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VBHI Verde Bio

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2019

 

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______ to _______

 

Commission File Number 000-54524

 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

(Name of small business issuer in its charter)

 

Nevada

 

30-0678378

(State of incorporation)

 

(I.R.S. Employer Identification No.)

 

5 Cowboys Way, Suite 300

Frisco Texas 75034

(Address of principal executive offices)

 

(972) 217-4080

(Registrant's telephone number)

 

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

[X] Yes [   ] No

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

[   ]

 

Accelerated filer

[   ]

Non-accelerated filer

[X]

 

Smaller reporting company

[X]

(Do not check if smaller reporting company)

 

 

Emerging growth company

[   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[   ] Yes [X] No

 

As of April 28, 2020 there were 2,247,678 shares of the registrant's $0.001 par value common stock issued and outstanding.


1


 

 

 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)*

 

TABLE OF CONTENTS

Page

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1.

CONDENSED FINANCIAL STATEMENTS

3

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

19

ITEM 3.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

21

ITEM 4.

CONTROLS AND PROCEDURES

21

 

 

PART II. OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

22

ITEM 1A.

RISK FACTORS

22

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

22

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

22

ITEM 4.

MINE SAFETY DISCLOSURES

22

ITEM 5.

OTHER INFORMATION

22

ITEM 6.

EXHIBITS

22

 

 

 

Special Note Regarding Forward-Looking Statements

 

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act").  This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Verde Bio Holdings, Inc., (formerly Appiphany Technologies Holdings Corp.) (the "Company"), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements.  Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology.  These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass.  Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.  Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

*Please note that throughout this Quarterly Report, except as otherwise indicated by the context, references in this report to "Company", "APHD", "we", "us" and "our" are references to Verde Bio Holdings, Inc. (formerly Appiphany Technologies Holdings Corp.) 

 

 

 


2


 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. CONDENSED FINANCIAL STATEMENTS

 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Condensed Consolidated Financial Statements

For the Three and Six Months Ended October 31, 2019

 

Condensed Consolidated Balance Sheets (unaudited)

4

Condensed Consolidated Statements of Operations (unaudited)

5

Condensed Statement of Stockholders Deficit (unaudited)

6

Condensed Consolidated Statements of Cash Flows (unaudited)

8

Notes to the Condensed Consolidated Interim Financial Statements (unaudited)

9

 

 

 


3


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Condensed Consolidated Balance Sheets

(Expressed in US dollars)

 

 

October 31,

2019

$

 

April 30,

2019

$

 

(unaudited)

 

 

ASSETS

 

 

 

Current Assets

 

 

 

Cash

38,904   

 

23,752   

Total Assets

38,904   

 

23,752   

 

 

 

 

LIABILITIES

 

 

 

Current Liabilities

 

 

 

Accounts payable and accrued liabilities

253,410   

 

484,964   

Advances

25,630   

 

-   

Convertible debentures, net of unamortized discount of $63,917 and $36,000, respectively

431,377   

 

432,790   

Notes payable

31,126   

 

32,116   

Derivative liability

1,054,780   

 

1,080,589   

Convertible Preferred Series B stock liability

583,000   

 

-   

Total Liabilities

2,379,323   

 

2,030,459   

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

Preferred stock - 10,000,000 authorized shares with a par value of $0.001 per share

 

 

 

Convertible Preferred Series A: Issued and outstanding:

 

 

 

 500,000 shares, respectively

500   

 

500   

Common stock – 5,000,000,000 authorized shares with a par value of $0.001 per share

 

 

 

 Issued and outstanding:

 

 

 

 1,660,708 and 1,074,255 shares, respectively

1,661   

 

1,074   

Additional paid-in capital

4,250,882   

 

3,938,057   

Accumulated deficit

(6,593,462)  

 

(5,946,338)  

Total Stockholders’ Deficit

(2,340,419)  

 

(2,006,707)  

 

 

 

 

Total Liabilities and Stockholders’ Deficit

38,904   

 

23,752   

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

 


4


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Condensed Consolidated Statements of Operations

(Expressed in US dollars)

(unaudited)

 

 

For the three

months ended

October 31,

2019

$

For the three

months ended

October 31,

2018

$

For the Six

months ended

October 31,

2019

$

For the Six

months ended

October 31,

2018

$

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

(Recovery) bad debt

–   

–   

(1,569)  

5,051   

Consulting fees

–   

1,828   

–   

8,619   

General and administrative

5,539   

5,037   

7,756   

13,421   

Professional fees

29,763   

–   

39,872   

–   

Management fees

–   

–   

33,000   

–   

 

 

 

 

 

Total Operating Expenses

35,302   

6,865   

79,059   

27,091   

 

 

 

 

 

Net Operating Loss

(35,302)  

(6,865)  

(79,059)  

(27,091)  

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

Gain (loss) on change in fair value of derivative liability

(194,590)  

(4,301)  

(221,595)  

397,946   

Interest expense

(30,985)  

(111,191)  

(56,348)  

(176,292)  

Gain (loss) on extinguishment of debt

181   

–   

(290,122)  

8,977   

 

 

 

 

 

Total Other Income (Expenses)

(225,394)  

(115,492)  

(568,065)  

230,631   

 

 

 

 

 

Net Income (Loss)

(260,696)  

(122,357)  

(647,124)  

203,540   

 

Net Income (Loss) Per Share, Basic

(0.17)  

(0.10)  

(0.50)  

0.21   

 

Net Income (Loss) Per Share, Diluted

(0.17)  

(0.10)  

(0.50)  

(0.00)  

Weighted Average Shares Outstanding – Basic

1,504,228   

1,268,387   

1,293,341   

962,916   

 

Weighted Average Shares Outstanding – Diluted

1,504,228   

1,268,387   

1,293,341   

807,528,966   

 

 

 

 

 

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

 


5


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Consolidated Statement of Stockholders Deficit

(Expressed in US dollars)

For the three months ended October 31, 2018 and 2019

(unaudited)

 

 

 

 

 

Additional

 

 

 

Preferred Stock

Common Stock

Paid-in

Accumulated

 

 

Shares

Par Value

Shares

 

Par Value

Capital

Deficit

Total

 

#

$

#

 

$

$

$

$

 

 

 

 

 

 

 

 

 

Balance – July 31, 2018

500,000   

500   

1,074,255   

 

1,074   

3,938,057   

(5,083,354)  

(1,143,723)  

 

 

 

 

 

 

 

 

 

Net loss

–   

–   

–   

 

–   

–   

(122,357)  

(122,357)  

 

 

 

 

 

 

 

 

 

Balance – October 31, 2018

500,000   

500   

1,074,255   

 

1,074   

3,938,057   

(5,205,711)  

(1,266,080)  

 

 

 

 

 

 

Additional

 

 

 

Preferred Stock

Common Stock

Paid-in

Accumulated

 

 

Shares

Par Value

Shares

 

Par Value

Capital

Deficit

Total

 

#

$

#

 

$

$

$

$

 

 

 

 

 

 

 

 

 

Balance – July 31, 2019

500,000   

500   

1,181,365   

 

1,181   

4,094,329   

(6,332,766)  

(2,236,756)  

 

 

 

 

 

 

 

 

 

Shares issued upon conversion of notes payable

–   

–   

479,343   

 

480   

126,091   

–   

126,571   

 

 

 

 

 

 

 

 

 

Beneficial conversion feature on convertible debt

–   

–   

–   

 

–   

30,462   

–   

30,462   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

–   

–   

–   

 

–   

–   

(260,696)  

(260,696)  

 

 

 

 

 

 

 

 

 

Balance – October 31, 2019

500,000   

500   

1,660,708   

 

1,661   

4,250,882   

(6,593,462)  

(2,340,419)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements) 


6


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Consolidated Statements of Stockholder’s Deficit

(Expressed in US dollars)

For the six months ended October 31, 2018 and 2019

(unaudited)

 

 

 

 

 

Additional

 

 

 

Preferred Stock

Common Stock

Paid-in

Accumulated

 

 

Shares

Par Value

Shares

 

Par Value

Capital

Deficit

Total

 

#

$

#

 

$

$

$

$

 

 

 

 

 

 

 

 

 

Balance – April 30, 2018

500,000   

500   

628,664   

 

628   

3,883,787   

(5,409,251)  

(1,524,336)  

 

 

 

 

 

 

 

 

 

Shares issued upon conversion of notes payable

–   

–   

445,591   

 

446   

54,270   

–   

54,716   

 

 

 

 

 

 

 

 

 

Net income

–   

–   

–   

 

–   

–   

203,540  

203,540

 

 

 

 

 

 

 

 

 

Balance – October 31, 2018

500,000   

500   

1,074,255   

 

1,074   

3,938,057   

(5,205,711)  

(1,266,080)  

 

 

 

 

 

 

Additional

 

 

 

Preferred Stock

Common Stock

Paid-in

Accumulated

 

 

Shares

Par Value

Shares

 

Par Value

Capital

Deficit

Total

 

#

$

#

 

$

$

$

$

 

 

 

 

 

 

 

 

 

Balance – April 30, 2019

500,000   

500   

1,074,255   

 

1,074   

3,938,057   

(5,946,338)  

(2,006,707)  

 

 

 

 

 

 

 

 

 

Shares issued upon conversion of notes payable

–   

–   

586,453   

 

587   

282,363   

–   

282,950   

 

 

 

 

 

 

 

 

 

Beneficial conversion feature on convertible debt

–   

–   

–   

 

–   

30,462   

–   

30,462   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

–   

–   

–   

 

–   

–   

(647,124)  

(647,124)  

 

 

 

 

 

 

 

 

 

Balance – October 31, 2019

500,000   

500   

1,660,708   

 

1,661   

4,250,882   

(6,593,462)  

(2,340,419)  

 

 

 (The accompanying notes are an integral part of these condensed consolidated interim financial statements) 


7


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Condensed Consolidated Statements of Cashflow

(Expressed in US dollars)

(unaudited)

 

 

 

For the six

months ended

October 31,

2019

$

For the six

months ended

October 31,

2018

$

 

 

 

Operating Activities

 

 

 

 

 

Net income (loss)

(647,124)  

203,540   

 

 

 

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

Amortization of discount on convertible debt payable

2,545   

150,098   

Bad debts

–   

5,051   

Conversion penalties related to conversion of convertible note

2,500   

5,833   

Loss (Gain) on change in fair value of derivative liability

221,595   

(397,946)  

Preferred shares issued for management fees

33,000   

–   

Loss (gain) on settlement of debt

290,122   

(8,977)  

Original issue discount

3,000   

–   

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Prepaid expense

–   

8,619   

Accounts payable and accrued liabilities

53,884   

28,126   

 

 

 

Net Cash Used In Operating Activities

(40,478)  

(5,656)  

 

 

 

Financing Activities

 

 

 

 

 

Proceeds from advances

25,630   

–   

Proceeds from convertible debenture

30,000   

–   

 

 

 

Net Cash Provided by Financing Activities

55,630   

–   

 

 

 

Increase (decrease) in Cash

15,152   

(5,656)  

 

 

 

Cash – Beginning of Period

23,752   

10,129   

 

 

 

Cash – End of Period

38,904   

4,473   

 

 

 

Supplemental Disclosures

 

 

 

 

 

Interest paid

–   

–   

Income tax paid

–   

–   

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

Beneficial conversion feature

30,462   

–   

Common stock issued for conversion of convertible debentures

282,950   

54,716   

Series B preferred shares issued for settlement of accounts and notes payable

550,000   

–   

 

 

 

 


8


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

1.Nature of Operations and Continuance of Business   

Verde Bio Holdings, Inc. (formerly Appiphany Technologies Holdings Corp.) (the “Company”) was incorporated in the State of Nevada on February 24, 2010. Currently, the Company is in the business of oil and gas exploration and investment.

Going Concern

These condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at October 31, 2019, the Company has not recognized significant revenue, has a working capital deficit of $2,340,419, and has an accumulated deficit of $6,593,462. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. The Company will continue to rely on equity sales of its common shares in order to continue to fund business operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued.  These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.   

 

2.Summary of Significant Accounting Policies   

 (a)Basis of Presentation and Principles of Consolidation   

The accompanying unaudited interim condensed consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and accompany notes filed with the U.S. Securities and Exchange Commission for the year ended April 30, 2019. These interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

 These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The condensed consolidated financial statements are comprised of the records of the Company and its wholly owned subsidiaries, IP Risk Control Inc., a company incorporated in the State of Nevada. All intercompany transactions have been eliminated on consolidation. The Company’s fiscal year end is April 30.

 (b)Use of Estimates   

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair value and estimated useful life of long-lived assets, fair value of convertible debentures, derivative liabilities, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected


9


VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

2.Summary of Significant Accounting Policies   

(c)Basic and Diluted Net Loss per Share  

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.  As of October 31, 2019, the Company had 1,674,522,798 excluded (October 31, 2018 – 806,566,050 included) potentially dilutive common shares outstanding.  The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) per share (the three-month periods’ are not included in the table below because the diluted net income (loss) per share are the same as the basic net income (loss) per share).  

 

 

October 31, 2019

October 31, 2018

Net Income (Loss)

(647,124)  

$ 203,540   

  Add back:  Interest expense, convertible notes

-   

26,822   

  Less:  Gain on FV of derivative liabilities

-   

(397,946)  

Adjusted Net Income (Loss) for dilutive EPS

(647,124)  

(167,584)  

Weighted average number of common shares - Basic

1,293,341   

962,916   

EPS - Basic

(0.50)  

0.21   

Effect of dilutive securities, convertible notes and preferred series A and B shares

-   

806,566,050   

Weighted average number of common shares- Dilutive

1,293,341   

807,528,966   

EPS - Dilutive

(0.50)  

(0.00)  

 

(d)Fair Value Measurements  

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active markets;

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial instruments consist principally of cash, other assets, accounts payable and accrued liabilities, notes payable, convertible debentures, derivative liabilities and amounts due to related parties. The fair value of cash is determined based on Level 1 inputs. The fair value of the derivative liabilities are determined based on Level 3 inputs. There were no transfers into or out of “Level 3” during the periods presented. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.


10


VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.  

 

2.Summary of Significant Accounting Policies   

(e)Recent Accounting Pronouncements  

In February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. Earlier application is permitted. The Company adopted the standard on May 1, 2019. The adoption of this standard did not have a material impact on the Company´s consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

3.Related Party Transactions   

During the six months ended October 31, 2019, the Company incurred $33,000 (2018 - $nil) in management fees to the former President and Director of the Company, which were paid in shares of Convertible Preferred Series B Stock (see Note 7).

 

4.Notes Payable  

(a)As at October 31, 2019, the Company owed $3,626 (April 30, 2019 - $4,616) in notes payable to non-related parties. Under the terms of the notes, the amounts are unsecured, bear interest at 6% per annum, and were due on July 31, 2016. The notes bear a default interest rate of 18% per annum.   

(b)As at October 31, 2019, the Company owed $10,000 (April 30, 2019 - $10,000) in notes payable to non-related parties. Under the terms of the note, the amount is unsecured, bears interest at 5% per annum, and was due on July 6, 2017. The note bears a default interest rate of 12% per annum.  

(c)As at October 31, 2019, the Company owed $2,500 (April 30, 2019 - $2,500) in notes payable to non-related parties. Under the terms of the note, the amount is unsecured, bears interest at 5% per annum, and was due on February 1, 2018. The note bears a default interest rate of 12% per annum. 

(d)As at October 31, 2019, the Company owed $15,000 (April 30, 2019 - $15,000) in notes payable to a non-related party. The note payable was issued as a commitment fee and was recorded to additional paid-in capital. Under the terms of the note, the amount is unsecured, bears interest at 8% per annum, and was due on September 15, 2017. The note bears a default interest rate of 20% per annum. 


11


VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

5.Convertible Debentures   

(a)On February 13, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $105,000. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $94,500. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and was due on November 13, 2017. The debenture is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note. In the event of default, the conversion price decreases to 50% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note and the interest rate increases to 20%. During the year ended April 30, 2019, the Company incurred $1,020 in penalties that were added to the principal balance of the note.  

 Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $105,000, of which $20,000 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $105,000. As at October 31, 2019, the loan was in default, the carrying value of the note was $8,990 (April 30, 2019 - $8,990), and the unamortized total discount was $nil (2018 - $nil). 

(b)On February 24, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,000. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum pre-default and 20% per annum thereafter, and was due on November 30, 2017. The debenture is convertible into common shares of the Company at a conversion price equal to 58% of the average of the lowest two trading prices of the Company’s common stock of the fifteen prior trading days immediately preceding the issuance of the note. During the six months ended October 31, 2019, the Company incurred a $nil (year ended April 30, 2019 - $38,965) default fee on the note.  

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging. As at October 31, 2019, the loan was in default and the carrying value of the note was $93,965 (April 30, 2019 - $93,965).

(c)On May 9, 2017, the Company issued a convertible debenture, to a non-related party, totaling $36,450. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $30,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and was due on February 9, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company’s common stock of the past ten trading days prior to notice of conversion. In the event of default, the conversion price decreases to 50% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note and the interest rate increases to 20%. During the six months ended October 31, 2019, the Company incurred $nil (year ended April 30, 2019, $27,902) in penalties that were added to the principal balance of the note. 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $36,450, of which $6,450 of the discount resulted from debt issuance costs. The carrying value of the convertible note was accreted over the term of the convertible note up to the face value of $36,450. As at October 31, 2019, the loan was in default and the carrying value of the note was $64,352 (April 30, 2019 - $64,352).


12


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

5.Convertible Debentures(continued) 

(d)On June 28, 2017, the Company issued a convertible debenture, to a non-related party, totaling $57,250. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price and proceeds received was $49,500. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and was due on March 28, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note. In the event of default the interest rate increases to 24%. 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $57,250, of which $7,750 of the discount resulted from debt issuance costs. The carrying value of the convertible note was accreted over the term of the convertible note up to the face value of $57,250. During the six months ended October 31, 2019,  the Company issued 330,978 shares of common stock for the conversion of $15,935 of accrued interest and $2,500 of conversion fees and finance costs. During the year ended April 30, 2019, the Company issued 167,930 shares of common stock for the conversion of $1,569 of the note and $2,712 of accrued interest and $2,500 of conversion fees and finance costs. As at October 31, 2019, the loan was in default and the carrying value of the note was $55,341 (April 30, 2019 - $55,341).

(e)On July 19, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,333. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $28,000. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and was due on July 19, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note. In the event of default the interest rate increases to 24%. During the year ended April 30, 2019, the Company incurred $854 in penalties that were added to the principal balance of the note. 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,333, of which $5,333 of the discount resulted from debt issuance costs. The carrying value of the convertible note was be accreted over the term of the convertible note up to the face value of $33,333.

During the six months ended October 31, 2019, the Company issued 255,475 shares of common stock for the conversion of $6,496 of the note and $2,446 of accrued interest. During the year ended April 30, 2019, the Company issued 277,661 shares of common stock for the conversion of $13,196 of the note and $1,395 of accrued interest. As at October 31, 2019, the loan was in default, the carrying value of the note was $2,902 (April 30, 2019 - $9,398), and the unamortized total discount was $nil (April 30, 2019 - $nil).

Included in the convertible debenture agreement is a $30,000 collateralized secured promissory note and a $33,333 back end note (with the same terms as the convertible debenture mentioned above).  As of October 31, 2019, and at the date of filing, no proceeds have been received on the collateralized secured promissory note or the back-end note.

(f)On October 4, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $36,000, which was the first tranche of a convertible debenture totaling $102,000. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $25,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and was due on July 9, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past ten trading days prior to notice of conversion or the issuance of the note. In the event of default, the conversion price decreases to 40% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note and the interest rate increases to 20%. During the year ended April 30, 2019, the Company incurred $21,910 in penalties that were added to the principal balance of the note. 


13


 

 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

5.Convertible Debentures(continued) 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $36,000, of which $11,000 of the discount resulted from debt issuance costs. The carrying value of the convertible note was accreted over the term of the convertible note up to the face value of $36,000. As at October 31, 2019, the loan was in default, the carrying value of the note was $57,910 (April 301, 2019 - $57,910), and the unamortized total discount was $nil (April 30, 2019 - $nil).

(g)On September 28, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,333. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $25,500. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and was due on September 28, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note. In the event of default there is a penalty of 10% of the principal balance of the outstanding note and the interest rate increases to 24%. 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,333, of which $7,833 of the discount resulted from debt issuance costs. The carrying value of the convertible note was accreted over the term of the convertible note up to the face value of $33,333. During the year ended April 30, 2019, the Company recorded a $3,333 principal penalty. As at October 31, 2019, the loan was in default, the carrying value of the note was $36,666 (April 30, 2019 - $36,666), and the unamortized total discount was $nil (April 30, 2019 - $nil).

Included in the convertible debenture agreement is a back end note for up to $33,333 (with the same amount of proceeds, original issue discount, maturity date, interest rate and conversion terms as the convertible debenture mentioned above).  As of October 31, 2019, and at the date of filing, no proceeds have been received on the back-end note.

(h)On November 8, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,000, which was the second tranche of the October 4, 2017 agreement. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $30,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and was due on August 8, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past ten trading days prior to notice of conversion or the issuance of the note. In the event of default, the conversion price decreases to 40% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note and the interest rate increases to 20%. During the year ended April 30, 2019, the Company incurred $20,084 in penalties that were added to the principal balance of the note. 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,000, of which $3,000 of the discount resulted from debt issuance costs. The carrying value of the convertible note was accreted over the term of the convertible note up to the face value of $33,000. As at October 31, 2019, the loan was in default, the carrying value of the note was $53,084 (April 30, 2019 - $53,084), and the unamortized total discount was $nil (April 30, 2019 - $nil).


14


 

 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

5.Convertible Debentures(continued) 

(i)On December 26, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,000, which was the final tranche of the October 4, 2017 agreement. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $30,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and was due on September 26, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past ten trading days prior to notice of conversion or the issuance of the note. In the event of default, the conversion price decreases to 40% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note and the interest rate increases to 20%. During the year ended April 30, 2019, the Company incurred $20,084 in penalties that were added to the principal balance of the note. 

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,000, of which $3,000 of the discount resulted from debt issuance costs. The carrying value of the convertible note was accreted over the term of the convertible note up to the face value of $33,000. As at October 31, 2019, the loan was in default, the carrying value of the note was $53,084 (April 30, 2019 - $53,084), and the unamortized total discount was $nil (April 30, 2019 - $nil).

(j)On March 15, 2019, the Company issued a convertible debenture, to a non-related party, for proceeds of $36,000. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $30,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum (20% default interest rate), and is due on December 15, 2019. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 65% of the lowest trading price of the Company’s common stock of the past twenty trading days prior to notice of conversion or the issuance of the note.  

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $36,000, of which $6,000 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $36,000. As at October 31, 2019, the carrying value of the note was $868 (April 30, 2019 - $nil), and the unamortized total discount was $35,132 (April 30, 2019 - $36,000).

(k)On September 12, 2019, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,000. Pursuant to the agreement, the note was issued with an original issue discount of $3,000 and as such the purchase price was $30,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum (20% default interest rate), and is due on June 12, 2020. The debenture is convertible into common shares of the Company at a conversion price $0.078. The Company evaluated the convertible notes for a beneficial conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $30,462 as additional paid-in capital and reduced the carrying value of the convertible note to $2,538. The carrying value will be accreted over the term of the convertible notes up to their face value of $33,000. 

As at October 31, 2019, the carrying value of the convertible notes was $4,215 (April 30, 2019 - $nil) and had an unamortized discount of $28,785 (April 30, 2019 - $nil). During the six months ended October 31, 2019, the Company recorded accretion expense of $1,677 (2018 - $nil).


15


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

6.Derivative Liability   

The Company records the fair value of the of the conversion price of the convertible debentures disclosed in Note 5 in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative was calculated using a Binomial model. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the six months ended October 31, 2019, the Company recorded a loss on the change in fair value of derivative liability of $221,595 (October 31, 2018 – gain of $397,946). As at October 31, 2019, the Company recorded a derivative liability of $1,054,780 (April 30, 2018 - $1,080,589).  A summary of the activity of the derivative liability is shown below:

 

$

Balance, April 30, 2019

1,080,589

Adjustment for conversion

(247,404)

Mark to market adjustment at October 31, 2019

221,595

 

 

Balance, October 31, 2019

1,054,780

  

7.Convertible Preferred Series B Stock Liability  

On June 13, 2019, the Company designated 1,000,000 shares of preferred stock as Series B. The holders of Series B preferred shares are not entitled to receive dividends except as may be declared by the Board at its sole and absolute discretion. Each Series B preferred share is convertible into common shares according to the following formula: the Stated Value of $1.10 per share of Series B preferred stock divided by the closing price of the Common Stock on the day prior to the conversion. Holders of Series B preferred stock shall not have voting rights.

On June 17, 2019, the Company issued 530,000 shares of Series B preferred stock, at a value of $583,000 based on the stated value of $1.10 per share, in exchange for the settlement of accounts payable of $266,523, notes payable of $990, accrued interest of $535, management fees of $33,000. The transaction resulted in a loss on settlement of debt of $281,952.  Because the Series B shares represent an unconditional obligation that the Company must or may settle in a variable number of its equity shares and the monetary value of the obligation is predominantly based on a fixed monetary amount ($1.10 worth of common stock), the 530,000 shares with a balance of $583,000 is recorded as a liability on the balance sheet.

 

8.Common Shares  

During the six months ended October 31, 2019, the Company issued an aggregate of 586,453 common shares with a fair value of $282,950 upon the conversion of $6,496 of convertible debentures, $247,404 of derivative liabilities, $13,381 of accrued interest, and $2,500 in conversion fees resulting in a loss on settlement of debt of $8,170

On November 17, 2017, the Company effected a reverse stock split on a basis of 1 new common share for every 100 old common shares. Additionally, on February 14, 2020, the Company effected a reverse stock split on a basis of 1 new common share for every 100 old common shares. The impact of these reverse stock splits has been applied on a retroactive basis. 

 

9.Preferred Shares   

Authorized: 10,000,000 preferred shares with a par value of $0.001 per share.

Convertible Preferred Series A stock

On April 18, 2017, the Company designated 500,000 shares of preferred stock as Series A. The holders of Series A preferred shares are entitled to receive dividends equal to the amount of the dividend or distribution per share of common stock payable multiplied by the number of shares of common stock the shares of Series A preferred shares held by such holder are convertible into. Each Series A preferred shares is convertible at a factor of 10,000 Series A shares for one common share.  Each holder of Series A preferred shares is entitled to cast 10,000 votes for every one Series A preferred share held.  


16


 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

 

Convertible Preferred Series B stock – see Note 7.

 

10.Commitments and Contingencies 

On February 19, 2019, the former Chief Executive Officer and Director of the Company entered into a Stock Purchase Agreement to sell his Series A Preferred Stock, the closing of which is pending certain closing conditions, including, but not limited to the Company getting current with its SEC filings and restricting some of its outstanding debt. This transaction was completed on November 22, 2019.

On October 25, 2019 the Company received an advance of funds from an unrelated party. The funds relate to the convertible promissory note issued November 13, 2019. See Note 11     

 

11.Subsequent Events  

Subsequent to the six months ended October 31, 2019, the Company issued 86,970 common shares upon the conversion of $2,109 of accrued interest, and $500 of conversion fee penalties.  

On November 13, 2019, the Company issued a convertible promissory note to an unrelated party for $28,193. Pursuant to the agreement, the note was issued with a 10% original issue discount and as such the purchase price was $25,630. The note is convertible into common stock of the Company at $0.048, which equals 60% multiplied by the lowest Trading Price for the Common Stock on the Trading Day preceding the execution of the note. The promissory note shall bear interest at 10% per annum and is due on August 13, 2020.

On November 22, 2019, the former Chief Executive Officer completed a transaction to sell 500,000 shares of his Series A Preferred Stock for consideration of $5,000, leading to a change in control for the Company.  

On January 14, 2020, the Company issued a convertible promissory note to an unrelated party for $35,000. Pursuant to the agreement, the note was issued with a 10% original issue discount and as such the purchase price was $31,500. The note is convertible into common stock of the Company at $0.06, which equals 60% multiplied by the lowest Trading Price for the Common Stock on the Trading Day preceding the execution of the note. The promissory note shall bear interest at 10% per annum and is due on October 14, 2020.

On January 23, 2020, the Company issued a convertible promissory note to an unrelated party for $68,000. Pursuant to the agreement, the note was issued with a 10% original issue discount and as such the purchase price was $60,000. The note is convertible into common stock of the Company at $0.048, which equals 60% multiplied by the lowest Trading Price for the Common Stock on the Trading Day preceding the execution of the note. The note provides for funding in two tranches of $30,000.  The first tranche was paid on January 30, 2020 and the second tranche, which was at the discretion of the lender, was funded on March 4, 2020.  The promissory note bears interest at 10% per annum and is due on October 23, 2020.

On February 1, 2020, the Company signed a consulting services agreement with an unrelated party to be paid in 500,000 shares of common stock and $5,000 per month for the duration of the contract.

On February 5, 2020, the Company signed a joint venture agreement for a 25% share in the Hemp seed and genetics industry. The Company has committed to contribute $300,000 to the joint venture on a to be mutually agreed upon schedule. Additionally, the Company will issue 1,500,000 common shares to the other members of the joint venture as compensation for their initial contributions.

On March 25, 2020, the Company issued a convertible promissory note to an unrelated party for $13,000. Pursuant to the agreement, the note was issued with a 10% original issue discount and with $2,000 being withheld by the Holder to offset transaction costs. As such the purchase price was $9,700. The note is convertible into common stock of the Company at $0.018, which equals 60% multiplied by the lowest Trading Price for the Common Stock on the Trading Day preceding the execution of the note. The promissory note shall bear interest at 10% per annum and is due on December 25, 2020.


17



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

 

RESULTS OF OPERATIONS

 

Working Capital

 

  

October 31, 2019

 

April 30, 2019

$

$

 

(unaudited)

 

 

Current Assets

38,904

 

23,752

Current Liabilities

2,379,323

 

2,030,459

Working Capital (Deficit)

(2,340,419)

 

(2,006,707)

 

Cash Flows

 

  

October 31, 2019

 

July 31, 2018

$

$

 

(unaudited)

 

 

Cash Flows used in Operating Activities

(40,478)

 

(5,656)

Cash Flows from (used in) Investing Activities

-

 

-

Cash Flows from Financing Activities

55,630

 

-

Net increase (decrease) in Cash During Period

15,152

 

(5,656)

 

Operating Revenues

 

During the six months ended October 31, 2019 and 2018, the Company recorded revenues of $0 and $0, respectively.

 

Operating Expenses and Net Loss

 

During the three months ended October 31, 2019, the Company recorded operating expenses of $35,302 compared to operating expenses of $6,865 for the three months ended October 31, 2018.  The increase in operating expenses is due to an increase in professional fees of $29,763 offset by a decrease in consulting fees of $1,868.  

 

Net loss for the three months ended October 31, 2019 was $260,696 compared to a net loss of $122,357 during the three months ended October 31, 2018.  In addition to operating expenses, the Company incurred a loss on the change in fair value of derivative liability of $194,590 and interest expense of $30,985 relating to interest on outstanding


18



convertible notes.  Comparatively, the Company incurred a loss of $4,301 on the change in fair value of the derivative liability and interest expense of $111,191.   

 

During the six months ended October 31, 2019, the Company recorded operating expenses of $79,059 compared with $27,091 for the six months ended October 31, 2018. The increase in operating expenses of $51,968 reflected an increase in management fees of $33,000 and an increase in professional fees of $39,872, partially offset by a decrease in the payment of consulting fees of $8,619, and a decrease in general and administrative expenses of $5,665, The increases in operating expenses is due to increased professional expenses associated with bringing the Company current in its filings.  

 

Net loss for the six months ended October 31, 2019 was $647,124 as compared with net income of $230,631 during the six months ended October 31, 2018.  In addition to the increase in operating expenses, the Company recorded a $221,595 loss on the change in fair value of derivative liability, $56,348 in interest, and a loss on settlement of debt of $290,122.  During the six months ended October 31, 2018, the Company recorded a $397,946 gain on the change in fair value of derivative liability, $176,292 of interest and debt discount accretion expense, and $8,977 gain on settlement of debt.  The decrease in the net loss during the current year was due largely to an increase in operating expenses, the issuance of Series B Preferred Stock to the Company’s in exchange for $33,000 in management fees, the loss of fair value on derivative liability and to a larger loss with regards to the change in the loss on extinguishment of debt of $299,280.  

 

For the six months ended October 31, 2019, the Company recorded a loss per share of $0.50 as compared with net income per share basic of $0.21 per share and net loss per share dilutive of $(0.02) per share for the six months ended October 31, 2018.

 

Liquidity and Capital Resources

 

As of October 31, 2019, the Company's total asset balance was, $38,904, compared to $23,752 for the year ended April 30, 2019. The increase in total assets was due to an increase in cash in the amount of $15,152.

 

As of October 31, 2019, the Company had total liabilities of $2,379,323 compared with total liabilities of $2,030,459 as at April 30, 2019. The increase in total liabilities was due to a decrease in convertible debt in the amount of $1,413, a decrease in derivative liability of $25,809, a decrease in accounts payable and accrued liabilities of $231,554, and a decrease in notes payable of $990, and offset by advances in the amount of $25,630.

 

As of October 31, 2019, the Company had a working capital deficit of $2,340,419 compared with $2,006,707 as of April 30, 2019.  The change in working capital deficit was primarily due to a decrease in accounts payable of $231,554.  

  

Cash Flow from Operating Activities

 

During the six months ended October 31, 2019, the Company used $40,478 of cash for operating activities compared with $5,656 of cash for operating activities during the six months ended October 31, 2018. The increase in cash used for operating activities was due to a decrease in the amortization of discount on convertible debt payable, the issuance of preferred shares for management fee, a decrease in the loss on change in fair value of derivative liability, default and conversion fees, original issue discount and prepaid expenses offset by an increase in interest and penalties accrued on convertible debt.

 

Cash Flow from Investing Activities

 

During the six months ended October 31, 2019 and 2018, the Company did not have any investing activities.

 

Cash Flow from Financing Activities

 

During the six months ended October 31, 2019 the Company received $55,630 of cash from financing activities consisting of $25,630 from advances and $30,000 from the issuance of convertible debentures compared to $0 received during the six months ended October 31, 2018.


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Going Concern

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. At October 31, 2019, the Company has not recognized significant revenue, has a working capital deficit of $2,340,419, and has an accumulated deficit of $6,593,462. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern  The unaudited financial statements included in this report on Form 10-Q does not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Future Financings

 

We will continue to rely on equity sales of our Common Shares in order to continue to fund our business operations.  Issuances of additional shares will result in dilution to existing stockholders.  There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis.  The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. 

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements.  In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances.  Actual results could differ from those estimates made by management.

 

Recently Issued Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4.  CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within


20



the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2019. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective for the reasons discussed in our annual 10-K filing.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of October 31, 2019, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS.

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 1A. RISK FACTORS.

 

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

 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

1.Quarterly Issuances:   

 

Other than as previously disclosed in the above Notes to the Condensed Consolidated Financial Statements, we did not issue any unregistered securities during the quarter.

 

2.Subsequent Issuances:   

 

Other than as previously disclosed in the above Notes to the Condensed Consolidated Financial Statements, we did not issue any unregistered securities subsequent to the quarter.

 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4.  MINE SAFETY DISCLOSURES.

 

Not Applicable.

 

ITEM 5.  OTHER INFORMATION.

 

None.


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ITEM 6.  EXHIBITS

 

Exhibit Number

 

Description of Exhibit

 

Filing

3.1

 

Articles of Incorporation

 

Filed with the SEC on June 11, 2010 as part of our Registration Statement on Form S-1.

3.2

 

Bylaws

 

Filed with the SEC on June 11, 2010 as part of our Registration Statement on Form S-1.

31.1

 

Certification of Principal Executive Officer Pursuant to Rule 13a-14

 

Filed herewith.

31.2

 

Certification of Principal Financial Officer Pursuant to Rule 13a-14

 

Filed herewith.

32.1

 

Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

 

Filed herewith.

32.2

 

Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

 

Filed herewith.

 

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 


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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

VERDE BIO HOLDINGS, INC.

(FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

 

 

 

 

Dated: April 28, 2020

 

/s/ Scott Cox 

  

By:

Scott Cox

  

Its:

President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)

 

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:

 

Dated: April 28, 2020

By:

/s/ Scott Cox

  

Its:

Scott Cox, Director