
Exercise price | $ 0.20 | |||||||
Warrant issue | 6,160 | 63,602 | $ 25,000 | |||||
Interest expense | 7,297 | 6,395 | ||||||
Principal outstanding | $ 17,500 | 30,000 | 0 | |||||
Debt conversion, description | The Company entered into an unsecured promissory note for $70,000 with an effective annual interest rate of 12% and a maturity date of May 1, 2020. Subsequently, the note holder agreed to extend the maturity date until August 31, 2020. In addition, the Company agreed to pay the lender in services provided by the Company, and any unpaid principal and accrued interest will be paid in cash. During the years ended July 31, 2020 and July 31, 2019, the Company provided VoIP Hosted and fiber services of $173,065 and $108,634, respectively. The proceeds from this note were used to extend the closing date of the Nexogy acquisition, the funds are an advance to the purchase price for the benefit of Nexogy owners , the funds will be credited to the purchase price at Closing of the Acquisition. The Company included the prepaid amounts in other current assets as of July 31, 2020. The total principal outstanding as of July 31, 2020 was $16,298. | |||||||
Unsecured promissory note | $ 70,000 | |||||||
Shift8 Networks, Inc. [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Promissory note | $ 275,000 | $ 525,000 | ||||||
Interest rate | 8.08% | 8.00% | ||||||
Interest and principal payment | $ 6,000 | |||||||
Warrants to purchase of common stock | 100,000 | |||||||
Debt maturity date | Apr. 30, 2020 | |||||||
Description of conversion price | A principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823 due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder (such total amount, the “Conversion Amount”) into shares of Common Stock (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount (the numerator); divided by (ii) a conversion price of $1.50 per share of Common Stock, which price shall be indicated in the conversion notice (the denominator) (the “Conversion Price”). The Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable upon such conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and Escrow Agreement, whereby T3 agreed to pledge 51% of the securities owned in its Florida operations, T3 Communications, Inc., until the principal payment is paid in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 75,000 shares of common stock at an exercise price of $0.50 per share. | |||||||
Debt instrument, description of variable rate basis | The promissory note is guaranteed to the lender by 15% of the stock owned by T3 in its Florida operations, T3 Communications, Inc., the secured interest will continue until the principal balance is paid in full. | |||||||
Warrants terms | 3 years | |||||||
Exercise price | $ 0.5 | |||||||
Warrant issue | $ 19,267 | |||||||
Interest expense | 10,386 | 7,738 | ||||||
Fair market value of warrants | $ 26,543 | |||||||
Black-Scholes valuation [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Unamortized discount | 6,300 | 16,686 | ||||||
Discount on promissory note | 19,000 | |||||||
Principal outstanding | $ 152,634 | $ 209,732 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
Convertible notes payables non derivative | $ 307,000 | $ 772,000 |
Total convertible notes payable - derivative | 534,831 | 829,875 |
Total convertible notes payable derivative and non-derivative | 841,831 | 1,601,875 |
Less: discount on convertible notes payable | (294,667) | (575,681) |
Total convertible notes payable, net of discount | 547,164 | 1,026,194 |
Less: current portion of convertible notes payable | (547,164) | (1,005,408) |
Long-term portion of convertible notes payable | 20,786 | |
Convertible Note Payable March 2018 [Member] | ||
Convertible notes payables non derivative | 500,000 | |
Convertible Note Payable June 19, 2018 [Member] | ||
Convertible notes payables non derivative | 272,000 | 32,000 |
Convertible Notes Payable July 27, 2020 [Member] | ||
Convertible notes payables non derivative | 275,000 | |
Convertible Notes Payable January 16, 2019 [Member] | ||
Total convertible notes payable - derivative | 98,250 | |
Convertible Notes Payable February 22, 2019 [Member] | ||
Total convertible notes payable - derivative | 57,750 | |
Convertible Notes Payable April 20, 2019 [Member] | ||
Total convertible notes payable - derivative | 44,000 | |
Convertible Notes Payable July 2019 [Member] | ||
Total convertible notes payable - derivative | 579,875 | |
Convertible Notes Payable August 6, 2019 [Member] | ||
Total convertible notes payable - derivative | ||
Convertible Notes Payable August 30, 2019 [Member] | ||
Total convertible notes payable - derivative | 93,500 | |
Convertible Notes Payable October 2019 [Member] | ||
Total convertible notes payable - derivative | ||
Convertible Notes Payable January 10, 2020 [Member] | ||
Total convertible notes payable - derivative | 340,000 | |
Convertible Notes Payable February 13, 2020 [Member] | ||
Total convertible notes payable - derivative | 33,500 | |
Convertible Notes Payable April 28, 2020 [Member] | ||
Total convertible notes payable - derivative | 15,000 | |
Convertible Notes Payable July 28, 2020 [Member] | ||
Total convertible notes payable - derivative | 52,831 | |
Convertible Notes Payable July 31, 2018 [Member] | ||
Total convertible notes payable - derivative | $ 50,000 |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details 1) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 |
Convertible promissory notes derivative liability | $ 606,123 | $ 927,171 | |
Quoted prices in active markets for identical liabilities (Level 1) [Member] | |||
Convertible promissory notes derivative liability | |||
Significant other observable inputs (Level 2) [Member] | |||
Convertible promissory notes derivative liability | |||
Significant unobservable inputs (Level 3) [Member] | |||
Convertible promissory notes derivative liability | $ 606,123 | $ 927,171 | $ 632,268 |
Convertible Notes Payable (De_3
Convertible Notes Payable (Details 2) | 12 Months Ended |
Jul. 31, 2020 | |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Expected stock price volatility | 83.28% |
Risk-free interest rate | 0.09% |
Expected term | 4 days |
Maximum [Member] | |
Expected stock price volatility | 268.02% |
Risk-free interest rate | 2.67% |
Expected term | 1 year |
Convertible Notes Payable (De_4
Convertible Notes Payable (Details 3) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Beginning Balance | $ 927,171 | |
Derivative loss | 263,000 | $ (74,000) |
Ending Balance | 606,123 | 927,171 |
Level 3 inputs [Member] | ||
Beginning Balance | 927,171 | 632,268 |
Derivative from new convertible promissory notes recorded as debt discount | 814,180 | 1,043,834 |
Derivative liability resolved to additional paid in capital due to debt conversion | (872,914) | (822,922) |
Derivative loss | (262,314) | 73,991 |
Ending Balance | $ 606,123 | $ 927,171 |
Convertible Notes Payable (De_5
Convertible Notes Payable (Details 4) - Fair Value, Inputs, Level 3 [Member] | Jul. 31, 2020USD ($) |
2021 | $ 2,501,809 |
2022 | 251,957 |
2023 | 23,596 |
2024 | |
Total principal payments | $ 2,777,362 |
Convertible Notes Payable (De_6
Convertible Notes Payable (Details Textual) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Convertible Notes Payable (Textual) | ||
Variable conversion price, description | (i) the lowest trading price of the Common Stock (as defined in the Note) as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading Day period immediately preceding the issuance date of each Note; or (ii) 60% multiplied by the lowest traded price of the Common Stock during the twenty (20) consecutive Trading Day period immediately preceding the Trading Day that the Company receives a notice of conversion (the “Variable Conversion Price”). The Variable Conversion Price may further be adjusted in connection with the terms of the Notes.at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. | |
Unamortized discount | $ 294,667 | $ 575,681 |
Principal balance outstanding | 841,831 | 1,601,875 |
Amortized of debt discount as interest expense | 1,228,000 | 1,466,000 |
Derivative liabilities | $ 606,123 | $ 927,171 |
Convertible Notes Payable (De_7
Convertible Notes Payable (Details Textual 1) - USD ($) | Jul. 28, 2020 | Jul. 13, 2020 | Apr. 28, 2020 | Feb. 13, 2020 | Jan. 10, 2020 | Oct. 31, 2019 | Aug. 30, 2019 | Aug. 06, 2019 | Jul. 12, 2019 | Apr. 20, 2019 | Feb. 22, 2019 | Jan. 16, 2019 | Jul. 29, 2020 | Jul. 27, 2020 | Apr. 30, 2020 | Feb. 27, 2020 | Aug. 26, 2019 | Jul. 31, 2019 | Jul. 19, 2019 | Jun. 14, 2019 | Jul. 31, 2018 | Jun. 19, 2018 | Mar. 31, 2018 | Jul. 31, 2020 | Jul. 31, 2019 | Mar. 31, 2020 | Feb. 19, 2020 | Nov. 30, 2019 | Jul. 25, 2019 | Mar. 29, 2019 | Jan. 24, 2019 | Dec. 27, 2018 |
Convertible notes payable issued | $ 220,000,000 | $ 220,000,000 | ||||||||||||||||||||||||||||||
Maturity date | Oct. 31, 2019 | |||||||||||||||||||||||||||||||
Warrants maturity term | 5 years | |||||||||||||||||||||||||||||||
Exercise price per share | $ 0.20 | |||||||||||||||||||||||||||||||
Unamortized discount | 0 | 0 | ||||||||||||||||||||||||||||||
Proceeds of common stock | $ 51,629 | $ 42,337 | ||||||||||||||||||||||||||||||
Amortized debt discount | 163,584 | $ 29,214 | 163,584 | |||||||||||||||||||||||||||||
Debt conversion, description | The Company entered into an unsecured promissory note for $70,000 with an effective annual interest rate of 12% and a maturity date of May 1, 2020. Subsequently, the note holder agreed to extend the maturity date until August 31, 2020. In addition, the Company agreed to pay the lender in services provided by the Company, and any unpaid principal and accrued interest will be paid in cash. During the years ended July 31, 2020 and July 31, 2019, the Company provided VoIP Hosted and fiber services of $173,065 and $108,634, respectively. The proceeds from this note were used to extend the closing date of the Nexogy acquisition, the funds are an advance to the purchase price for the benefit of Nexogy owners , the funds will be credited to the purchase price at Closing of the Acquisition. The Company included the prepaid amounts in other current assets as of July 31, 2020. The total principal outstanding as of July 31, 2020 was $16,298. | |||||||||||||||||||||||||||||||
Principal balance outstanding | 220,000,000 | 220,000,000 | ||||||||||||||||||||||||||||||
Total principal balance outstanding | 50,000 | $ 0 | $ 50,000 | |||||||||||||||||||||||||||||
Common stock for conversion, description | The Company issued 1,248,335 shares of common stock for the conversion of $50,000 of the principal outstanding under the convertible debenture. | The Company issued 2,615,309 shares of common stock for the conversion of $170,000 of the principal outstanding under the convertible debenture. | ||||||||||||||||||||||||||||||
Assignment Agreement, description | The Company entered into an Assignment Agreement whereby Armada Investment Fund LLC (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $145,297 and $35,750, representing the outstanding principal balance on the Convertible Promissory Notes dated July 11, 2019 and October 18, 2019, respectively, plus accrued interest of $28,953. The new notes are is in the aggregate principal amount of $210,000, annual interest rate of 3% and a maturity date of January 10, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby BHP Capital NY Inc. (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC (the "Assignor") assigned to Platinum Point Capital LLC (the "Assignee") a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of the assignment, the Company recognized derivative liability for the new convertible notes of $784,565, of which $570,000 was recorded as debt discount and amortized over the term of the notes, and $214,565 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 25,312,983 shares of common stock for the conversion of $230,000 of the principal outstanding and $12,000 in accrued interest and fees. The total unamortized discount on the Notes as of July 31, 2020 was $172,611, and the total principal balance outstanding as of July 31, 2020 was $340,000. The Company amortized $397,389 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | |||||||||||||||||||||||||||||||
Securities Purchase Agreements [Member] | ||||||||||||||||||||||||||||||||
Maturity date | Jan. 24, 2020 | |||||||||||||||||||||||||||||||
Aggregateprinicipal amount | $ 57,750 | |||||||||||||||||||||||||||||||
Series B Preferred Stock [Member] | ||||||||||||||||||||||||||||||||
Accrued interest | $ 37,477 | |||||||||||||||||||||||||||||||
Convertible Notes payable [Member] | ||||||||||||||||||||||||||||||||
Convertible notes payable issued | $ 275,000 | $ 272,000 | $ 250,000 | |||||||||||||||||||||||||||||
Interest rate | 8.00% | 10.00% | 12.00% | |||||||||||||||||||||||||||||
Maturity date | Jan. 24, 2020 | Mar. 27, 2021 | Apr. 10, 2019 | Sep. 15, 2018 | Aug. 31, 2020 | |||||||||||||||||||||||||||
Warrants issued | 255,000 | 300,000 | ||||||||||||||||||||||||||||||
Warrants maturity term | 3 years | 3 years | ||||||||||||||||||||||||||||||
Exercise price per share | $ 0.10 | $ 0.10 | ||||||||||||||||||||||||||||||
Unamortized discount | 29,765 | $ 0 | $ 29,765 | |||||||||||||||||||||||||||||
Conversion Price per share | $ 0.50 | $ 0.35 | ||||||||||||||||||||||||||||||
Proceeds of common stock | $ 25,000 | |||||||||||||||||||||||||||||||
Accrued interest | 37,500 | $ 14,796 | $ 4,401 | |||||||||||||||||||||||||||||
Convertible notes payable, description | In November 2019, the Company issued 110,830 shares of common stock for payment of $7,500 in accrued interest. On October 7, 2019, the holders agreed to extend the maturity date until March 30, 2020. As part of the amendments, the Company agreed to issue 400,000 shares of common stock. Under a Black-Scholes valuation the relative fair market value of the shares of common at time of issuance was approximately $40,000 and was recognized as a discount on the promissory notes over the extended period. The Company amortized the total discount of $40,000 during the year ended July 31, 2020. | |||||||||||||||||||||||||||||||
Settlement of debt | $ 500,000 | |||||||||||||||||||||||||||||||
Issuance of common stock | 500,000 | 8,958,334 | 2,658,888 | 110,027 | 85,000 | 312,500 | 85,000 | |||||||||||||||||||||||||
Gain on settlement | $ 85,104 | |||||||||||||||||||||||||||||||
Amortized debt discount | 389,235 | $ 29,765 | 389,235 | $ 14,450 | $ 17,425 | |||||||||||||||||||||||||||
Amendments, description | In November 2019 and February 2020, the holders agreed to extend the maturity date of the notes until April 30, 2020. As part of the amendments, the Company agreed to issue 340,000 shares of common stock. The shares were recorded as debt discount of $10,090 and amortized during the note extension agreement. On April 30, 2020, the Company and the debtholder agreed to settle $240,000 of the debt and $37,454 of accrued interest, as a result the Company issued 4,624,220 shares of common stock and 138,727 shares of Convertible Series B Preferred Stock for the settlement. At the time of issuance, the Company recognized a gain in settlement of debt $43,930. | |||||||||||||||||||||||||||||||
Aggregateprinicipal amount | $ 240,000 | $ 32,000 | ||||||||||||||||||||||||||||||
Transaction-related expenses | 35,000 | |||||||||||||||||||||||||||||||
Debt discount | $ 11,626 | |||||||||||||||||||||||||||||||
Debt conversion, description | Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock The Note Conversion Price shall equal the greater of $0.05 (five) cents or 25% discount to up-listing price or offering/underwriting price concurrent with the Company listing on Nasdaq or NYSE American., subject to adjustment as provided in this Note. If an Event of Default occurs, the Conversion Price shall be the lesser of (a). $0.05 (five) cents or (b). 75% of the lowest traded price in the prior fifteen trading days immediately preceding the Notice of Conversion. | |||||||||||||||||||||||||||||||
Convertible debenture, description | The principal amount of $220,000 for a purchase price of $198,000 and 0% percent stated interest rate. At issuance, the Company incurred $5,000 in legal and compliance fees, these fees were deducted from the proceeds at time of issuance. The Company recorded these discounts and cost of $22,000 as a discount to the debenture and amortized to interest expense. The Company analyzed the Debenture for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. Therefore, the Company recognized derivative liability of $189,171. In connection with the execution of the Debenture, we issued 130,000 shares of our common stock, the shares were recorded with a relative fair value of $3,627 and $192,798 was recorded as debt discount and amortized during the term of the note. | |||||||||||||||||||||||||||||||
Principal balance outstanding | $ 9,500 | 275,000 | $ 20,000 | |||||||||||||||||||||||||||||
Total principal balance outstanding | 98,250 | $ 0 | 98,250 | |||||||||||||||||||||||||||||
Common stock for conversion | 156,202 | 73,250 | ||||||||||||||||||||||||||||||
Notes payable fees | $ 500 | |||||||||||||||||||||||||||||||
Assignment Agreement, description | The Company entered into an Assignment Agreement whereby one of the variable noteholders assigned a principal amount of $35,750 and accrued interest and penalties of $17,081. The new variable convertible note is for $52,831, annual interest rate of 10% and a maturity date of July 28, 2021. The Company analyzed the assignment of the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $70,888, of which $49,180 was recorded as debt discount and will be amortized during the term of the Note, and $21,708 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $49,180. The total principal balance outstanding as of July 31, 2020 was $52,831. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | The Company entered into an Assignment Agreement whereby Armada Investment Fund LLC assigned the principal amount of $35,750 and accrued interest of $627, representing the balance outstanding on the Convertible Promissory Note dated October 2019 to Platinum Point Capital LLC. The total assignment for note was for $36,377. On July 28, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC assigned the principal amount of $35,750 and accrued interest and penalty of $17,081, representing the balance outstanding on the Convertible Promissory Note dated October 2019 to Platinum Point Capital LLC. The total assignment for note was for $52,831. The total unamortized discount on the Notes as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $0. The Company amortized $71,500 of debt discount as interest expense during the year ending July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | The Company entered into variable convertible note for $93,500, bearing interest at a rate of 10% per annum and a maturity date of May 30, 2020. On August 10, 2020, the noteholder agreed to extend the maturity date until October 31, 2020. After payment of transaction-related expenses of $8,500, net proceeds to the Company from the Note totaled $85,000. The Company recorded these discounts and cost of $8,500 as a discount to the Note and fully amortized as interest expense during the period. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $100,978, of which $85,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,978 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $93,500. The Company amortized $93,500 of debt discount as interest expense during the year ending July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | |||||||||||||||||||||||||||||
Variable convertible note, description | The Company entered into a variable convertible note. The note is in the principal amount of $15,000, annual interest rate of 10% and a maturity date of April 28, 2021. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $26,629, of which $15,000 was recorded as debt discount and will be amortized during the term of the Note, and $11,629 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $11,250. The total principal balance outstanding as of July 31, 2020 was $15,000. The Company amortized $3,750 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | The Company entered into a variable convertible note. The note is in the aggregate principal amount of $33,500, annual interest rate of 10% and a maturity date of February 13, 2021. After payment of transaction-related expenses of $3,500, net proceeds to the Company from the note totaled $30,000. The Company recorded these discounts and cost of $3,500 as a discount to the note and fully amortized as interest expense during the period. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $42,976, of which $30,000 was recorded as debt discount and will be amortized during the term of the Note, and $12,976 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of July 31, 2020 was $15,000. The total principal balance outstanding as of July 31, 2020 was $33,500. The Company amortized $18,500 of debt discount as interest expense during the year ended July 31, 2020. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | ||||||||||||||||||||||||||||||
Two variable convertible notes, description | The Company entered into two variable convertible notes are in the aggregate principal amount of $71,500, bearing interest at a rate of 8% and a maturity date of July 18, 2020. After payment of transaction-related expenses of $6,500, net proceeds to the Company from the notes totaled $65,000. The Company recorded these discounts and cost of $6,500 as a discount to the notes and fully amortized as interest expense during the period. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible notes of $82,462 of which $65,000 was recorded as debt discount and will be amortized during the term of the notes, and $17,462 was recorded as day 1 derivative loss. | |||||||||||||||||||||||||||||||
Convertible Notes payable [Member] | Jefferson Street Capital LLC [Member] | ||||||||||||||||||||||||||||||||
Convertible notes payable amount | $ 25,000 | |||||||||||||||||||||||||||||||
Assignment Agreement, description | The Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC assigned a principal amount of $25,000, representing a portion of a Convertible Promissory Note dated January 24, 2019 to Armada Investment Fund LLC. The note is in the aggregate principal amount of $25,000, bearing interest at a rate of 10% and a maturity date of January 24, 2020.The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. During the year ended July 31, 2020, the Company issued 555,859 shares of common stock for the conversion of $25,000 principal balance and accrued interest and administrative fees of $1,579. The total unamortized discount on the Note as of July 31, 2020 was $0. The total principal balance outstanding as of July 31, 2020 was $0. The notes are immediately convertible into shares of the Company's Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.1) | |||||||||||||||||||||||||||||||
Convertible Notes payable [Member] | Securities Purchase Agreements [Member] | ||||||||||||||||||||||||||||||||
Maturity date | Oct. 16, 2019 | |||||||||||||||||||||||||||||||
Convertible notes payable, description | After payment of transaction-related expenses of $51,000, net proceeds to the Company from the three Notes totaled $369,000. The purchase price of $57,750 Note was paid in cash on January 24, 2019. After payment of transaction-related expenses of $7,750, net proceeds to the Company from Note totaled $50,000. The Company recorded these discounts and cost of $58,750 as a discount to the Notes and fully amortized as interest expense during the period. In connection with the execution of the Notes, we issued 500,000 shares of our common stock to the Note holders, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. | |||||||||||||||||||||||||||||||
Aggregateprinicipal amount | $ 140,000 | |||||||||||||||||||||||||||||||
Transaction-related expenses | $ 51,000 | |||||||||||||||||||||||||||||||
Unsecured convertible promissory note percentage | 10.00% | |||||||||||||||||||||||||||||||
Purchase price of the note | $ 140,000 | $ 57,750 | ||||||||||||||||||||||||||||||
Net proceeds | 369,000 | |||||||||||||||||||||||||||||||
Convertible Notes payable [Member] | Black-Scholes option [Member] | ||||||||||||||||||||||||||||||||
Fair market value of the warrant | $ 126,538 | |||||||||||||||||||||||||||||||
Amortized of non cash interest amount | 84,433 | 84,433 | ||||||||||||||||||||||||||||||
Unamortized discount | 0 | 0 | ||||||||||||||||||||||||||||||
Convertible Notes payable [Member] | Black-Scholes valuation One [Member] | ||||||||||||||||||||||||||||||||
Fair market value of the warrant | $ 118,400 | |||||||||||||||||||||||||||||||
Amortized of non cash interest amount | 109,552 | 109,552 | ||||||||||||||||||||||||||||||
Convertible Notes payable [Member] | Series B Preferred Stock [Member] | ||||||||||||||||||||||||||||||||
Issuance of common stock | 268,750 | |||||||||||||||||||||||||||||||
Convertible Notes payable One [Member] | ||||||||||||||||||||||||||||||||
Amortized of non cash interest amount | 2,890 | $ 11,560 | 2,890 | |||||||||||||||||||||||||||||
Unamortized discount | 29,214 | $ 46,626 | 29,214 | |||||||||||||||||||||||||||||
Conversion Price per share | $ 0.50 | |||||||||||||||||||||||||||||||
Accrued interest | $ 6,882 | |||||||||||||||||||||||||||||||
Convertible notes payable, description | The Company amortized $17,425 as a non-cash interest during the years ended July 31, 2019. The holders may elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after 90 days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price or (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall be equal to the average closing price for Digerati’s Common Stock (the “Shares”) for the ten (10) Trading Day period immediately preceding the Conversion Date. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. | |||||||||||||||||||||||||||||||
Issuance of common stock | 172,055 | |||||||||||||||||||||||||||||||
Four New Convertible Notes [Member] | Securities Purchase Agreements [Member] | ||||||||||||||||||||||||||||||||
Debt discount | 419,000 | |||||||||||||||||||||||||||||||
Convertible notes payable amount | 655,345 | |||||||||||||||||||||||||||||||
Derivative loss | $ 236,345 | |||||||||||||||||||||||||||||||
Two Convertible Notes [Member] | ||||||||||||||||||||||||||||||||
Principal balance outstanding | $ 70,000 | |||||||||||||||||||||||||||||||
Redemption price | 91,000 | |||||||||||||||||||||||||||||||
Interest expenses | 21,000 | |||||||||||||||||||||||||||||||
One Convertible Notes [Member] | ||||||||||||||||||||||||||||||||
Principal balance outstanding | 280,000 | |||||||||||||||||||||||||||||||
Redemption price | 382,726 | |||||||||||||||||||||||||||||||
Interest expenses | $ 102,726 | |||||||||||||||||||||||||||||||
Variable Convertible Note [Member] | ||||||||||||||||||||||||||||||||
Convertible notes payable issued | $ 44,000 | $ 57,750 | ||||||||||||||||||||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||||||||||||||||||||||
Maturity date | Jan. 19, 2020 | Feb. 22, 2020 | ||||||||||||||||||||||||||||||
Fair value of derivative liability | $ 0 | |||||||||||||||||||||||||||||||
Unamortized discount | 29,166 | $ 0 | 29,166 | |||||||||||||||||||||||||||||
Proceeds of common stock | 3,430,700 | |||||||||||||||||||||||||||||||
Accrued interest | 6,962 | |||||||||||||||||||||||||||||||
Issuance of common stock | 50,000 | |||||||||||||||||||||||||||||||
Amortized debt discount | $ 4,000 | $ 7,750 | 20,834 | 29,166 | 20,834 | |||||||||||||||||||||||||||
Debt conversion, description | The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $55,592, of which $40,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,592 was recorded as day 1 derivative loss. | The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $79,729, of which $50,000 was recorded as debt discount and amortized during the term of the Note, and $29,729 was recorded as day 1 derivative loss. | ||||||||||||||||||||||||||||||
Principal balance outstanding | 57,750 | $ 0 | 57,750 | |||||||||||||||||||||||||||||
Net proceeds | $ 40,000 | $ 50,000 | ||||||||||||||||||||||||||||||
Common stock for conversion | 57,750 | |||||||||||||||||||||||||||||||
Variable Convertible Note [Member] | ||||||||||||||||||||||||||||||||
Unamortized discount | 26,668 | $ 0 | 26,668 | |||||||||||||||||||||||||||||
Issuance of common stock | 2,529,562 | |||||||||||||||||||||||||||||||
Amortized debt discount | 13,332 | $ 26,668 | 13,332 | |||||||||||||||||||||||||||||
Total principal balance outstanding | 44,000 | $ 0 | 44,000 | |||||||||||||||||||||||||||||
Common stock for conversion | 44,000 | |||||||||||||||||||||||||||||||
Notes payable fees | $ 5,854 | |||||||||||||||||||||||||||||||
Multiple Variable Convertible Note With 4 Investors [Member] | ||||||||||||||||||||||||||||||||
Amortized debt discount | $ 56,168 | $ 449,332 | $ 56,168 | |||||||||||||||||||||||||||||
Multiple variable convertible notes, description | The Company entered into multiple variable convertible notes with four (4) different investors. Three of the notes are in the aggregate principal amount of $146,625 each, 3% interest rate and a maturity date of April 11, 2020. After payment of transaction-related expenses of $57,375, net proceeds to the Company from the three Notes totaled $382,500. The Company also secured an additional variable convertible note in the aggregate principal amount of $140,000, interest rate of 10% and a maturity date of April 10, 2020. After payment of transaction-related expenses of $17,000, net proceeds to the Company from the Note totaled $123,000. The Company recorded these discounts and cost of $74,375 as a discount to the Notes and fully amortized as interest expense during the period. In connection with the execution of the Notes, we issued 450,000 shares of our common stock to the Note holders, the shares were recorded with a relative fair value of $0 as the notes were fully discounted by derivative liability. The Company analyzed the Notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the four (4) new convertible notes of $959,180, of which $505,500 was recorded as debt discount and will be amortized during the term of the Notes, and $453,680 was recorded as day 1 derivative loss. | The Company issued 200,000 shares of common stock for the conversion of $1,328 of the principal outstanding and accrued interest of $2,212 under one of the convertible notes. On January 10, 2020, the Company assigned a convertible note with a $145,297 principal and accrued interest of $13,500 and a second convertible note with a $35,750 principal balance and accrued interest of $15,453 for $210,000. On January 22, 2020, the Company assigned two promissory notes with a $293,250 principal balance outstanding and accrued interest of $66,750. The total assignment was for $360,000. On July 30, 2020, the Company paid the total principal outstanding in one of the notes for $140,000, plus a redemption interest of $46,000. The total unamortized discount on the Notes as of July 31, 2020 and July 31, 2019 were $0 and $449,332, respectively. The total principal balance outstanding as of July 31, 2020 and July 31, 2019 were $0 and $579,875, respectively. |
Equipment Financing (Details)
Equipment Financing (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Debt Disclosure [Abstract] | ||
2021 | $ 70,233 | |
2022 | 34,897 | |
Total future payments: | 105,130 | |
Less: amounts representing interest | 5,635 | |
Present value of net minimum equipment financing payments | 99,495 | |
Less current maturities | 61,850 | |
Long-term equipment financing obligation | 37,645 | |
Lease cost: | ||
Amortization of ROU assets | 140,000 | |
Interest on lease liabilities | 9,201 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cashflow from financing leases: | 9,201 | |
Financing cashflows from finance leases | $ 65,465 | |
Weighted-average remaining lease term - finance lease: | 1 year 6 months 7 days | |
Weighted-average discount rate: | 6.76% |
Equipment Financing (Details Te
Equipment Financing (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Jul. 12, 2019 | Jul. 20, 2018 | Jun. 20, 2018 | Jul. 31, 2020 | Jul. 31, 2019 | Jun. 30, 2018 | May 31, 2018 | |
Financing agreements amount | $ 103,509 | $ 60,408 | $ 37,255 | ||||
Principal and interest payments | $ 3,172 | $ 1,856 | $ 1,176 | ||||
Total principal payments | $ 65,465 | $ 32,943 | |||||
Minimum [Member] | |||||||
Lease interest rate, percentage | 6.50% | ||||||
Maximum [Member] | |||||||
Lease interest rate, percentage | 8.50% |
Leases (Details)
Leases (Details) | 12 Months Ended | |
Jul. 31, 2020USD ($)ft² | Jul. 31, 2019USD ($) | |
Annual Rent | $ 160,574 | $ 141,546 |
Location [Member] | ||
Lease Expiration Date | Jul. 31, 2022 | |
Annual Rent | $ 23,654 | |
Business Use | Executive offices | |
Approx. Sq. Ft | ft² | 1,546 | |
Location One [Member] | ||
Lease Expiration Date | Nov. 30, 2020 | |
Annual Rent | $ 107,534 | |
Business Use | Lease of network facilities and office space | |
Approx. Sq. Ft | ft² | 6,800 | |
Location Two [Member] | ||
Lease Expiration Date | Apr. 30, 2021 | |
Annual Rent | $ 14,222 | |
Business Use | Lease of network facilities | |
Approx. Sq. Ft | ft² | 25 | |
Location Three [Member] | ||
Lease Expiration Date | Apr. 30, 2021 | |
Annual Rent | $ 25,161 | |
Business Use | Lease of network facilities | |
Approx. Sq. Ft | ft² | 25 | |
Location Four [Member] | ||
Lease Expiration Date | May 31, 2023 | |
Annual Rent | $ 30,528 | |
Business Use | Lease of network facilities | |
Approx. Sq. Ft | ft² | 540 |
Leases (Details 1)
Leases (Details 1) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2020 | |
Amortization | $ (140,314) | |
Amortization | 140,314 | |
Leases Topic 842 [Member] | ||
ROU Asset | 316,411 | |
Amortization | (140,314) | |
ROU Asset | 176,097 | |
Lease Liability | 316,411 | |
Amortization | (140,314) | |
Lease Liability | 176,097 | |
Lease Liability short term | $ 99,443 | |
Lease Liability Long term | 76,654 | |
Lease Liability, Total | 176,097 | $ 176,097 |
Operating lease cost: | 160,574 | |
Cash paid for amounts included in the measurement of lease labilities | ||
Operating cashflow from operating leases: | $ 160,574 | |
Weighted-average remain lease term-operating lease: | 1 year 10 months 17 days | |
Weighted-average discount rate | 8.00% |
Leases (Details 2)
Leases (Details 2) | Jul. 31, 2020USD ($) |
Lease Payments | |
2021 | $ 108,409 |
2022 | 57,057 |
2023 | 25,440 |
Total: | $ 190,906 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Leases [Abstract] | ||
Amortization of assets | $ 140,314 | |
Amortization of liabilities | $ 140,314 | |
Lease rates | 8.00% | |
Lease, description | The initial term will of 5 years, at an annual base rent of $57,000. The Company will have the option to renew the lease for an additional 5 years. The Company is working with the landlord on the final buildout of the office space. From October 1, 2020 through December 31, 2020, the Company entered into a Sublease Agreement with the current tenant, for a monthly rate of $4,791. | |
Annual rent expense | $ 160,574 | $ 141,546 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) | May 01, 2018 |
Noncontrolling Interest (Textual) | |
Noncontrolling interest, description | T3 Communications, Inc. (“T3”), a Nevada Corporation, entered into a Stock Purchase Agreement (“SPA”), whereby in an exchange for $250,000, T3 agreed to sell to the buyers 199,900 shares of common stock equivalent to 19.99% of the issued and outstanding common share of T3 Communications, Inc. The $250,000 of the cash received under this transaction was recognized as an adjustment to the carrying amount of the noncontrolling interest and as an increase in additional paid-in capital in T3. At the option of the Company, and for a period of five years following the date of the SPA, the 199,900 shares of common stock in T3 may be converted into Common Stock of Digerati at a ratio of 3.4 shares of DTGI Common stock for every one (1) share of Shift8 at any time after the DTGI Common Stock has a current market price of $1.50 or more per share for 20 consecutive trading days. For the years ending July 31, 2020 and 2019, the Company accounted for a noncontrolling interest of $47,000 and $128,000, respectively. Additionally, one of the buyers serves as a Board Member of T3 Communications, Inc., a Florida Corporation, one of our operating subsidiaries. |
Investment in Itellum (Details)
Investment in Itellum (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jun. 14, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Investment in Itellum (Textual) | |||
minority interest | 12.00% | ||
Common stock, share issued | 500,000 | 101,323,590 | 23,740,406 |
Common stock value | $ 82,500 | ||
Common stock market value | 85,000 | ||
Promissory note | $ 17,500 | $ 30,000 | $ 0 |
Annual interest rate | 8.00% | ||
Debt maturity date | Oct. 31, 2019 | ||
Outstanding balance | $ 7,500 | ||
Investment | $ 185,000 |
Preferred Stock (Details)
Preferred Stock (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | Mar. 31, 2019 | |
Preferred Stock (Textual) | ||||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | ||
Settlement of debt | $ 65,000 | $ 33,000 | ||
Series A Convertible Preferred Stock [Member] | ||||
Preferred Stock (Textual) | ||||
Preferred stock, shares authorized | 1,500,000 | 1,500,000 | 1,500,000 | |
Preferred stock par value | $ 0.001 | |||
Preferred stock, shares issued | 225,000 | 225,000 | ||
Preferred stock, shares outstanding | 225,000 | 225,000 | ||
Stated value | $ 1 | |||
Annual rate | 8.00% | |||
Outstanding shares | 225,000 | |||
Dividend | $ 19,000 | |||
Optional conversion preferred stock, description | The number of shares of Common Stock into which each share of Series A Preferred Stock may be converted shall be determined by dividing the Original Issue Price of each share of Series A Preferred Stock, plus accrued and unpaid dividends through the Conversion Date, to be converted by the Conversion Price (as defined below) in effect at the time of conversion. The "Conversion Price" at which shares of Common Stock shall be issuable upon conversion of any shares of Series A Preferred Stock shall initially be the greater of (i) $0.40 per share, (ii) a 30% discount to the offering price of the Common Stock (or Common Stock equivalent) in a $10 million or greater equity financing that closes concurrently with an up-listing of the Company Common Stock on the NYSE American or Nasdaq, in the event of such up-listing, and (iii) a 30% discount to the average closing price per share of the Common Stock for the 5 consecutive trading days commencing upon the date the Common Stock is up-listed on either the NYSE American or Nasdaq in which there is no concurrent $10 million equity financing, in the event of such up-listing, subject to adjustment as provided below. | |||
Mandatory conversion preferred stock, description | Each share of Series A Preferred Stock shall automatically convert into shares of Common Stock, as described in paragraph 2a, at the then applicable Conversion Price, upon the earlier of (i) the closing of a public or private offering (or series of offerings within a 90-day period) of Corporation equity or equity equivalent securities placed by a registered broker-dealer resulting in minimum gross proceeds to the Corporation of $10 million, (ii) commencing on April 30, 2020, if the Common Stock shall close (or the last trade shall be) at or above 150% of the Conversion Price per share for 20 out of 30 consecutive trading days, and (iii) the uplisting of the Corporation's Common Stock to a national securities exchange or the Nasdaq stock market ((i), (ii) and (iii) are collectively referred to as "Mandatory Conversion Event"). The Corporation will provide notice to holder within 20 days of the occurrence of a Mandatory Conversion Event (failure of the Corporation to timely give such notice does not void the mandatory conversion). Holder shall surrender to the Corporation, within 10 days of receiving such notice, the certificate(s) representing the shares of Series A Preferred Stock to be converted into Common Stock. In the event holder does not surrender such certificate(s) within 10 days of receiving such notice, the Corporation shall deem such certificate(s) cancelled and void. As soon as practicable, after the certificate(s) are either surrendered by the holder or cancelled by the Corporation, as the case may be, the Corporation will issue and deliver to holder a new certificate for the number of full shares of Common Stock issuable upon such mandatory conversion in accordance with the provisions hereof and cash as provided in paragraph 2(c) in respect of any fraction of a share of Common Stock otherwise issuable upon such mandatory conversion, unless fractional shares are rounded up to the next whole share. Holder will be deemed a Common Stockholder of record as of the date of the occurrence of a Mandatory Conversion Event. | |||
Series B Convertible Preferred Stock [Member] | ||||
Preferred Stock (Textual) | ||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | |
Preferred stock par value | $ 0.001 | |||
Preferred stock, shares issued | 407,477 | 407,477 | 407,477 | |
Preferred stock, shares outstanding | 0 | 0 | ||
Stated value | $ 1 | |||
Mandatory conversion preferred stock, description | (i) an up-listing of the Corporation's Common Stock to Nasdaq or a US national securities exchange, (ii)an underwriting involving the sale of $5,000,000 or more of the Corporation's Common Stock or Common Stock Equivalents (a "Material Underwriting"), (iii) the Corporation ceases to be a public corporation as the result of a going private transaction, (iv) the Corporation, directly or indirectly, effects any sale, lease, exclusive license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions (including a transaction involving the Corporation's spin-off of its operating subsidiary, T3 Communications, Inc.), (v) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (vi) the Corporation, directly or indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (vii) the Corporation, directly or indirectly, in one or more related transactions, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person, other than an officer or director of the Company, whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) , all shares of Series B Preferred Stock shall be automatically converted, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, into the number of fully paid and nonassessable shares of Common Stock in an amount equal, following conversion ,to 18% of the Corporation's issued and outstanding shares of Common Stock . Each of (i)-(vii) above shall be hereafter referred to as a "Conversion Event" and the date of a Conversion Event shall be hereafter referred to as a "Conversion Date". | |||
Redemption of preferred stock, description | At any time on or after the second anniversary of the date of issuance of shares of Series B Preferred Stock to the Holder, the Corporation, in its sole discretion ,may elect, by delivering written notice to the Holder no less than 10 days or more than 20 prior to the redemption date set forth in such notice (the "Redemption Date"), to redeem all or any portion of the Series B Preferred Stock held by such Holder at a price per share (the "Redemption Price") equal to 120% of the Stated Value per share being redeemed . | |||
Settlement of debt | $ 370,000 | |||
Accrued interest | $ 37,477 | |||
Series C Convertible Preferred Stock [Member] | ||||
Preferred Stock (Textual) | ||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | ||
Preferred stock par value | $ 0.001 | |||
Preferred stock, shares issued | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Stated value | $ 10 | |||
Redemption of preferred stock, description | At any time on or after the second anniversary of the date of issuance of shares of Series C Preferred Stock to the Holder, the Corporation, in its sole discretion ,may elect, by delivering written notice to the Holder no less than 10 days or more than 20 prior to the redemption date set forth in such notice (the "Redemption Date"), to redeem all or any portion of the Series C Preferred Stock held by such Holder at a price per share (the "Redemption Price") equal to 120% of the Stated Value per share being redeemed . | |||
Series preferred stock, description | The series of preferred stock shall be designated as its Series C Convertible Preferred Stock (the "Series C Preferred Stock") and the number of shares so designated shall be up to one million (1,000,000) (which shall not be subject to increase without the written consent of the holders of a majority of the outstanding Series C Preferred Stock (each, a "Holder" and collectively, the "Holders"). Series C Preferred Stock shall only be issuable to the Company's officers and directors as of July 1, 2020 who may from time to time purchase shares of Series C Preferred Stock at the Stated Value by converting all or part of the compensation owed to them by the Corporation. Each share of Series C Preferred Stock shall have a par value of $0.001 per share and a stated value equal to Ten Dollars ($10.00) (the "Stated Value"). | |||
Description of voting rights | Upon (i) an up-listing of the Corporation's Common Stock to Nasdaq or a US national securities exchange, (ii) a financing or offering involving the sale of $5,000,000 or more of the Corporation's Common Stock or Common Stock Equivalents (a "Material Financing"), (iii) the Corporation ceases to be a public corporation as the result of a going private transaction, (iv) the Corporation, directly or indirectly, effects any sale, lease, exclusive license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions (including a transaction involving the Corporation's spin-off of its Nevada subsidiary, T3 Communications, Inc.), (v) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (vi) the Corporation, directly or indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (vii) the Corporation, directly or indirectly, in one or more related transactions, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person, other than an officer or director of the Company, whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), all issued shares of Series C Preferred Stock shall be automatically converted, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, into the number of fully paid and nonassessable shares of Common Stock in an amount equal, following conversion, to 22% of the Corporation's issued and outstanding shares of Common Stock. Each of (i)-(vii) above shall be hereafter referred to as a "Conversion Event" and the date of a Conversion Event shall be hereafter referred to as a "Conversion Date". | |||
Series F Preferred Stock [Member] | ||||
Preferred Stock (Textual) | ||||
Preferred stock, shares authorized | 100 | 100 | ||
Preferred stock par value | $ 0.001 | |||
Preferred stock, shares issued | 100 | 100 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Stated value | $ 0.01 | |||
Series preferred stock, description | The series of preferred stock shall be designated as its Series F Preferred Stock (the "Series F Preferred Stock") and the number of shares so designated shall be up to one hundred (100) (which shall not be subject to increase without the written consent of the holders of a majority of the outstanding Series F Preferred Stock (each, a "Holder" and collectively, the "Holders"). Series F Preferred Stock shall only be issuable to members of the Corporation's Board of Directors, as joint tenants, who may purchase shares of Series F Preferred Stock at the Stated Value per share. Each share of Series F Preferred Stock shall have a par value of $0.001 per share and a stated value equal to one cent ($0.01) (the "Stated Value"). | |||
Common stock diluted basis | $ 1,000,000 |
Equity (Details)
Equity (Details) - USD ($) | Jul. 13, 2020 | Feb. 08, 2019 | Feb. 05, 2019 | Nov. 14, 2018 | Nov. 05, 2018 | Sep. 28, 2018 | Jul. 29, 2020 | Nov. 30, 2019 | Nov. 29, 2018 | Jul. 31, 2020 |
Equity (Textual) | ||||||||||
Aggregate shares of common stock | 77,583,184 | |||||||||
Issued shares | 2,073,925 | 1,819,700 | ||||||||
Cash proceeds | $ 51,629 | $ 42,337 | ||||||||
Administration fees | $ 2,500 | $ 2,500 | ||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||
Equity (Textual) | ||||||||||
Issued shares | 86,667 | |||||||||
Conversion shares | 25,000 | |||||||||
Accrued dividends | $ 1,189 | |||||||||
Accredited Investors [Member] | Securities Purchase Agreement [Member] | ||||||||||
Equity (Textual) | ||||||||||
Secured amount | $ 150,000 | $ 75,000 | ||||||||
Common stock, shares issued | 600,000 | 258,621 | ||||||||
Common stock price, per share | $ 0.25 | $ 0.29 | ||||||||
Common Stock [Member] | ||||||||||
Equity (Textual) | ||||||||||
Aggregate shares of common stock | 60,715 | 16,883 | 21,672 | 39,444 | ||||||
Issuance of common stock, value | $ 13,357 | $ 5,875 | $ 5,794 | $ 11,833 | ||||||
Settle of accounts payables to professional | 10,382 | 5,287 | 5,287 | 10,545 | ||||||
Loss upon issuance of shares | $ 2,975 | $ 588 | $ 507 | $ 1,288 | ||||||
Share amount | $ 400,000 | |||||||||
Issued shares | 100,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Oct. 15, 2020 | Oct. 13, 2020 | Aug. 14, 2020 | Aug. 12, 2020 | Aug. 07, 2020 | Aug. 04, 2020 | Aug. 02, 2020 | Jul. 02, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 29, 2020 | Jul. 13, 2020 |
Subsequent Events (Textual) | ||||||||||||
Issued shares | 1,819,700 | 2,073,925 | ||||||||||
Derivative liability | $ 606,123 | $ 927,171 | ||||||||||
Debt discount cost | $ 1,228,000 | $ 1,466,000 | ||||||||||
Convertible Promissory Notes [Member] | ||||||||||||
Subsequent Events (Textual) | ||||||||||||
Advance note payable | $ 15,000 | |||||||||||
Convertible promissory notes for additional advance | $ 10,000 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Subsequent Events (Textual) | ||||||||||||
Issuance of common shares for professional services | 7,608,820 | 2,000,000 | ||||||||||
Stock-based compensation expense | $ 247,287 | $ 58,000 | ||||||||||
Promissory note, description | The Company entered into a $330,000 promissory note, in conjunction with the promissory note, we issued 1,000,000 shares of common stock. At the time of issuance, the Company recognized the relative fair market value of the shares of $36,244 as debt discount, and it will be amortized to interest expense during the term of the promissory note. | |||||||||||
Issued shares | 5,000,000 | 5,000,000 | ||||||||||
Principal on convertible | $ 75,000 | |||||||||||
Accrued interest | $ 1,500 | |||||||||||
Principal outstanding of convertible notes | $ 80,000 | |||||||||||
Subsequent Event [Member] | Convertible Note with Platinum Point Capital LLC [Member] | ||||||||||||
Subsequent Events (Textual) | ||||||||||||
Accrued interest | $ 22,530 | |||||||||||
Principal outstanding of convertible notes | $ 50,000 | |||||||||||
Subsequent Event [Member] | Other Terms October 2020 Convertible Notes [Member] | ||||||||||||
Subsequent Events (Textual) | ||||||||||||
Convertible promissory notes, description | At any time, the Company shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note, to prepay up to fifty percent (50%) of the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to one hundred twenty (120%) multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, if any. Subject to the terms of this Note, the Company may prepay the amounts outstanding, less any amounts paid under the Company’s right to prepay up to the fifty percent (50%), hereunder at any time, subject to the consent of the Holder. Such consent by the Holder may be withheld for any reason in its discretion, or for no reason at all. | |||||||||||
Promissory note, description | Notes shall bear interest at a rate of eight percent (8%) per annum (the “Interest Rate”), which interest shall be paid by the Company to the Investor in shares of Common Stock at any time the Investor sends a notice of conversion to the Company. The Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but unpaid interest of the Note into shares of the Company’s Common Stock, at any time, at a conversion price for each share of Common Stock shall equal (1) $0.05; provided however that in the event the Borrower fails to close on the acquisition of Nexogy Inc., for any reason, or none at all, by February 11, 2021, the Conversion Price shall equal (2) the Variable Conversion Price (as defined herein). The “Variable Conversion Price” shall mean eighty-five percent (85%) multiplied by the Market Price (as defined herein) (representing a discount rate of fifteen percent (15%)). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the lesser of: (i) the lowest trade price on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“Reporting Service”) designated by the Holder or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc., or (ii) the closing bid price on the OTC Pink, OTCQB or applicable trading market as reported by a Reporting Service designated by the Holder or, if the OTC Pink is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. | |||||||||||
Accrued interest | $ 13,639 | |||||||||||
Principal outstanding of convertible notes | 52,831 | |||||||||||
Subsequent Event [Member] | Convertible Promissory Notes [Member] | ||||||||||||
Subsequent Events (Textual) | ||||||||||||
Shares of common stock for conversion | 1,000,000 | |||||||||||
Principal outstanding of convertible notes | $ 27,500 | $ 330,000 | ||||||||||
Convertible Promissory maturity date | Oct. 31, 2021 | Oct. 31, 2021 | ||||||||||
Annual interest rate | 8.00% | 8.00% | ||||||||||
Debt discount cost | $ 2,500 | $ 32,000 | ||||||||||
Payment of transaction-related expenses | 2,500 | 32,000 | ||||||||||
Net proceeds | $ 25,000 | 298,000 | ||||||||||
Fair market value | $ 36,244 |