Stockholders' Deficiency

3 Months Ended

Oct. 31, 2018

Equity [Abstract]

Stockholders' Deficiency

Note 6 - Stockholders’ Deficiency:

Common Stock

All shares presented are adjusted according to the stock dividend recorded subsequent to the period end (Note 13).

On January 18, 2017, the Company issued 1,117,431 shares of common stock for the acquisition of 51% of HDS and is obligated to issue 4,830,000 shares of common stock upon the conclusion of the Company’s reverse stock split. On October 26, 2018, 4,830,000 shares were issued.

During January 2017, the Company issued 168,000 shares of common stock for the conversion of 120 shares of Series F convertible preferred stock, plus 88,935 shares for the related make-whole payments issued to convert the accumulated dividend payable.

During January 2017, the Company issued 210,000 shares of common stock for the conversion of 150 shares of Series G convertible preferred stock, plus 98,448 shares for the related make-whole payments issued to convert the accumulated dividend payable.

During February 2017, the Company issued 489,993 shares of common stock for the conversion of 350 shares of Series G convertible preferred stock, plus 222,726 shares for the related make-whole payments issued to convert the accumulated dividend payable.

On February 9, 2017, the Company offered all current warrant holders an option to exercise immediately all outstanding common stock purchase warrants on a cashless basis at a reduced exercise price of $0.35 per share from $0.71 per share. The Company agreed to issue a total of 2,179,989 shares of common stock in connection with the exercise of 6,607,629 warrants in connection with the following outstanding warrants:

	Warrants Exercised		Shares Agreed to be Issued
Series C 9% Convertible Preferred Stock		210,000		69,279
Series D 9% Convertible Preferred Stock		349,629		115,332
Series E 9% Convertible Preferred Stock		2,513,007		829,101
Series F 9% Convertible Preferred Stock		2,904,993		958,419
Series G 9% Convertible Preferred Stock		630,000		207,858
		6,607,629		2,179,989

On October 22, 2018, 1,166,928 common stock payable was issued. As at October 31, 2018, 357,966 shares remain to be issued resulting in common stock payable $251,617.

Series H and Series I Convertible Preferred Stock 

The Company has authorized 109,000 shares of designated non-voting Series H Convertible Preferred Stock with a stated value of $1000 per share and authorized 6,000 shares of designated non-voting Series I Convertible Preferred Stock with a stated value of $47.61 per share pursuant to the Purchase Agreement dated March 27, 2017. The Series H Preferred Stock was scheduled to be sold in four tranches to the Purchaser. Under the Securities Purchase Agreement, in the event the Purchaser failed to purchase 100% of the shares of Preferred Stock at any given Closing, the Company can decline to sell any further securities to the Purchaser (the “Purchase Agreement”).

The Series H and Series I Convertible Preferred Stock are convertible at the option of the holder at any time into shares of the Company’s common stock at an effective conversion price of $.12 per share. An aggregate of 966,000,000 shares of the Company’s common stock would be issuable upon conversion of both the Series H and Series I Preferred Stock if all shares of such preferred stock contemplated by the securities purchase agreement are issued.

Neither Series H nor Series I Convertible Preferred Stock have special dividend rights. If the Company pays dividends on its common stock, the holders of the preferred stock will receive dividends in the amount they would have received had they converted the preferred stock to common stock.

At closing of the first tranche on March 28, 2017, the Company issued 63,000 shares of Series H Preferred Stock for a purchase price of $3,000,000. The proceeds of this sale were paid directly on the Company’s behalf to Emmaus as an additional deposit under the Company’s Emmaus LOI. The full amount of such proceeds was repaid to the Company in July 2017 upon termination of the Emmaus LOI. As of October 31, 2018, an aggregate of 25,200,000 shares of the Company’s common stock are issuable upon conversion of the Series H Preferred Stock sold.

On April 17, 2017, the Purchaser failed to close the sale of Series I Preferred Stock despite the Company being ready, willing and able to proceed and the Company terminated the Purchaser’s rights on April 23, 2017. Under the Securities Purchase Agreement, in the event the Purchaser fails to purchase 100% of the shares of Preferred Stock, the Company can decline to sell any further securities to the Purchaser. On April 23, 2017 the Company notified the Purchaser in writing that its rights to purchase additional shares were forfeit.

Conversion of Debt to Officers into Series I Preferred Stock

On April 27, 2017, the Company converted the “Moscato – Salvo Advances” (Note 3) after applying a 20% original issue discount, the same as the original issue discount negotiated at arm’s length with Alpha on March 6, 2017. Moscato converted $390,984 (including $65,164 original issue discount) into 8,211 shares of Series I Convertible Preferred Stock. Salvo converted $399,363 (including $66,560 original issue discount) into 8,379 shares of Series I Convertible Preferred Stock.

Noncontrolling Interest

During the three months ended in October 31, 2018, there was a net loss attributable to the non-controlling interest (49%) in HDS of $88,256 and contributions made of $91,027. As of October 31, 2018, and July 31, 2018, the non-controlling interest in HDS was $5,573,501 and $5,576,272, respectively.