Company Quick10K Filing
Quick10K
Poverty Dignified
10-Q 2019-05-31 Quarter: 2019-05-31
10-Q 2019-02-28 Quarter: 2019-02-28
10-Q 2018-11-30 Quarter: 2018-11-30
10-K 2018-08-31 Annual: 2018-08-31
10-Q 2018-05-31 Quarter: 2018-05-31
10-Q 2018-02-28 Quarter: 2018-02-28
10-Q 2017-11-30 Quarter: 2017-11-30
10-K 2017-08-31 Annual: 2017-08-31
10-Q 2017-05-31 Quarter: 2017-05-31
10-Q 2017-02-28 Quarter: 2017-02-28
10-Q 2016-11-30 Quarter: 2016-11-30
10-K 2016-08-31 Annual: 2016-08-31
10-Q 2016-05-31 Quarter: 2016-05-31
10-Q 2016-02-29 Quarter: 2016-02-29
10-Q 2015-11-30 Quarter: 2015-11-30
10-K 2015-08-31 Annual: 2015-08-31
10-Q 2015-05-31 Quarter: 2015-05-31
8-K 2019-07-09 Enter Agreement, Sale of Shares, Exhibits
8-K 2019-01-15 Officers
8-K 2018-07-06 Leave Agreement, Off-BS Arrangement
8-K 2018-06-19 Leave Agreement, M&A, Earnings
LCA Landcadia 708
POWW Ammo 70
MPAY Mobetize 37
BRTX Biorestorative Therapies 5
VIVIC Vivic 0
FRLI Frelii 0
ZNGY Zenergy Brands 0
FVRR Fiverr 0
GBBT Global Boatworks Holdings 0
YECO Yulong Eco-Materials 0
POVD 2019-05-31
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Organization and Basis of Presentation
Note 2 - Going Concern and Plan of Operation
Note 3 - Summary of Significant Accounting Policies
Note 4 - Stockholders' Equity (Deficit)
Note 5 - Commitments and Contingencies
Note 6 - Convertible Notes Payable
Note 7 - Warrants Exercisable Into Common Shares
Note 8 - Derivative Liabilities
Note 9 - Income Taxes
Note 10 - Related Party Transactions
Note 12 - Subsequent Events
Item 2. Management`S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 povd_ex311.htm
EX-31.2 povd_ex312.htm
EX-32 povd_ex32.htm

Poverty Dignified Earnings 2019-05-31

POVD 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 povd_10q.htm FORM 10-Q povd_10q.htm

 

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: May 31, 2019

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from: _____________ to ________________

 

Commission file number: ____________

  

Poverty Dignified, Inc.

(Exact name of registrant as specified in its charter)

  

Nevada

 

46-3754609

(State or Other Jurisdiction of Incorporation or Organization)

 

(IRS Employer Identification Number)

 

6428 W. Wilkinson Boulevard, Suite 305

Belmont, North Carolina 28012

Telephone No.: (928) 713-2386

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

  

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

N/A

 

N/A

 

N/A

  

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.

 

Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes x No ¨

 

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

 

Large accelerated filer

¨ 

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a 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 ¨ No x

 

As of July 19, 2019, there were 98,836,516 shares of the registrant's common stock issued and outstanding.

 

 
 
 
 

Poverty Dignified, Inc.

 

Quarterly Report on Form 10-Q

Table of Contents

 

 

Page

Number

 

PART I FINANCIAL INFORMATION

 

 

 

 

Item 1

Financial Statements

 

3

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

 

25

 

 

 

Item 4

Controls and Procedures

 

25

 

 

 

PART II OTHER INFORMATION

 

 

 

 

 

Item 1

Legal Proceedings

 

27

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

27

 

 

 

Item 3

Defaults Upon Senior Securities

 

27

 

 

 

Item 4

Mine Safety Disclosures

 

27

 

 

 

Item 5

Other Information

 

27

 

 

 

Item 6

Exhibits

 

28

 

 

 
2
 
Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements 

 

Poverty Dignified, Inc.

Consolidated Balance Sheets

Unaudited

 

 

 

May 31,

2019

 

 

August 31,

2018

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$40,927

 

 

$1,819

 

Prepaid expenses and other current assets

 

 

6,221

 

 

 

10,092

 

Current assets of discontinued operation

 

 

2,190

 

 

 

2,174

 

Total current assets

 

 

49,338

 

 

 

14,085

 

 

 

 

 

 

 

 

 

 

Total assets

 

$49,338

 

 

$14,085

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$37,714

 

 

$53,777

 

Notes payable - related party

 

 

1,114,207

 

 

 

1,114,207

 

Accrued payroll expenses

 

 

1,089,950

 

 

 

1,013,863

 

Accrued expenses

 

 

51,005

 

 

 

6,330

 

Due to former officer

 

 

6,725

 

 

 

6,725

 

Convertible notes payable, net of discount of $23,706 and $52,831, respectively

 

 

230,654

 

 

 

158,669

 

Derivative liabilities

 

 

141,533

 

 

 

56,220

 

Current liabilities of discontinued operation

 

 

407,807

 

 

 

415,371

 

Total current liabilities

 

 

3,079,595

 

 

 

2,825,162

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

3,079,595

 

 

 

2,825,162

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock par value $.0001: 10,000,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock par value $.0001: 2,490,000,000 shares authorized; 82,646,606 and 10,107,394 shares issued and outstanding as of May 31, 2019 and August 31, 2018, respectively

 

 

8,265

 

 

 

1,011

 

Series E preferred stock par value $.001: 1,000,000 shares authorized; 1,000,000 and no shares issued and outstanding as of May 31, 2019 and August 31, 2018, respectively

 

 

1,000

 

 

 

-

 

Additional paid in capital

 

 

10,057,903

 

 

 

8,812,361

 

Accumulated deficit

 

 

(13,069,212)

 

 

(11,596,587)

Accumulated other comprehensive loss - discontinued operation

 

 

(28,213)

 

 

(27,862)

Total stockholders' equity (deficit)

 

 

(3,030,257)

 

 

(2,811,077)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity (deficit)

 

$49,338

 

 

$14,085

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
3
 
Table of Contents

 

Poverty Dignified, Inc.

Consolidated Statements of Operations and Comprehensive Loss

Unaudited

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

May 31, 2019

 

 

May 31, 2018

 

 

May 31, 2019

 

 

May 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

Payroll

 

$16,602

 

 

$56,962

 

 

$101,428

 

 

$219,661

 

Stock-based compensation expense

 

 

136,061

 

 

 

29,000

 

 

 

337,018

 

 

 

114,750

 

Professional fees

 

 

36,991

 

 

 

7,550

 

 

 

118,201

 

 

 

84,117

 

Advertising

 

 

-

 

 

 

214

 

 

 

102

 

 

 

214

 

Travel

 

 

577

 

 

 

-

 

 

 

2,296

 

 

 

11,596

 

Other

 

 

3,816

 

 

 

3,930

 

 

 

19,942

 

 

 

18,929

 

Total general and administrative

 

 

194,047

 

 

 

97,656

 

 

 

578,987

 

 

 

449,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

194,047

 

 

 

97,656

 

 

 

578,987

 

 

 

449,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating loss

 

 

(194,047)

 

 

(97,656)

 

 

(578,987)

 

 

(449,267)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(63,662)

 

 

(54,390)

 

 

(185,224)

 

 

(175,096)

Gain (loss) on valuation of derivative liabilities

 

 

(133,049)

 

 

43,537

 

 

 

(35,652)

 

 

(83,632)

Loss on extinguishment of convertible notes

 

 

(550,990)

 

 

(78,340)

 

 

(569,480)

 

 

(168,431)

Debt penalty recovery (expense)

 

 

(30,000)

 

 

5,104

 

 

 

(30,000)

 

 

(46,288)

Loss on cashless exercise of warrants

 

 

(71,484)

 

 

-

 

 

 

(71,484)

 

 

-

 

Gain on prepayment of convertible notes

 

 

-

 

 

 

2,967

 

 

 

-

 

 

 

2,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

 

(1,043,232)

 

 

(178,778)

 

 

(1,470,827)

 

 

(919,747)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operation

 

 

-

 

 

 

(147,992)

 

 

(1,798)

 

 

(364,802)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(1,043,232)

 

 

(326,770)

 

 

(1,472,625)

 

 

(1,284,549)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment - discontinued operation

 

 

1,793

 

 

 

(4,654)

 

 

(351)

 

 

(8,606)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$(1,041,439)

 

$(331,424)

 

$(1,472,976)

 

$(1,293,155)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Continuing operations

 

$(0.02)

 

$(0.02)

 

$(0.03)

 

$(0.10)

-Discontinued operation

 

 

-

 

 

 

(0.02)

 

 

(0.00)

 

 

(0.04)

Net loss per share

 

$(0.02)

 

$(0.04)

 

$(0.03)

 

$(0.14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Basic and diluted

 

 

47,371,379

 

 

 

9,232,394

 

 

 

46,377,000

 

 

 

9,004,622

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
4
 
Table of Contents

 

Poverty Dignified, Inc.

Consolidated Statement of Changes in Stockholders' Equity (Deficit)

Unaudited

 

 

 

Common Stock

 

 

Series E Preferred Stock

 

 

Additional  

 

 

 

 

 

Accumulated Other  

 

 

Total 

Stockholders'

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

Paid In

Capital

 

 

Accumulated Deficit

 

 

Comprehensive Loss

 

 

Equity

(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended May 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at August 31, 2018

 

 

10,107,394

 

 

$1,011

 

 

 

-

 

 

$-

 

 

$8,812,361

 

 

$(11,596,587)

 

$(27,862)

 

$(2,811,077)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,288,758

 

 

 

129

 

 

 

-

 

 

 

-

 

 

 

200,828

 

 

 

-

 

 

 

-

 

 

 

200,957

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(363,268)

 

 

-

 

 

 

(363,268)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,973)

 

 

(2,973)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at November 30, 2018

 

 

11,396,152

 

 

 

1,140

 

 

 

-

 

 

 

-

 

 

 

9,013,189

 

 

 

(11,959,855)

 

 

(30,835)

 

 

(2,976,361)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock through conversion  of convertible notes payable

 

 

700,000

 

 

 

70

 

 

 

-

 

 

 

-

 

 

 

35,930

 

 

 

-

 

 

 

-

 

 

 

36,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(66,125)

 

 

-

 

 

 

(66,125)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

829

 

 

 

829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at February 28, 2019

 

 

12,096,152

 

 

 

1,210

 

 

 

-

 

 

 

-

 

 

 

9,049,119

 

 

 

(12,025,980)

 

 

(30,006)

 

 

(3,005,657)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock through conversion of convertible notes payable

 

 

67,352,971

 

 

 

6,735

 

 

 

-

 

 

 

-

 

 

 

802,559

 

 

 

-

 

 

 

-

 

 

 

809,294

 

Issuance of common stock for exercise of warrants

 

 

3,107,983

 

 

 

311

 

 

 

-

 

 

 

-

 

 

 

71,173

 

 

 

-

 

 

 

-

 

 

 

71,484

 

Stock-based compensation

 

 

89,500

 

 

 

9

 

 

 

1,000,000

 

 

 

1,000

 

 

 

135,052

 

 

 

-

 

 

 

-

 

 

 

136,061

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,043,232)

 

 

-

 

 

 

(1,043,232)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,793

 

 

 

1,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at May 31, 2019

 

 

82,646,606

 

 

$8,265

 

 

 

1,000,000

 

 

$1,000

 

 

$10,057,903

 

 

$(13,069,212)

 

$(28,213)

 

$(3,030,257)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
5
 
Table of Contents

  

 

 

Common Stock

 

 

Series E Preferred Stock

 

 

Additional 

 

 

 

 

 

Accumulated Other  

 

 

 Total

Stockholders'

 

 

 

Number of Shares

 

 

Amount

 

 

Number of Shares

 

 

Amount

 

 

 Paid In

Capital

 

 

Accumulated Deficit

 

 

Comprehensive Loss

 

 

Equity

(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended May 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at August 31, 2017

 

 

8,511,850

 

 

$851

 

 

 

-

 

 

$-

 

 

$8,272,310

 

 

$(9,784,847)

 

$(41,665)

 

$(1,553,351)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock 

 

 

16,800

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

17,098

 

 

 

-

 

 

 

-

 

 

 

17,100

 

Issuance of common stock through conversion of convertible notes payable

 

 

131,152

 

 

 

13

 

 

 

-

 

 

 

-

 

 

 

126,063

 

 

 

-

 

 

 

-

 

 

 

126,076

 

Reclassification of beneficial conversion feature to derivative liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(51,075)

 

 

-

 

 

 

-

 

 

 

(51,075)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(427,119)

 

 

-

 

 

 

(427,119)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,029)

 

 

(1,029)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at November 30, 2017

 

 

8,659,802

 

 

 

866

 

 

 

-

 

 

 

-

 

 

 

8,364,396

 

 

 

(10,211,966)

 

 

(42,694)

 

 

(1,889,398)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock through conversion of convertible notes payable

 

 

132,592

 

 

 

13

 

 

 

-

 

 

 

-

 

 

 

63,931

 

 

 

-

 

 

 

-

 

 

 

63,944

 

Stock-based compensation

 

 

175,000

 

 

 

17

 

 

 

-

 

 

 

-

 

 

 

85,733

 

 

 

-

 

 

 

-

 

 

 

85,750

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(530,660)

 

 

-

 

 

 

(530,660)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,923)

 

 

(2,923)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at February 28, 2018

 

 

8,967,394

 

 

 

896

 

 

 

-

 

 

 

-

 

 

 

8,514,060

 

 

 

(10,742,626)

 

 

(45,617)

 

 

(2,273,287)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock through conversion of convertible notes payable

 

 

430,000

 

 

 

44

 

 

 

-

 

 

 

-

 

 

 

125,457

 

 

 

-

 

 

 

-

 

 

 

125,501

 

Stock-based compensation

 

 

100,000

 

 

 

10

 

 

 

-

 

 

 

-

 

 

 

28,990

 

 

 

-

 

 

 

-

 

 

 

29,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(326,770)

 

 

-

 

 

 

(326,770)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,654)

 

 

(4,654)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at May 31, 2018

 

 

9,497,394

 

 

$950

 

 

 

-

 

 

$-

 

 

$8,668,507

 

 

$(11,069,396)

 

$(50,271)

 

$(2,450,210)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
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Poverty Dignified, Inc.

Consolidated Statements of Cash Flows

Unaudited

 

 

 

Nine Months Ended

 

 

 

May 31, 2019

 

 

May 31, 2018

 

 

 

 

 

 

 

 

Cash Flows From Operating Activities

 

 

 

 

 

 

Net loss from continuing operations

 

$(1,470,827)

 

$(919,747)

Loss from discontinued operation

 

 

(1,798)

 

 

(364,802)

Net loss

 

 

(1,472,625)

 

 

(1,284,549)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss from continuing operations to net cash used in operating activities - continuing operations:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

337,018

 

 

 

114,750

 

Amortization of debt discounts

 

 

114,946

 

 

 

129,934

 

Loss on valuation of derivative liabilities

 

 

35,652

 

 

 

83,632

 

Loss on extinguishment of convertible notes

 

 

569,480

 

 

 

168,431

 

Debt penalty expense

 

 

30,000

 

 

 

46,288

 

Loss on cashless exercise of warrants

 

 

71,484

 

 

 

-

 

Gain on prepayment of convertible notes

 

 

-

 

 

 

(2,967)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

3,871

 

 

 

5,658

 

Accounts payable

 

 

(16,063)

 

 

(10,226)

Accrued payroll expenses

 

 

76,087

 

 

 

193,644

 

Accrued expenses

 

 

62,939

 

 

 

19,482

 

Net cash used in operating activities - continuing operations

 

 

(185,413)

 

 

(171,121)

Adjustments to reconcile loss from discontinued operation to net cash used in operating activities - discontinued operation:

 

 

 

 

 

 

 

 

Loss on impairment of property and equipment of discontinued operation

 

 

-

 

 

 

54,141

 

Changes in discontinued operation assets and liabilities

 

 

(7,580)

 

 

38,727

 

Net cash used in operating activities - discontinued operation

 

 

(9,378)

 

 

(271,934)

Net cash used in operating activities

 

 

(194,791)

 

 

(443,055)

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 

 

 

Proceeds from notes payable - related party

 

 

-

 

 

 

580,800

 

Payments on notes payable - related party

 

 

-

 

 

 

(11,543)

Advances from (payments to) former officer, net

 

 

-

 

 

 

(219)

Issuance of common stock

 

 

-

 

 

 

17,100

 

Proceeds from convertible notes payable

 

 

240,250

 

 

 

186,500

 

Repayments of convertible notes payable

 

 

-

 

 

 

(301,560)

Debt issuance costs

 

 

(6,000)

 

 

(19,500)

Net cash provided by financing activities - continuing operations

 

 

234,250

 

 

 

451,578

 

Net cash provided by financing activities

 

 

234,250

 

 

 

451,578

 

 

 

 

 

 

 

 

 

 

Effect of foreign currency translation - discontinued operation

 

 

(351)

 

 

(8,606)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

39,108

 

 

 

(83)

Cash - beginning of period

 

 

1,819

 

 

 

2,039

 

Cash - end of period

 

$40,927

 

 

$1,956

 

 

 

 

 

 

 

 

 

 

Non-Cash Financing Activities:

 

 

 

 

 

 

 

 

Debt issuance costs netted from proceeds on convertible notes payable

 

$26,750

 

 

$-

 

Original issue discount in connection with convertible note payable

 

$-

 

 

$12,500

 

Issuance of common stock through conversion of convertible notes payable

 

$845,294

 

 

$315,521

 

Reclassification of beneficial conversion feature to derivative liabilities

 

$-

 

 

$51,075

 

 

 

 

 

 

 

 

 

 

Supplementary Disclosure Of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$-

 

 

$39,516

 

Cash paid during the period for income taxes

 

$-

 

 

$-

 

 

The accompanying notes are an integral part of these consolidated financial statements. 

 

 
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Poverty Dignified, Inc.

Notes to Unaudited Consolidated Financial Statements

May 31, 2019

 

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

 

Poverty Dignified, Inc. was incorporated in the State of Nevada on September 27, 2013, and is headquartered in Belmont, North Carolina. The Company was established as a renewable energy company, incubating solar technologies to establish electrification, education, connectivity and community development infrastructures in rural communities across the globe to empower the individual, community and local economy. My Power Solutions, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc., was incorporated in the State of Nevada on March 13, 2014 as a franchise business opportunity in the United States and Global Markets. Africhise, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc. is a Delaware Corporation, and was formed on August 28, 2015 to be the franchise management arm of My Power Solutions, Inc's franchise operations. My Power Solutions Bahamas, Inc., a wholly-owned subsidiary of My Power Solutions, Inc., is a Delaware Corporation, and was formed on June 14, 2018 to establish itself as a renewable energy solutions company in the Bahamas. B4dignity, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc. is a Delaware Corporation, and was formed on January 18, 2019 to be a cause marketing company.

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The unaudited interim consolidated financial statements are condensed and should be read in conjunction with the Company’s Form 10-K, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the year ended August 31, 2018. The interim results for the nine months ended May 31, 2019 are not necessarily indicative of results for the full fiscal year.

 

The consolidated financial statements include the accounts of Poverty Dignified, Inc., My Power Solutions, Inc., Africhise, Inc., and My Power Solutions Bahamas, Inc., and B4dignity, Inc. However, My Power Solutions Bahamas, Inc. and B4dignity, Inc. have yet to establish operations and have minimal activity to date. All significant intercompany accounts and transactions have been eliminated in consolidation. These entities are collectively referred to herein as Poverty Dignified, or the Company.

 

In May 2018, following an operational review, the Company decided to withdraw all operations of My Power Solutions, Inc. in South Africa. With a lack of significant revenues and higher than expected expenses due to training on-the-ground personnel and the implementation of solar installations, plus the instability of the political environment, the established operating structure and initial business plan was not sustainable. The decision to cease the operations of My Power Solutions, Inc. in rural South African communities represents a strategic shift that impacts the Company’s financial reporting and results. As such, My Power Solutions, Inc. in South Africa has been classified as a discontinued operation.

 

Since it has been classified as a discontinued operation, the balance sheet amounts and results of operations for My Power Solutions, Inc. in South Africa have been reclassified from their historical presentation to assets and liabilities of discontinued operation on the Consolidated Balance Sheets and to discontinued operation on the Consolidated Statements of Operations and Comprehensive Loss, respectively, for all periods presented. Losses associated with impairment of assets are recorded in discontinued operation in the period of the disposal. The Consolidated Statements of Cash Flows has also been reclassified for assets, liabilities and results of the discontinued operation for all periods presented. See Note 11 for more details regarding the discontinued operation.

 

 
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NOTE 2 - GOING CONCERN AND PLAN OF OPERATION

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of May 31, 2019, the Company had cash of $40,927, a working capital deficit of $3,030,257 and a stockholders’ deficit of $3,030,257. The Company has incurred net losses from start-up costs and minimal operations since inception to May 31, 2019 and has ceased operations of its subsidiary, My Power Solutions, Inc. in South Africa. As a result, as of May 31, 2019, these issues raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company needs to generate revenues or must raise additional capital, reduce expenses and curtail cash outflows in order to be able to accomplish its business plan. In the interim, the Company will continue to pursue bridge capital as needed. The Company’s $3,079,595 of total liabilities at May 31, 2019 includes $1,114,207 of notes payable to a related party, $1,089,950 of accrued payroll expenses due to current and former Company management, and $6,725 due to a former officer of the Company, all of which we believe, but cannot guarantee, we can delay payment on over the next twelve months. During the nine months ended May 31, 2019, we received net proceeds totaling $240,250 from four convertible notes payable. For all of our convertible notes payable, payments become due in the fourth quarter of fiscal year 2019 or in early fiscal year 2020, or can be repaid through conversion into the Company’s common stock. During the nine months ended, payments totaling $254,140 have been netted against the outstanding principal of convertible notes payable through the issuance of common stock. Based on our current cash position and our ability to issue additional convertible notes payable to our lending partners, we believe we have the capabilities and available resources to continue for the next twelve months, although we cannot guarantee that we will be able to do so.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of expenses in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

 

Cash 

 

The Company maintains funds in financial institutions that are members of the Federal Deposit Insurance Corporation (“FDIC”). As such, funds are insured based on Federal Reserve limits. The Company has not experienced any losses in the past, and management believes it is not exposed to any significant credit risk on the current account balances, which do not exceed FDIC limits. At times, cash balances may exceed insured limits.

 

The Company has determined that the functional currency of its foreign subsidiaries is the local currency. At May 31, 2019 and August 31, 2018, the Company had no cash in foreign bank accounts.

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consist of payments primarily related to a professional fee retainer and short-term deposits.

 

 
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Property and Equipment, Net

 

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally between three and five years. As of May 31, 2019 and August 31, 2018, property and equipment consists of computer equipment with a total cost of $1,607 and accumulated depreciation of $1,607. There was no depreciation expense during the nine months ended May 31, 2019 and 2018.

 

The Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. As a result of the discontinued operation in South Africa, during the nine months ended May 31, 2018, the solar equipment for containers was written down to its net realizable value of $-0- and the Company recognized a loss on impairment of $54,141.

 

Accrued Expenses

 

Accrued expenses are recorded when incurred and primarily consist of accrued interest on notes payable and amounts due for supplies and travel. Accrued payroll consists of salary amounts earned but deferred by the Company's management team.

 

Derivative Liabilities

 

The Company has certain financial instruments that contain embedded derivatives. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be accounted for separately. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to income or expense as part of gain or loss on extinguishment. 

 

Advertising 

 

Advertising expenditures are charged to expense as incurred and are included in general and administrative expense. Total advertising expense for the nine months ended May 31, 2019 and 2018 was $102 and $214, respectively.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist primarily of cash, prepaid expenses and other current assets, current assets of discontinued operation, accounts payable, accrued payroll expenses, accrued expenses, current liabilities of discontinued operation, derivative liabilities, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

 

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

 

The three-level hierarchy for fair value measurements is defined as follows:

 

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

 

 
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Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

 

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

 

The following table summarizes fair value measurements by level at May 31, 2019 and August 31, 2018, measured at fair value on a recurring basis:

 

 

 

 Level 1

 

 

 Level 2

 

 

 Level 3

 

 

 Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

May 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

$-

 

 

$-

 

 

$141,533

 

 

$141,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

$-

 

 

$-

 

 

$56,220

 

 

$56,220

 

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.

 

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be classified as additional income taxes in the consolidated statements of income. No interest or penalties were recognized for the years ended August 31, 2018 or 2017.

 

Tax years 2015 and forward remain open to examination under United States statute of limitations. Management is not aware of any material uncertain tax positions and no liability has been recognized at May 31, 2019 or August 31, 2018.

 

 
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Earnings Per Share

 

Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding. Potential dilutive securities outstanding at May 31, 2019 and August 31, 2018 include convertible notes payable convertible into approximately 81,000,000 and 149,100,000, respectively, shares of common stock and common stock purchase warrants convertible into approximately 17,800,000 and 20,900,000, respectively, shares of common stock. These items are not included in the computation of diluted earnings per share due to their anti-dilutive effect from continuing losses.

 

Foreign Currency Translation

 

For financial reporting purposes, the functional currency of the discontinued foreign operation of My Power Solutions, Inc. is the local currency. The assets and liabilities of the discontinued foreign operation for which the local currency is the functional currency are translated into the U.S. dollar at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the period. The accumulated foreign currency translation adjustment is presented as a component of accumulated other comprehensive loss in the consolidated statement of changes in stockholders’ equity (deficit). Gains and losses on foreign current transactions, if any, are recorded in earnings in the period of settlement.

 

Recent Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of operations.

 

NOTE 4 - STOCKHOLDERS’ EQUITY (DEFICIT)

 

In September 2013, the Company authorized the issue of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock at a par value of $.0001. To meet the reserve demand for its convertible note holders and to have adequate shares available for future acquisitions, the Company increased its authorized shares of common stock to 490,000,000 on May 21, 2019 and again to 2,490,000,000 on May 28, 2019. There is a total of 82,646,606 and 10,107,394 shares of common stock issued and outstanding at May 31, 2019 and August 31, 2018, respectively. Preferred stockholders could receive preferential treatment relative to declared dividends, should there be any, and to distributions upon a liquidation event. As of May 31, 2019, no preferred stock has been issued.

 

During the nine months ended May 31, 2019, the Company issued 1,378,258 shares of common stock for stock compensation expense of $201,718, 3,107,983 shares of common stock for loss on cashless exercise of warrants of $71,484, and 68,052,971 shares of common stock through conversions of convertible notes payable and recognized a loss on extinguishment of convertible notes of $569,480. During the nine months ended May 31, 2018, the Company issued 10,800 shares of common stock at a discounted price of $0.75 per share and 6,000 shares at a price of $1.50 for total proceeds of $17,100, 275,000 shares of common stock for stock compensation expense of $114,750, and 693,744 shares of common stock through conversions of convertible notes payable and recognized a loss on extinguishment of convertible notes of $168,431.

 

On May 21, 2019, the Company amended its Articles of Incorporation in the State of Nevada to designate a series of preferred stock, the Series E Preferred Stock. The Company established 1,000,000 shares of the Series E Preferred Stock as available for issuance. The Series E Preferred Stock is not convertible into common stock, nor does the Series E Preferred Stock have any right to dividends and any liquidation preference. The Series E Preferred Stock entitles its holder to a number of votes per share equal to sixty-six and two thirds of the voting rights of the Company. On May 28, 2019, the Company issued 500,000 shares of its Series E Preferred Stock to its President, Matthew D. Alpeter, and 500,000 shares of its Series E Preferred Stock to its Chief Financial Officer, George C. Critz, III. The Company valued the Series E Preferred Stock issued to these officers at $135,300 based on a valuation performed by an independent valuation firm. The valuation was performed in accordance with the fair value standard set forth in ASC 820-10-35-37, Fair Value in Financial Instruments. The valuation used a market value approach to estimate the fair value of the Series E Preferred Stock which represent a permanent controlling voting interest in the Company. As such, the Company recorded stock-based compensation expense of $135,300 for the issuance of the Series E Preferred Stock.

 

 
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NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

Based on a May 2018 performance review by Poverty Dignified Inc.’s Board of Directors, the decision was made to withdraw all operations of its wholly owned subsidiary, My Power Solutions, Inc., in South Africa. As a result, My Power Solutions South African employees and consultants have filed a dispute with The Commission for Conciliation, Mediation and Arbitration (CCMA) in South Africa. As the Company winds down its local operations in South Africa, legal counsel has confirmed that the creditors of the Company will only have claims against the insolvent estate of the local external company and not against My Power Solutions, Inc. or Poverty Dignified Inc in the United States. It is therefore management’s position that there is no probable recourse that will have an adverse effect on Poverty Dignified, Inc.

 

NOTE 6 – CONVERTIBLE NOTES PAYABLE

 

On December 21, 2017, the Company entered into a Securities Purchase Agreement whereas, Crown Bridge Partners, LLC (the "buyer") wished to purchase from the Company securities consisting of the Company’s 8% convertible notes payable for an aggregate principal amount of up to $120,000. As additional consideration, the Company issued a Common Stock Purchase Warrant (the “warrant”) for 32,000 shares at an exercise price of $1.25 over an exercise period of 5 years. Due to the provisions of the warrant, the warrant was classified as a derivative warrant liability, the fair value of which was determined using the Black-Scholes valuation model. On May 11, 2018, the Company repaid the convertible note payable. The warrant remained outstanding after the repayment of the convertible note payable (see Notes 7 and 8).

 

On June 21, 2018, the Company issued a convertible note to Power Up Lending Group, LTD. for $128,000. The note bears interest at 12%, matures on March 30, 2019, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date. During the nine months ended May 31, 2019, the holder’s option to convert became active and the Company recorded a derivative liability of $38,008, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. The value of the derivative liability was attributed to debt discount. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the nine months ended May 31, 2019, the holder exercised its conversion options to settle the note payable of $128,000 plus accrued interest of $7,680 in exchange for 26,281,973 shares of the Company’s common stock. As a result, the Company recorded a loss on extinguishment of debt of $266,660.

 

On July 13, 2018, the Company entered into a Securities Purchase Agreement whereas, EMA Financial, LLC (the "buyer") wishes to purchase from the Company a 10% convertible note for a principal amount of $83,500. On July 13, 2018, the Company issued a convertible promissory note (the “note”) to the buyer for $81,830 in proceeds, after a $1,670 original issue discount. The note matured on April 12, 2019. The note is convertible at a conversion price of 50% of the lowest trading price during the 10 days prior to the conversion date. At the closing, the Company paid closing costs and a consulting fee totaling $7,340. Accordingly, the Company recorded a debt discount of $9,010. At issuance, the holder’s option to convert was active and the Company recorded a derivative liability of $48,702, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. The derivative liability was attributed to debt discount. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the nine months ended May 31, 2019, the holder effected conversions for a total of 21,217,000 shares to extinguish a portion of the convertible note payable. As a result, the Company recorded a loss on extinguishment of debt of $198,773. Also during the nine months ended May 31, 2019, in accordance with the terms of the note agreement, the Company incurred debt penalties totaling $30,000 for market loss and for failure to timely replenish reserve shares, which was added to outstanding principal balance of the convertible note payable

 

 
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On September 27, 2018, the Company issued a convertible note to Power Up Lending Group, LTD. for $53,000. The note bears interest at 12%, matures on July 15, 2019, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note did not become active until 180 days after the issuance date. During the nine months ended May 31, 2019, the holder exercised its conversion options to settle the note payable of $53,000 plus accrued interest of $3,180 in exchange for 11,467,898 shares of the Company’s common stock. As a result, the Company recorded a loss on extinguishment of debt of $53,788.

 

On November 6, 2018, the Company entered into a Securities Purchase Agreement whereas, Auctus Fund, LLC (the "buyer") wishes to purchase from the Company a 12% convertible note for a principal amount of $111,000. On November 6, 2018, the Company issued a convertible promissory note (the “note”) to the buyer for $97,250 in proceeds, after a $13,750 reduction for issuance fees. The note matures on August 6, 2019. The note is convertible at a conversion price of 55% of the lowest trading price during the 25-day period ending one trading day prior to the date of the conversion notice. At the closing, the Company paid closing costs and fees totaling $6,000. Accordingly, the Company recorded a debt discount of $19,750. At issuance, the holder’s option to convert was active and the Company recorded a derivative liability of $15,063, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. The derivative liability was attributed to debt discount. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the nine months ended May 31, 2019, the holder effected conversions for a total of 9,086,100 shares to extinguish a portion of the convertible note payable. As a result, the Company recorded a loss on extinguishment of debt of $50,259.

 

On April 2, 2019, the Company issued a convertible note to Power Up Lending Group, LTD. for $25,000. The note bears interest at 12%, matures on February 15, 2020, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date.

 

On May 7, 2019, the Company issued a convertible note to Power Up Lending Group, LTD. for $78,000. The note bears interest at 12%, matures on March 15, 2020, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $7,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date.

 

The following table summarizes the balances of convertible notes payable:

 

 

 

 May 31,

 

 

 August 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

Power Up Lending Group, LTD

 

$-

 

 

$125,667

 

EMA Financial, LLC

 

 

47,928

 

 

 

33,002

 

Auctus Fund, LLC

 

 

88,481

 

 

 

-

 

Power Up Lending Group, LTD

 

 

22,545

 

 

 

-

 

Power Up Lending Group, LTD

 

 

71,700

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Convertible notes payable, net of discount

 

$230,654

 

 

$158,669

 

 

 
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Amortization of the debt discounts recorded as interest expense during the nine months ended May 31, 2019 and 2018 totaled $114,946 and $129,934, respectively.

  

Each of the convertible notes payable include a debt covenant stating that during the period the conversion right exists, the borrower will reserve from its authorized and unissued common stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of common stock upon the full conversion of the notes issued pursuant to the securities purchase agreement. The borrower is required at all times to have authorized and reserved between five to ten times the number of shares that would be issuable upon full conversion of the note. At July 19,2019, the Company had sufficient authorized and unissued common stock to meet the reserve demand of its convertible notes payable.

 

NOTE 7 – WARRANTS EXERCISABLE INTO COMMON SHARES

 

As additional consideration for its convertible note payable agreement with Crown Bridge Partners (see Note 6), the Company issued a Common Stock Purchase Warrant (the “warrant”) for 32,000 shares at an exercise price of $1.25 over an exercise period of 5 years. The warrant has full ratchet price protection, cashless exercise rights, and an anti-dilution clause. During the nine months ended May 31, 2019, the anti-dilution clause was triggered, increasing the number of common shares from 32,000 to 21,164,021 at an exercise price of $0.00189.

 

On May 22, 2019, Crown Bridge Partners, LLC executed a cashless exercise of 3,386,243 warrant shares for 3,107,983 shares of common stock. As a result of the cashless exercise, the Company recorded a loss of $71,484.

 

For the periods ended August 31, 2018 and May 31, 2019, a summary of the Company’s warrant activity is as follows:

 

 

 

 Number of

Shares

 

 

 Weighted-Average Exercise Price

 

 

 Weighted-Average Remaining Contractual Term (Years)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at August 31, 2017

 

 

-

 

 

 

-

 

 

 

-

 

Granted

 

 

32,000

 

 

 

1.25000

 

 

 

5.00

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at August 31, 2018

 

 

32,000

 

 

 

1.25000

 

 

 

4.31

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

Anti-Dilution

 

 

21,132,021

 

 

 

0.00189

 

 

 

3.56

 

Exercised

 

 

(3,386,243)

 

 

0.00189

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at May 31, 2019

 

 

17,777,778

 

 

 

0.00189

 

 

 

3.56

 

 

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at May 31, 2019 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of May 31, 2019, the aggregate intrinsic value of warrants outstanding was $103,289 based on the closing market price of $0.0077 on May 31, 2019.

 

The Company determined the warrants qualify for derivative accounting as a result of the related issuance of the convertible note payable and based on the fact that the number of shares and exercise price can change due to market changes in the price of the common stock (see Note 8).

 

 
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NOTE 8 – DERIVATIVE LIABILITIES

 

The Company analyzed the warrant and beneficial conversion features (“BCF”) for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the warrant was a derivative warrant liability and that the conversion options on convertible notes payable become derivatives at the point the holder’s option to convert becomes active and there is active trading of the Company’s stock.

 

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of May 31, 2019 and August 31, 2018. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.

 

The following weighted-average assumptions were used at May 31, 2019 and August 31, 2018:

 

 

 

 May 31,

 

 

 August 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

Expected term

 

3.56 years

 

 

0.614-4.31 years

 

Expected average volatility

 

 

270.53%

 

85.45%-130.21

%

Expected dividend yield

 

 

0.00%

 

 

0.00%

Risk-free interest rate

 

 

1.90%

 

2.46%-2.74

%

 

The following table summarizes the balances of derivative liabilities:

 

 

 

 May 31,

 

 

 August 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

EMA Financial, LLC

 

$-

 

 

$49,134

 

Crown Bridge Partners, LLC - Warrant

 

 

141,533

 

 

 

7,086

 

 

 

 

 

 

 

 

 

 

Total derivative liabilities

 

$141,533

 

 

$56,220

 

 

The following table summarizes the change in derivative liabilities included in the balance sheet for the nine months ended May 31, 2019:

  

Fair Value Measurements Using Significant Observable Inputs (Level 3)

 

 

 

 

 

Balance - August 31, 2018

 

$56,220

 

Addition of new derivative liabilities as debt discounts, upon issuance of warrants and convertible notes

 

 

15,063

 

Addition of new derivative liabilities as debt discounts, upon holder's option becoming active

 

 

38,008

 

Reduction in derivative liabilities due to conversions of convertible notes to common stock

 

 

(3,410)

Loss on change in fair value of derivative liabilities

 

 

35,652

 

 

 

 

 

 

Balance - May 31, 2019

 

$141,533

 

 

NOTE 9 – INCOME TAXES

 

Due to continued operating losses, there is a full valuation against gross deferred tax assets for the period from inception through May 31, 2019.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.

 

 
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The Company’s total deferred tax asset, calculated using effective tax rates is as follows:

 

 

 

 May 31,

 

 

 August 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

Net operating loss carryforwards

 

$855,902

 

 

$630,534

 

Foreign net operating losses

 

 

275,306

 

 

 

274,803

 

Organization costs

 

 

48,502

 

 

 

51,916

 

Accrued payroll

 

 

228,701

 

 

 

212,932

 

 

 

 

 

 

 

 

 

 

Gross deferred tax asset

 

 

1,408,411

 

 

 

1,170,185

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

 

(1,408,411)

 

 

(1,170,185)

 

 

 

 

 

 

 

 

 

Net deferred tax asset

 

$-

 

 

$-

 

 

The Company has not recognized a deferred tax asset for its stock compensation expense due to its non-deductibility. The Company has no plans to pursue any tax benefits relative to its recognized stock compensation expense.

 

The reconciliation of income taxes is computed at a rate of 21% for federal income taxes for the nine months ended May 31, 2019 and 2018, and at 28% for foreign income taxes is as follows:

 

 

 

 Nine Months Ended May 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

Income tax computed at the federal statutory rate

 

$(308,497)

 

$(193,147)

Foreign income tax

 

 

(503)

 

 

(102,145)

Non-deductible stock compensation expense

 

 

70,774

 

 

 

24,097

 

Impact of rate change from 35% to 21%

 

 

-

 

 

 

512,105

 

 

 

 

 

 

 

 

 

 

Total

 

 

(238,226)

 

 

240,910

 

 

 

 

 

 

 

 

 

 

Change in valuation allowance

 

 

238,226

 

 

 

(240,910)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

$-

 

 

$-

 

 

As of May 31, 2019, the Company had net operating loss carryforwards in the amount of $5,058,962, of which $4,075,725 was incurred in the U.S. and $983,237 was the result of cumulative operating losses of the Company’s subsidiaries in South Africa, which have now been discontinued. Because of the Company’s lack of earnings history and uncertainty regarding the usability of the losses from its discontinued operation in South Africa, the net operating loss carryforwards and other deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $238,226 and decreased by $240,910 during the nine months ended May 31, 2019 and 2018, respectively.

 

Our federal net operating losses will begin to expire in 2034 and our state tax loss carryforwards will begin to expire in 2029. Federal net operating losses incurred in 2018 and after carryforward indefinitely.

 

 
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NOTE 10 – RELATED PARTY TRANSACTIONS

 

Due to Former Officer

 

On March 13, 2016, John K. Lowther, now former Chief Executive Officer and Director, advanced the Company $12,916. The balance outstanding at May 31, 2019 and August 31, 2018 is $6,725. This advance does not bear interest.

 

Notes Payable – Related Party

 

During the year ended August 31, 2015, Power It Perfect, Inc. loaned the Company $194,500 for working capital purposes in exchange for promissory notes. During the year ended August 31, 2016, Power It Perfect, Inc. loaned the Company $208,160 for working capital purposes in exchange for promissory notes. During the year ended August 31, 2017, Power It Perfect, Inc. loaned the Company an additional $313,450 for working capital purposes in exchange for promissory notes. During the year ended August 31, 2018, Power It Perfect, Inc. loaned the Company an additional $678,358 (including $580,800 during the nine months ended May 31, 2018) for working capital and other purposes in exchange for promissory notes. All the notes bear interest at five percent per annum, are non-collateralized and due for repayment in installments as soon as the Company has a stream of revenue. Through May 31, 2019 and August 31, 2018, the Company had made repayments totaling $280,261 (including $11,543 during the nine months ended May 31, 2018.) As such, the balance of the notes payable was $1,114,207 at May 31, 2019 and August 31, 2018. Accrued interest on the notes, which is included in accrued expenses, totaled $43,968 and $2,300 at May 31, 2019 and August 31, 2018, respectively. There are no conversion provisions associated with the notes.

 

Stock-Based Compensation

 

During the nine months ended May 31, 2019, the Company issued 1,378,258 shares to employees of an affiliated company for services rendered to the Company. These services were valued at the market value of shares at the time of issuance. The stock-based compensation expense recognized by the Company for the nine months ended May 31, 2019 totaled $201,718.

 

On May 28, 2019, the Company issued 1,000,000 shares of Series E Preferred Stock to its President and Chief Financial Officer. Based on an independent valuation of the fair value of these shares, the Company recognized stock-based compensation expense of $135,300 for the nine months ended May 31, 2019.

 

During the nine months ended May 31, 2018, the Company issued 275,000 shares to employees of an affiliated company for services rendered to the Company. These services were valued at the market value of shares at the time of issuance. The stock-based compensation expense recognized by the Company for the nine months ended May 31, 2018 totaled $114,750.

 

NOTE 11 – DISCONTINUED OPERATION

 

In May 2018, the Company decided to withdraw all operations of My Power Solutions, Inc. in South Africa. The decision to cease the operations of My Power Solutions, Inc. in rural South African communities represents a strategic shift that impacts the Company’s financial reporting and results. As such, My Power Solutions, Inc. has been classified as a discontinued operation.

 

 
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The major classes of line items constituting the loss from discontinued operation are presented in the table below.

 

 

 

 Nine Months Ended May 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

Revenue

 

$-

 

 

$-

 

Franchise and operating expenses

 

 

(1,798)

 

 

(310,661)

Loss on impairment of property and equipment

 

 

-

 

 

 

(54,141)

 

 

 

 

 

 

 

 

 

Loss from discontinued operation

 

$(1,798)

 

$(364,802)

 

The major components of the assets and liabilities of the discontinued operation are presented in the table below.

 

 

 

 May 31,

 

 

 August 31,

 

 

 

 2019

 

 

 2018

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

Prepaid expenses and other assets

 

$2,190

 

 

$2,174

 

 

 

 

 

 

 

 

 

 

Current assets of discontinued operation

 

$2,190

 

 

$2,174

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$16,934

 

 

$16,812

 

Accrued payroll and expenses

 

 

33,874

 

 

 

41,560

 

Other liabilities

 

 

356,999

 

 

 

356,999

 

 

 

 

 

 

 

 

 

 

Current liabilities of discontinued operation

 

$407,807

 

 

$415,371

 

  

NOTE 12 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through July 19, 2019, which is the date when these consolidated financial statements were issued, and is aware of none requiring disclosure, except as follows:

 

Since May 31, 2019, the Company has issued 4,058,616 shares of common stock for the cashless exercise of outstanding warrants and 12,131,294 shares of common stock for the conversion of $8,070 of principal on convertible promissory notes.

 

On July 9, 2019, the Company entered into and consummated a Stock Purchase Agreement with Sun Ovens International, Inc. (“Sun Oven”) and its shareholders. In exchange for the issuance 1,000,000 shares of its common stock to the shareholders of Sun Oven, the Company acquired all the outstanding shares of Sun Oven, such that after the transaction, Sun Oven is a wholly-owned subsidiary of the Company. Sun Oven is a privately-held Illinois corporation engaged in the business of manufacturing and distributing sun powered devices for cooking, baking, and other functions. The Company has refocused its growth strategy and made a shift from organic growth to growth through acquisition. This acquisition marks the first step in this direction and allows the Company to vertically integrate.

 

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

 

With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.

 

Background Overview

 

Poverty Dignified, Inc. was incorporated in the State of Nevada on September 27, 2013, and is headquartered in Belmont, North Carolina. The Company was established as a renewable energy company, incubating solar technologies to establish electrification, education, connectivity and media distribution infrastructures in rural communities across the globe to empower the individual, community and local economy. My Power Solutions, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc., was incorporated in the State of Nevada on March 13, 2014 as a franchise business opportunity with Franchise Disclosure Documents for franchise sales in both the United States and South African markets. Africhise, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc. is a Delaware Corporation, and was formed on August 28, 2015 to be the franchise management arm of My Power Solutions, Inc's franchise operations in Africa. My Power Solutions Bahamas, Inc., a wholly-owned subsidiary of My Power Solutions, Inc., is a Delaware Corporation, and was formed on June 14, 2018 to establish itself as a renewable energy solutions company in the Bahamas. B4dignity, Inc., a wholly-owned subsidiary of Poverty Dignified, Inc. is a Delaware Corporation, and was formed on January 18, 2019 to be a cause marketing company.

 

In May 2018, following an operational review, the Company decided to withdraw all operations of My Power Solutions, Inc. in South Africa. With a lack of significant revenues and higher than expected expenses due to training on-the-ground personnel and the implementation of solar installations, plus the instability of the political environment, the established operating structure and initial business plan was not sustainable. The decision to cease the operations of My Power Solutions, Inc. in rural South African communities represents a strategic shift that impacts the Company’s financial reporting and results. As such, My Power Solutions, Inc. in South Africa has been classified as a discontinued operation.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of May 31, 2019, the Company had cash of $40,927, a working capital deficit of $3,030,257 and a stockholders’ deficit of $3,030,257. The Company has incurred net losses from start-up costs and minimal operations since inception to May 31, 2019 and has ceased operations of its subsidiary, My Power Solutions, Inc. in South Africa. As a result, as of May 31, 2019, these issues raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

  

The Company needs to generate revenues or must raise additional capital, reduce expenses and curtail cash outflows in order to be able to accomplish its business plan. In the interim, the Company will continue to pursue bridge capital as needed. The Company’s $3,079,595 of total liabilities at May 31, 2019 includes $1,114,207 of notes payable to a related party, $1,089,950 of accrued payroll expenses due to current and former Company management, and $6,725 due to a former officer of the Company, all of which we believe, but cannot guarantee, we can delay payment on over the next twelve months. During the nine months ended May 31, 2019, we received net proceeds totaling $240,250 from four convertible notes payable. For all of our outstanding convertible notes payable, payments become due in the fourth quarter of fiscal year 2019 or in early fiscal year 2020, or can be repaid through conversion into the Company’s common stock. During the nine months ended, payments totaling $254,140 have been netted against the outstanding principal of convertible notes payable through the issuance of common stock. Based on our current cash position and our ability to issue additional convertible notes payable to our lending partners, we believe we have the capabilities and available resources to continue for the next twelve months, although we cannot guarantee that we will be able to do so.

 

 
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Plan of Operation

 

As a renewable energy Company, Poverty Dignified remains committed to incubating solar technologies that establish electrification, education, connectivity and community development infrastructures in rural communities across the globe to empower the individual, community and local economy. Plans are underway to recapitalize the Company over the next two quarters, which if successful, would provide the necessary operational capital to execute its plan of operation.

 

The core values of the Company are 1) To be a renewable energy company focused on community development that champions the cause of dignity for a forgotten people by empowering them to implement practical solutions through an intentional, hands on engagement model that promotes entrepreneurial education, micro-business incubation and installation of basic solar power solutions. 2) To implement entrepreneurial education programs that strengthen and enhance the local community through actionable awareness of basic solar technology, discovery and implementation of business development opportunities and hands-on vocational training programs. 3) To develop a repeatable micro-business incubation model (with an emphasis on apprenticeships) that creates a sustainable economic development blueprint for rural communities to improve the quality of life for everyone. 4) To install basic solar power solutions as a transformation catalyst to kickstart the stalled economic growth in rural communities.

 

The Company strives to promote a cycle of sustainability in rural communities, and to recognize a need for reliable and affordable power, and we believe solar power is the best solution for rural settings. For this reason, we intend to combine entrepreneurial education, micro-business development and solar power installations – with the hope of creating jobs through micro-business development and installation of solar power in rural communities to achieve the goal of stimulating economic growth and creating a pathway out of poverty into dignity.

 

Poverty Dignified, Inc. is not a charity, and is not under any impression that it needs to rescue rural communities, but rather a for profit business, that believes in developing integrated business partnerships to create opportunities for empowerment for everyone. Poverty Dignified, Inc’s goal is: 1) to integrate solar technology solutions that will improve power efficiency and 2) facilitate business development through entrepreneurial education and community development.

 

In June 2018, the Company established My Power Solutions Bahamas, Inc. to begin offering renewable energy solutions throughout the Bahamas, but to date has minimal operations. On January 18, 2019, the Company established B4dignity, Inc. as a cause marketing company focused on lowering the cost of solar power for rural communities, but to date has minimal operations. It plans to partner with rural communities to create micro-business opportunities that invite interest in doing a pilot implementation of low-cost, energy efficient solar power generation and power storage products. In this way, funding for solar energy solutions in rural communities could become a realistic and achievable goal. Through an established eco-system of partners who provide basic products and services to the community, it can champion the rural community development story, and build a diversified online platform to facilitate e-commerce marketing efforts that can achieve sustainable business growth to help fund the implementation of basic solar power for the community. With an apprenticeship approach, and vocational skills training programs, individuals in rural communities can apply their skills and training anywhere they wish, either to grow a business of their own, or as a valuable employee of an existing local business to support their family and community.

 

A portion of all sales from products and services will be used to offset the initial cost of installing solar power for a family or school in the community. By sharing their story, the voice of rural communities can be elevated and highlight the sustainable micro-business development model that is being championed for rural communities. It is Poverty Dignified Inc’s belief that this is a repeatable model that can be implemented in any rural community across the globe to provide renewable solar power and sustainable community development.

 

In addition to working with local community business partners to install solar power solutions and provide business development skills training, Poverty Dignified, Inc is also building joint venture relationships with technology companies that are revolutionizing solar power technology and battery power management. It is already seeing positive results that may lead to significant efficiency improvements and lower the cost for solar power generation and distribution, which could make solar power available to everyone at an affordable price. These new solutions could make a powerful impact on the local economy and transform rural communities, which in turn, would drive revenue for the Company. Poverty Dignified, Inc. believes in changing lives and making a profit at the same time.

 

 
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On July 9, 2019, the Company, in exchange for the issuance 1,000,000 shares of its common stock, the Company acquired all the outstanding shares of Sun Oven, such that after the transaction, Sun Oven is a wholly-owned subsidiary of the Company. Sun Oven is a privately-held Illinois corporation engaged in the business of manufacturing and distributing sun powered devices for cooking, baking, and other functions.

 

Results of Operations 

 

For the three and nine months ended May 31, 2019

 

There were no revenues for the three and nine months ended May 31, 2019. The net loss from continuing operations for the three and nine months ended May 31, 2019 was $925,099 and $1,352,694, respectively.

 

Our primary expenses for the nine months ended May 31, 2019 were related payroll expenses of $101,428, non-cash stock-based compensation expense of $337,018, and professional fees of $118,201. $76,087 of the payroll expenses related to amounts accrued for, but not paid to, the Company’s current and former management team. Interest expense for the nine months ended May 31, 2019 totaled $185,224, of which $114,946 related to amortization of debt discounts.

 

The Company recorded a loss on the changes in fair value of derivative liabilities of $35,652 for the nine months ended May 31, 2019. Due to principal payments made through the conversions of common stock, the Company recorded a loss on extinguishment of convertible notes of $569,480 for the nine months ended May 31, 2019. Additionally, the Company recorded a debt penalty expense of $30,000 and loss on cashless exercise of warrants of $71,484 during the nine months ended May 31, 2019.

 

Significant expense and loss items for the three months ended May 31, 2019 included payroll of $16,602, non-cash stock-based compensation expense of $136,061, professional fees of $36,991, interest expense of $63,662, loss on the changes in fair value of derivative liabilities of $133,049, loss on extinguishment of debt of $550,990, debt penalty expense of $30,000, and a loss on cashless exercise of warrants of $71,484.

 

The loss from the discontinued operation was $-0- and $1,798 during the three and nine months ended May 31, 2019, respectively.

 

For the three and nine months ended May 31, 2018

 

There were no revenues from continuing operations for the three and nine months ended May 31, 2018.

 

Our expenses for the nine months ended May 31, 2018 were related to professional fees of $84,117, and general and administrative costs of $365,150. General and administrative costs primarily consisted of payroll expenses of $219,661, non-cash stock-based compensation expense of $114,750 and $11,596 of travel related costs. $193,644 of the payroll expenses related to amounts accrued for, but not paid to, the Company’s management team.

 

Additionally, we incurred interest expense of $175,096 for the nine months ended May 31, 2018, primarily due to interest on our related party and convertible notes payable and amortization of the debt discounts on the convertible notes payable.

 

The Company recorded a loss on the changes in fair value of derivative liabilities of $83,632 for the nine months ended May 31, 2018. As a result of conversions of convertible debt during the nine months ended May 31, 2018, the Company recorded a loss on extinguishment of debt of $168,431. Additionally, due to an event of default on one of its convertible notes payable, the Company recorded debt default penalty expense of $46,288 during the nine months ended May 31, 2018.

 

 
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Significant expense and loss items for the three months ended May 31, 2018 included payroll of $56,962, non-cash stock-based compensation expense of $29,000, interest expense of $54,390 and loss on extinguishment of debt of $78,340. These were offset by a gain on valuation of derivative liabilities of $43,537 during the three months ended May 31, 2018.

 

For the three and nine months ended May 31, 2018, we recognized a loss from discontinued operation of $147,992 and $364,802, respectively. The loss from discontinued operation was primarily derived from payroll costs, professional fees and a loss on the disposal of property and equipment.

 

Liquidity and Capital Resources

 

In May 2018, we ceased all operations of MPS South Africa. Though we formed MPS Bahamas on June 14, 2018 and B4dignity, Inc. on January 18, 2019, both companies are not currently operational and have engaged in no material business activities. As a result, the Company currently has no operations.

 

The Company needs to generate revenues or must raise additional capital, reduce expenses and curtail cash outflows in order to be able to accomplish its business plan. In the interim, the Company plans to defer certain payments. The Company’s $3,079,595 of total liabilities at May 31, 2019, includes $1,114,207 of notes payable to a related party, $1,089,950 of accrued payroll expenses due to current and former Company management, and $6,725 due to a former officer of the Company, all of which we believe, but cannot guarantee, we can delay payment on over the next twelve months.

 

To continue as a going concern and achieve a profitable level of operations, we will need, among other things, additional capital resources. Management’s plan to continue as a going concern includes raising investment capital through leveraging equity in the Company, generating revenue through operations and securing additional debt and/or equity financing. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans to raise additional investment capital or generate revenue through operations. Our ability to continue as a going concern is dependent upon management’s ability to successfully implement the plans described above. Management cannot provide any assurance that unforeseen circumstances that may occur at any time within the next twelve months, or thereafter, will not increase the need for us to raise additional capital on an immediate basis. There can be no assurance that we will be able to continue to raise funds in subsequent debt or equity financings, in which case the Company may be unable to meet its obligations.

 

Equity Offerings

 

On May 21, 2019, the Company amended its Articles of Incorporation in the State of Nevada to designate a series of preferred stock, the Series E Preferred Stock. The Company established 1,000,000 shares of the Series E Preferred Stock as available for issuance. The Series E Preferred Stock is not convertible into common stock, nor does the Series E Preferred Stock have any right to dividends and any liquidation preference. The Series E Preferred Stock entitles its holder to a number of votes per share equal to sixty-six and two thirds of the voting rights of the Company. On May 28, 2019, the Company issued 500,000 shares of its Series E Preferred Stock to its President, Matthew D. Alpeter, and 500,000 shares of its Series E Preferred Stock to its Chief Financial Officer, George C. Critz, III. The Company valued the Series E Preferred Stock issued to these officers at $135,300 based on a valuation performed by an independent valuation firm. The valuation was performed in accordance with the fair value standard set forth in ASC 820-10-35-37, Fair Value in Financial Instruments. The valuation used a market value approach to estimate the fair value of the Series E Preferred Stock which represent a permanent controlling voting interest in the Company. As such, the Company recorded stock-based compensation expense of $135,300 for the issuance of the Series E Preferred Stock.

 

 
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Convertible Notes

 

Since August 31, 2018, the Company has engaged in the following transactions:

 

 

·On September 27, 2018, the Company issued a convertible promissory note to Power Up Lending Group, LTD in the amount of $53,000, resulting in $50,000 in net proceeds to the Company after the payment of debt issuance costs totaling $3,000. The note matures on July 15, 2019. After 180 days from the date of the note agreement, the note is convertible at a conversion price of 58% of the average of the lowest three trading price during the 10 days prior to the conversion date.

 

 

 

 

·On November 6, 2018, the Company issued a convertible promissory note to Auctus Fund, LLC in the amount of $111,000, resulting in $97,250 of net proceeds to the Company after the payment of debt issuance costs totaling $12,750. The note matures on August 6, 2019 and bears interest at 12%. The note is convertible into shares of common stock at the lesser of market price at the date of the conversion or 55% of the lowest trading price during the 25-day period ending one trading day prior to the date of the conversion notice.

 

 

 

 

·On April 2, 2019, the Company issued a convertible promissory note to Power Up Lending Group, LTD in the amount of $25,000, resulting in $22,000 in net proceeds to the Company after the payment of debt issuance costs totaling $3,000. The note matures on December 2, 2019. After 180 days from the date of the note agreement, the note is convertible at a conversion price of 58% of the average of the lowest three trading price during the 10 days prior to the conversion date.

 

 

 

 

·On May 7, 2019, the Company issued a convertible promissory note to Power Up Lending Group, LTD in the amount of $78,000, resulting in $71,000 in net proceeds to the Company after the payment of debt issuance costs totaling $7,000. The note matures on March 15, 2020. After 180 days from the date of the note agreement, the note is convertible at a conversion price of 58% of the average of the lowest three trading price during the 10 days prior to the conversion date.

 

 

 

 

·During the nine months ended May 31, 2019, 21,217,000 shares of common stock were issued to EMA Financial, LLC for the conversion of $58,358 of principal on a convertible promissory note.

 

 

 

 

·During the nine months ended May 31, 2019, 26,281,973 shares of common stock were issued to Power Up Lending Group, LTD. for the conversion of $128,000 of principal, plus $7,680 of accrued interest, on a convertible promissory note.

 

 

 

 

·During the nine months ended May 31, 2019, 11,467,898 shares of common stock were issued to Power Up Lending Group, LTD. for the conversion of $53,000 of principal, plus $3,180 of accrued interest, on a convertible promissory note.

 

 

 

 

·During the nine months ended May 31, 2019, 9,086,100 shares of common stock were issued to Auctus Fund, LLC for the conversion of $14,782 of principal, plus $7,404 of accrued interest, on a convertible promissory note.

 

 

 

 

·On March 26, 2019, 632,000 shares of common stock were issued to Power Up Lending Group, LTD. for the conversion of $4,740 of principal on a convertible promissory note.

 

 

 

 

·On May 23, 2019, 3,107,983 shares of common stock were issued to Crown Bridge Partners, LLC for the cashless exercise of warrant shares.

 

 

 

 

·On June 6, 2019, 4,058,616 shares of common stock were issued to Crown Bridge Partners, LLC for the cashless exercise of warrant shares.

 

 

 

 

·Subsequent to May 31, 2019, 8,000,000 shares of common stock were issued to EMA Financial, LLC for the conversion of $6,140 of principal on a convertible promissory note.

 

 

 

 

·Subsequent to May 31, 2019, 4,131,294 shares of common stock were issued to Auctus Fund, LLC for the conversion of $1,930 of principal, plus $380 of accrued interest, on a convertible promissory note.

  

 
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Related Party Notes Payable

 

Since August 31, 2018, there have been no additional borrowings or repayments of notes payable to related party. Accrued interest on the notes totaled $43,968 and $2,300 at May 31, 2019 and August 31, 2018, respectively.

 

Cash

 

As of May 31, 2019, the Company had cash of $40,927, an increase of $39,108 during the nine months ended May 31, 2019. Our net cash used in operating activities of our continuing operation was only $185,413 for the nine months ended May 31, 2019. However, we do not currently have enough cash on hand to deploy our business plan in 2019. To achieve a profitable level of operations, we will need, among other things, additional capital resources. Management’s plan to continue as a going concern includes raising investment capital through leveraging equity in the Company, generating revenue through operations and by securing additional debt and/or equity financing. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans to raise additional investment capital or generate revenue through operations. Our ability to continue as a going concern is dependent upon management’s ability to successfully implement the plans described above. Management cannot provide any assurance that unforeseen circumstances that may occur at any time within the next twelve months, or thereafter, will not increase the need for us to raise additional capital on an immediate basis. There can be no assurance that we will be able to continue to raise funds in subsequent debt or equity financings, in which case the Company may be unable to meet its obligations.

 

Off-Balance Sheet Arrangements

 

We do not have any 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 is material to investors.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not required

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Based upon an evaluation of the effectiveness of disclosure controls and procedures, our principal executive and financial officer has concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were not effective. The Company’s principal executive and financial officer has determined that there are material weaknesses in our disclosure controls and procedures.

 

 
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The material weaknesses in our disclosure control procedures are as follows:

 

1)

lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures; and

2)

inadequate segregation of duties consistent with control objectives;

 

We recognize the importance of the control environment as it sets the overall tone for the organization and is the foundation for all other components of internal control.

 

As of July 19, 2019, while we have a third-party consultant to help us with our public reporting and disclosures we have not taken action to correct the material weaknesses identified above in our internal control over financial reporting. Once the Company has additional sales activities and has sufficient personnel available, then our Board of Directors, in connection with the aforementioned weaknesses, will implement the following remediation measures:

  

We will hire additional personnel with sufficient qualifications to allow us to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. We plan to use some of the funds through the private placement offering to allocate to this additional salary cost.

 

And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

 

If we are able to raise additional capital, we anticipate having sufficient funds to at least partially, if not fully, implement our plans by August 31, 2019. Additionally, we plan to test our updated controls and remediate our deficiencies by August 31, 2019.

 

 
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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

 

No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.

 

Based on a recent performance review by Poverty Dignified Inc.’s Board of Directors, the decision was made to withdraw all operations of its wholly owned subsidiary, My Power Solutions, Inc., in South Africa. As a result, My Power Solutions South African employees and consultants have filed a dispute with The Commission for Conciliation, Mediation and Arbitration (CCMA) in South Africa. As the Company winds down its local operations in South Africa, legal counsel has confirmed that the creditors of the Company will only have claims against the insolvent estate of the local external company and not against My Power Solutions, Inc. or Poverty Dignified Inc in the United States. It is therefore management’s position that there is no probable recourse that will have an adverse effect on Poverty Dignified, Inc.

 

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

 

During the nine months ended May 31, 2019, the Company issued 1,378,258 shares under restricted stock agreements for $-0- in proceeds. The Company record stock-based compensation expense of $201,718 related to these shares.

 

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 31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

 

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

 

Exhibit 32

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

101

Interactive data files pursuant to Rule 405 of Regulation S-T

  

 
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SIGNATURES

 

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

 

Poverty Dignified, Inc.
  
/s/ Matthew D. Alpeter 

Matthew D. Alpeter

Chief Executive Officer

(Principal Executive Officer)

 
  
/s/ George C. Critz, III 

George C. Critz, III

Chief Financial Officer

(Principal Financial Officer)

 

 

 

Dated: July 19, 2019

 

 

 

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