Attached files
file | filename |
---|---|
8-K - Tirex CORP | eps6554.htm |
EX-99.2 - Tirex CORP | ex99-2.htm |
EX-99 - Tirex CORP | ex99-5.htm |
EX-99.1 - Tirex CORP | ex99-1.htm |
EX-99.3 - Tirex CORP | ex99-3.htm |
EX-99.7 - Tirex CORP | ex99-7.htm |
EX-99.4 - Tirex CORP | ex99-4.htm |
Exhibit 99.6
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
1
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED BALANCE SHEET
JUNE 30, 2015
June 30, | June 30, | |||||||
2015 | 2014 | |||||||
ASSETS | ||||||||
Other assets | ||||||||
Patents | $ | 1 | $ | 1 | ||||
Total Other Assets | 1 | 1 | ||||||
Total Assets | $ | 1 | $ | 1 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilties | $ | 2,339,973 | $ | 2,253,238 | ||||
Accrued liabilties - related parties | 525,605 | 525,605 | ||||||
Convertible notes - non-related parties | 429,086 | 384,546 | ||||||
Derivative liability | — | — | ||||||
Total Current Liabilities | 3,294,664 | 3,163,389 | ||||||
Total Liabilities | 3,294,664 | 3,163,389 | ||||||
Stockholders' Equity (Deficit) | ||||||||
Preferred stock, $.005 par value, authorized | ||||||||
25,000,000 Series A shares, issued and outstanding | ||||||||
25,000,000 Series A shares (June 30, 2014 - 25,000,000 shares) | 125,000 | 125,000 | ||||||
Common stock, $.001 par value, authorized | ||||||||
3,000,000,000 shares, issued and outstanding | ||||||||
2,885,755,714 shares (June 30, 2014 - 2,885,755,714 shares) | 2,885,756 | 2,885,756 | ||||||
Common stock payable | 29,691 | 29,691 | ||||||
Additional paid-in capital | 28,082,681 | 28,082,681 | ||||||
Deficit accumulated prior to entering development stage | (1,057,356 | ) | (1,057,356 | ) | ||||
Deficit accumulated during the development stage | (32,844,054 | ) | (32,712,779 | ) | ||||
Unrealized loss on foreign exchange | (516,381 | ) | (516,381 | ) | ||||
(3,294,663 | ) | (3,163,388 | ) | |||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 1 | $ | 1 |
2
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Twelve months ended | Cumulative from | |||||||||||
June 30 | March 26, 1993 to | |||||||||||
2015 | 2014 | June 30, 2015 | ||||||||||
Revenues | $ | — | $ | — | $ | 1,354,088 | ||||||
Cost of Sales | — | — | 1,031,075 | |||||||||
Gross profit | — | — | 323,013 | |||||||||
Operations | ||||||||||||
General and administrative | 44,540 | 65,020 | 17,862,858 | |||||||||
Depreciation and amortization | — | — | 340,545 | |||||||||
Research and development | — | — | 15,396,966 | |||||||||
Total Expense | 44,540 | 65,020 | 33,600,369 | |||||||||
Income (loss) before other expenses | (44,540 | ) | (65,020 | ) | (33,277,356 | ) | ||||||
Other expenses (income) | ||||||||||||
Interest expense | 86,735 | 86,735 | 1,597,308 | |||||||||
Accretion expense | — | — | 750,000 | |||||||||
Interest income | — | — | (45,443 | ) | ||||||||
Income from stock options | — | — | (10,855 | ) | ||||||||
Impairment of fixed assets | — | — | 50,000 | |||||||||
Loss (gain) on change in derivative liability | — | (2,604,547 | ) | (750,000 | ) | |||||||
Loss (gain) on settlement of debt | — | (399,389 | ) | (2,134,998 | ) | |||||||
Loss on disposal of equipment | — | — | 4,549 | |||||||||
Total Other expenses (income) | 86,735 | (2,917,201 | ) | (539,439 | ) | |||||||
Provision for income taxes | — | — | — | |||||||||
Net income (loss) | (131,275 | ) | 2,852,181 | (32,737,917 | ) | |||||||
Other comprehensive loss | ||||||||||||
Loss (gain) on foreign exchange | — | — | 106,137 | |||||||||
Net income (loss) and comprehensive income (loss) | $ | (131,275 | ) | $ | 2,852,181 | $ | (32,844,054 | ) | ||||
Basic net income (loss) and comprehensive | ||||||||||||
income (loss) per share - basic | $ | (0.00 | ) | $ | 0.00 | |||||||
Basic net income (loss) and comprehensive | ||||||||||||
income (loss) per share - diluted | $ | (0.00 | ) | $ | 0.00 | |||||||
Weighted average number of shares - basic | 2,885,755,714 | 2,885,755,714 | ||||||||||
Weighted average number of shares - diluted | 2,885,755,714 | 2,885,755,714 |
3
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||
Accumulated | Accumulated | Unrealized | Total | |||||||||||||||||||||||||||||||||||||
Common | Additional | Prior to Entering | During | gain (loss) | Stockholders' | |||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | Stock | Paid-in | Developmental | Developmental | on foreign | Equity | |||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Payable | Capital | Stage | Stage | exchange | (Deficit) | |||||||||||||||||||||||||||||||
Balance June 30, 1992 | 3,383,050 | 3,383 | — | — | — | 194,980 | (1,057,356 | ) | — | $ | — | (858,993 | ) | |||||||||||||||||||||||||||
Stock issued for reorganization | 18,650,000 | 18,650 | 76,155 | 94,805 | ||||||||||||||||||||||||||||||||||||
Stock issued for services | 100,000 | 100 | (100 | ) | ||||||||||||||||||||||||||||||||||||
Stock issued in exchange for Warrants | 363,656 | 364 | (364 | ) | ||||||||||||||||||||||||||||||||||||
Forgiveness of debt | 728,023 | 728,023 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (165,296 | ) | (165,296 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1993 | 22,496,706 | 22,497 | — | — | — | 998,694 | (1,057,356 | ) | (165,296 | ) | — | (201,461 | ) | |||||||||||||||||||||||||||
Stock issued | 2,000 | 2 | (2 | ) | — | |||||||||||||||||||||||||||||||||||
Stock issued for services | — | |||||||||||||||||||||||||||||||||||||||
Exchange for Debt | 149,170 | 149,170 | ||||||||||||||||||||||||||||||||||||||
Payments received for stock previously issued | 237,430 | 237,430 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (179,296 | ) | (179,296 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1994 | 22,498,706 | 22,499 | — | — | — | 1,385,292 | (1,057,356 | ) | (344,592 | ) | — | 5,843 | ||||||||||||||||||||||||||||
Revision of common stock | (11,900,000 | ) | (11,900 | ) | 11,900 | — | ||||||||||||||||||||||||||||||||||
Stock issued for services | 5,592,857 | 5,592 | 513,908 | 519,500 | ||||||||||||||||||||||||||||||||||||
Exchange for Debt | 200,000 | 200 | 24,300 | 24,500 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock previously issued | 402,857 | 401 | 21,915 | 22,316 | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (575,771 | ) | (575,771 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1995 | 16,794,420 | 16,792 | — | — | — | 1,957,315 | (1,057,356 | ) | (920,363 | ) | — | (3,612 | ) | |||||||||||||||||||||||||||
Stock issued | 3,975,662 | 5,090 | 846,612 | 851,702 | ||||||||||||||||||||||||||||||||||||
Exchange for Debt | 391,857 | 392 | 29,008 | 29,400 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 710,833 | 710 | 80,161 | 80,871 | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (1,127,044 | ) | (1,127,044 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1996 | 21,872,772 | 22,984 | — | — | — | 2,913,096 | (1,057,356 | ) | (2,047,407 | ) | — | (168,683 | ) | |||||||||||||||||||||||||||
Stock issued for options | 912,838 | 912,838 | ||||||||||||||||||||||||||||||||||||||
Stock issued for services | 5,067,912 | 3,955 | 690,234 | 694,189 | ||||||||||||||||||||||||||||||||||||
Stock in Exchange for Debt | 251,382 | 252 | 43,965 | 44,217 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 10,257,936 | 10,259 | 335,132 | 345,391 | ||||||||||||||||||||||||||||||||||||
Grants received | 408,597 | 408,597 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (2,376,279 | ) | (2,376,279 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1997 | 37,450,002 | 37,450 | — | — | — | 5,303,862 | (1,057,356 | ) | (4,423,686 | ) | — | (139,730 | ) | |||||||||||||||||||||||||||
Stock issued for options | 948,500 | 948,500 | ||||||||||||||||||||||||||||||||||||||
Stock issued for services | 4,396,466 | 4,396 | 922,180 | 926,576 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 21,795,000 | 21,796 | 1,176,755 | 1,198,551 | ||||||||||||||||||||||||||||||||||||
Stock options issued and outstanding | 1,236,913 | 1,236,913 | ||||||||||||||||||||||||||||||||||||||
Grants received | 669,906 | 669,906 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | 183,785 | 183,785 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (4,570,441 | ) | (4,570,441 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1998 | 63,641,468 | 63,642 | — | — | — | 10,258,116 | (1,057,356 | ) | (8,994,127 | ) | 183,785 | 454,060 | ||||||||||||||||||||||||||||
Stock issued for options | 2,234,567 | 2,235 | 38,765 | 41,000 | ||||||||||||||||||||||||||||||||||||
Stock issued for services | 24,200,439 | 24,200 | 2,735,544 | 2,759,744 | ||||||||||||||||||||||||||||||||||||
Shares issued in exchange for debt | 3,787,947 | 3,788 | 340,164 | 343,952 | ||||||||||||||||||||||||||||||||||||
Conversion of debentures | 2,816,966 | 2,817 | 290,102 | 292,919 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 677,966 | 678 | 49,322 | 50,000 | ||||||||||||||||||||||||||||||||||||
Stock options issued and outstanding | 385,600 | 385,600 | ||||||||||||||||||||||||||||||||||||||
Grants received | 1,057,742 | 1,057,742 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (29,142 | ) | (29,142 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (4,909,879 | ) | (4,909,879 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 1999 | 97,359,353 | 97,360 | — | — | — | 15,155,355 | (1,057,356 | ) | (13,904,006 | ) | 154,643 | 445,996 | ||||||||||||||||||||||||||||
Stock issued for options | 5,327,486 | 5,327 | 381,600 | 386,927 | ||||||||||||||||||||||||||||||||||||
Stock issued for services | 28,873,210 | 28,873 | 2,217,758 | 2,246,631 | ||||||||||||||||||||||||||||||||||||
Shares issued in exchange for debt | 7,342,055 | 7,342 | 382,556 | 389,898 | ||||||||||||||||||||||||||||||||||||
Conversion of debentures | 12,010,073 | 12,010 | 815,796 | 827,806 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 221,000 | 221 | 16,039 | 16,260 | ||||||||||||||||||||||||||||||||||||
Grants received | 395,683 | 395,683 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | 5,789 | 5,789 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (5,548,829 | ) | (5,548,829 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2000 | 151,133,177 | 151,133 | — | — | — | 19,364,787 | (1,057,356 | ) | (19,452,835 | ) | 160,432 | (833,839 | ) | |||||||||||||||||||||||||||
Stock issued for services | 7,375,483 | 7,375 | 864,840 | 872,215 | ||||||||||||||||||||||||||||||||||||
Stock issued for options | 5,378,507 | 5,379 | 506,998 | 512,377 | ||||||||||||||||||||||||||||||||||||
Shares issued in exchange for debt | 11,646,312 | 11,646 | 1,547,455 | 1,559,101 | ||||||||||||||||||||||||||||||||||||
Conversion of debentures | 100,000 | 100 | 19,900 | 20,000 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 732,929 | 733 | 39,427 | 40,160 | ||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (340,661 | ) | (340,661 | ) | ||||||||||||||||||||||||||||||||||||
Grants issued | 249,294 | 249,294 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (3,242,572 | ) | (3,242,572 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2001 (Restated) | 176,366,408 | 176,366 | — | — | — | 22,592,701 | (1,057,356 | ) | (22,695,407 | ) | (180,229 | ) | (1,163,925 | ) | ||||||||||||||||||||||||||
Stock issued for services | 18,466,162 | 18,466 | 314,859 | 333,325 | ||||||||||||||||||||||||||||||||||||
Shares issued in exchange for debt | 24,075,502 | 24,076 | 1,649,442 | 1,673,518 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 5,849,487 | 5,850 | 61,897 | 67,747 | ||||||||||||||||||||||||||||||||||||
Interest expense on convertible note discount | 3,403 | 3,403 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (19,940 | ) | (19,940 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (4,089,933 | ) | (4,089,933 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2002 (Restated) | 224,757,559 | 224,758 | — | — | — | 24,622,302 | (1,057,356 | ) | (26,785,340 | ) | (200,169 | ) | (3,195,805 | ) | ||||||||||||||||||||||||||
Stock issued for services | 5,455,000 | 5,455 | 130,920 | 136,375 | ||||||||||||||||||||||||||||||||||||
Shares issued in exchange for debt | 15,400,000 | 15,400 | 441,183 | 456,583 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock | 4,283,333 | 4,283 | 31,217 | 35,500 | ||||||||||||||||||||||||||||||||||||
Interest expense on convertible note discount | 999 | 999 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (182,365 | ) | (182,365 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (2,417,261 | ) | (2,417,261 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2003 (Restated) | 249,895,892 | 249,896 | — | — | — | 25,226,621 | (1,057,356 | ) | (29,202,601 | ) | (382,534 | ) | (5,165,974 | ) | ||||||||||||||||||||||||||
Interest expense on convertible note discount | 1,000 | 1,000 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (30,325 | ) | (30,325 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (427,966 | ) | (427,966 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2004 (Restated) | 249,895,892 | 249,896 | — | — | — | 25,227,621 | (1,057,356 | ) | (29,630,567 | ) | (412,859 | ) | (5,623,265 | ) | ||||||||||||||||||||||||||
Unrealized foreign exchange | (63,448 | ) | (63,448 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (7,717,592 | ) | (7,717,592 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2005 (Restated) | 249,895,892 | 249,896 | — | — | — | 25,227,621 | (1,057,356 | ) | (37,348,159 | ) | (476,307 | ) | (13,404,305 | ) | ||||||||||||||||||||||||||
Unrealized foreign exchange | (78,596 | ) | (78,596 | ) | ||||||||||||||||||||||||||||||||||||
Net income and comprehensive income | 2,624,041 | 2,624,041 | ||||||||||||||||||||||||||||||||||||||
Balance June 30, 2006 (Restated) | 249,895,892 | 249,896 | — | — | — | 25,227,621 | (1,057,356 | ) | (34,724,118 | ) | (554,903 | ) | (10,858,860 | ) | ||||||||||||||||||||||||||
Unrealized foreign exchange | (44,174 | ) | (44,174 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (115,963 | ) | (115,963 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2007 (Restated) | 249,895,892 | 249,896 | — | — | — | 25,227,621 | (1,057,356 | ) | (34,840,081 | ) | (599,077 | ) | (11,018,997 | ) | ||||||||||||||||||||||||||
Common stock issued for settlement | 20,000,000 | 20,000 | 124,000 | 144,000 | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | 22,100,000 | 22,100 | 130,500 | 152,600 | ||||||||||||||||||||||||||||||||||||
Preferred stock issued | 3,000,000 | 15,000 | 271,000 | 286,000 | ||||||||||||||||||||||||||||||||||||
Stock options granted | 24,000 | 24,000 | ||||||||||||||||||||||||||||||||||||||
Imputed interest | 28,344 | 28,344 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (5,895 | ) | (5,895 | ) | ||||||||||||||||||||||||||||||||||||
Net income and comprehensive income | 2,882,338 | 2,882,338 | ||||||||||||||||||||||||||||||||||||||
Balance June 30, 2008 (Restated) | 291,995,892 | 291,996 | 3,000,000 | 15,000 | — | 25,805,465 | (1,057,356 | ) | (31,957,743 | ) | (604,972 | ) | (7,507,610 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | 191,750,000 | 191,750 | 96,340 | 288,090 | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | 64,900,000 | 64,900 | 83,589 | 148,489 | ||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | 50,140,000 | 50,140 | 171,310 | 221,450 | ||||||||||||||||||||||||||||||||||||
Common stock issued to related parties | 513,206,324 | 513,206 | 43,500 | 503,089 | 1,059,795 | |||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | 7,500,000 | 7,500 | (7,500 | ) | — | |||||||||||||||||||||||||||||||||||
Preferred stock issued | 12,000,000 | 60,000 | 115,000 | 175,000 | ||||||||||||||||||||||||||||||||||||
Stock options granted | 30,000 | 30,000 | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | 145,332 | 145,332 | ||||||||||||||||||||||||||||||||||||||
Net income and comprehensive income | 458,013 | 458,013 | ||||||||||||||||||||||||||||||||||||||
Balance June 30, 2009 | 1,119,492,216 | 1,119,492 | 15,000,000 | 75,000 | 43,500 | 26,797,293 | (1,057,356 | ) | (31,499,730 | ) | (459,640 | ) | (4,981,441 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | 95,000,000 | 95,000 | 134,098 | 229,098 | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | 93,500,000 | 193,500 | 311,950 | 505,450 | ||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | 76,291,429 | 76,292 | (192 | ) | 76,100 | |||||||||||||||||||||||||||||||||||
Common stock issued to related parties | 489,716,111 | 389,716 | (13,809 | ) | 536,950 | 912,857 | ||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | 3,000,000 | 3,000 | (3,000 | ) | — | |||||||||||||||||||||||||||||||||||
Preferred stock issued | — | |||||||||||||||||||||||||||||||||||||||
Stock options granted | 7,200 | 7,200 | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (87,519 | ) | (87,519 | ) | ||||||||||||||||||||||||||||||||||||
Net income and comprehensive income | (1,353,596 | ) | (1,353,596 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2010 | 1,876,999,756 | 1,877,000 | 15,000,000 | 75,000 | 29,691 | 27,784,299 | (1,057,356 | ) | (32,853,326 | ) | (547,159 | ) | (4,691,851 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | 424,833,575 | 424,833 | (170,258 | ) | 254,575 | |||||||||||||||||||||||||||||||||||
Common stock issued for services | 50,000,000 | 50,000 | (30,000 | ) | 20,000 | |||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | 106,666,669 | 106,667 | (54,033 | ) | 52,634 | |||||||||||||||||||||||||||||||||||
Common stock issued to related parties | 35,000,000 | 35,000 | (20,500 | ) | 14,500 | |||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Preferred stock issued | 10,000,000 | 50,000 | 102,000 | 152,000 | ||||||||||||||||||||||||||||||||||||
Stock options granted | 2,374 | 2,374 | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | (77,013 | ) | (77,013 | ) | ||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (775,087 | ) | (775,087 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2011 | 2,493,500,000 | 2,493,500 | 25,000,000 | 125,000 | 29,691 | 27,613,882 | (1,057,356 | ) | (33,628,413 | ) | (624,172 | ) | (5,047,868 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | 101,000,000 | 101,000 | 303,600 | 404,600 | ||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | 211,255,714 | 211,256 | 126,754 | 338,010 | ||||||||||||||||||||||||||||||||||||
Common stock issued to related parties | 15,000,000 | 15,000 | 9,000 | 24,000 | ||||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Preferred stock issued | — | — | 2,374 | 2,374 | ||||||||||||||||||||||||||||||||||||
Stock options granted | 32,693 | 32,693 | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | 66,302 | 66,302 | ||||||||||||||||||||||||||||||||||||||
Net income and comprehensive income | (409,071 | ) | (409,071 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2012 | 2,820,755,714 | 2,820,756 | 25,000,000 | 125,000 | 29,691 | 28,088,303 | (1,057,356 | ) | (34,037,484 | ) | (557,870 | ) | (4,588,961 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | 25,000,000 | 25,000 | — | 25,000 | ||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | — | — | — | (0 | ) | |||||||||||||||||||||||||||||||||||
Common stock issued to related parties | 40,000,000 | 40,000 | (8,000 | ) | 32,000 | |||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Preferred stock issued | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock options granted | 2,378 | 2,378 | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | 41,489 | 41,489 | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (1,527,476 | ) | (1,527,476 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2013 | 2,885,755,714 | 2,885,756 | 25,000,000 | 125,000 | 29,691 | 28,082,681 | (1,057,356 | ) | (35,564,960 | ) | (516,381 | ) | (6,015,569 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued to related parties | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Preferred stock issued | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock options granted | — | — | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | — | — | ||||||||||||||||||||||||||||||||||||||
Net income and comprehensive income | 2,852,181 | 2,852,181 | ||||||||||||||||||||||||||||||||||||||
Balance June 30, 2014 | 2,885,755,714 | 2,885,756 | 25,000,000 | 125,000 | 29,691 | 28,082,681 | (1,057,356 | ) | (32,712,779 | ) | (516,381 | ) | (3,163,388 | ) | ||||||||||||||||||||||||||
Common stock issued for liability settlements | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued for services | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock issued to related parties | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock options exercised on a cashless basis | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Preferred stock issued | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock options granted | — | — | ||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | — | |||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss and comprehensive loss | (131,275 | ) | (131,275 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2015 | 2,885,755,714 | 2,885,756 | 25,000,000 | 125,000 | 29,691 | 28,082,681 | (1,057,356 | ) | (32,844,054 | ) | (516,381 | ) | (3,294,663 | ) |
See Notes to Consolidated Financial Statements
4
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve months ended | Cumulative from | |||||||||||
June 30 | March 26, 1993 to | |||||||||||
2015 | 2014 | June 30, 2015 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | (131,275 | ) | $ | 2,852,181 | $ | (32,844,054 | ) | ||||
Adjustments to reconcile net income to net cash | ||||||||||||
used in operating activities: | ||||||||||||
Depreciation and amortization | — | — | 340,545 | |||||||||
Imputed interest | — | — | 28,344 | |||||||||
Accretion expense | — | — | 750,000 | |||||||||
Impairment of fixed assets | — | — | 50,000 | |||||||||
(Gain) loss on disposal and abandonment of assets | — | — | 2,005,498 | |||||||||
(Gain) loss on settlement of debt | — | (399,389 | ) | (2,134,998 | ) | |||||||
Loss on issuance of preferred stock | — | — | 386,000 | |||||||||
Common stock issued in exchange for services and expenses | — | — | 11,895,699 | |||||||||
Stock options issued in exchange for services | — | — | 3,184,409 | |||||||||
Change in derivative liability | — | (2,604,547 | ) | (750,000 | ) | |||||||
— | ||||||||||||
Changes in assets and liabilities: | — | |||||||||||
(Increase) decrease in: | — | |||||||||||
Inventory | — | — | (73,323 | ) | ||||||||
Sales tax receivable | — | — | (36 | ) | ||||||||
Other assets | — | — | (10,120 | ) | ||||||||
(Decrease) increase in : | — | |||||||||||
Accounts payable and accrued liabilities | 86,735 | 86,735 | 4,301,764 | |||||||||
Accrued liabilities - related parties | — | — | 2,751,580 | |||||||||
Net cash used in operating activities | (44,540 | ) | (65,020 | ) | (10,118,692 | ) | ||||||
Cash flow from investing activities: | ||||||||||||
Increase in notes receivable | — | — | (259,358 | ) | ||||||||
Reduction in notes receivable | — | — | 237,652 | |||||||||
Investment | — | — | (89,500 | ) | ||||||||
Equipment | — | — | (321,567 | ) | ||||||||
Equipment assembly costs | — | — | (1,999,801 | ) | ||||||||
Organization cost | — | — | 6,700 | |||||||||
Reduction in security deposit | — | — | (1,542 | ) | ||||||||
Net cash used in investing activities | — | — | (2,427,416 | ) | ||||||||
Cash flow from financing activities: | ||||||||||||
Loans from related parties | 4,354,835 | |||||||||||
Deferred financing costs | — | — | 180,557 | |||||||||
Due to stockholders | — | — | 5,000 | |||||||||
Proceeds from deposits | — | — | 143,500 | |||||||||
Payments on notes payable | — | — | (409,939 | ) | ||||||||
Proceeds from convertible notes | — | — | 754,999 | |||||||||
Proceeds from notes payable | — | — | 409,939 | |||||||||
Payments on lease obligations | — | — | (86,380 | ) | ||||||||
Proceeds from issuance of convertible subordinated debentures | — | — | 1,035,000 | |||||||||
Proceeds from private investors | 44,540 | 65,020 | 581,765 | |||||||||
Proceeds from loan payable | — | — | 591,619 | |||||||||
Payments on loan payable | — | — | (488,439 | ) | ||||||||
Proceeds from issuance of stock options | — | — | 20,000 | |||||||||
Proceeds from grants | — | — | 3,628,277 | |||||||||
Proceeds from issuance of common stock | — | — | 85,582 | |||||||||
Proceeds from additional paid-in capital | — | — | 2,145,775 | |||||||||
Net cash provided by financing activities | 44,540 | 65,020 | 12,952,090 | |||||||||
Effect of Exchange rate changes on cash and cash equivalents | — | — | (406,239 | ) | ||||||||
Net (decrease) increase in cash and cash equivalents | — | — | 405,982 | |||||||||
Cash and cash equivalents - beginning of period | — | — | 257 | |||||||||
Cash and cash equivalents - end of period | $ | — | $ | — | $ | — |
Twelve months ended | ||||||||
June 30 | ||||||||
2015 | 2014 | |||||||
Non-Cash Financing and Investing Activities: | ||||||||
Issuance of common stock for exercise of stock options | — | — | ||||||
Issuance of common stock for the settlement of accounts | ||||||||
payable and accrued liabilities | — | — | ||||||
Issuance of common stock for the settlement of accrued | ||||||||
liabilities - related parties | — | — | ||||||
Common stock to be issued to related parties for | ||||||||
accrued expenses | 29,691 | 29,691 | ||||||
Issuance of common stock for the settlement of convertible | ||||||||
notes - related parties | — | — | ||||||
Issuance of common stock for the settlement of convertible | ||||||||
notes - non-related parties | — | — | ||||||
Supplemental Disclosures - Cash paid for: | ||||||||
Interest | — | — | ||||||
Income taxes | — | — |
5
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
NOTE 1 BACKGROUND
NATURE OF BUSINESS
The Incorporation began August 19, 1987 as Concord Industries, Inc. It was originally organized to provide comprehensive health care services, but due to its inability to raise sufficient capital, was unable to implement its business plan. Then it merged with Stopwatch, Inc. in 1989.
REORGANIZATION
On March 26, 1993, it entered into an acquisition agreement (the "Acquisition Agreement") and became Tirex America, Inc. (the Company) with Louis V. Muro as its principle, currently an officer and a director of the Company, and former Officers and Directors (collectively the "Seller"), for the purchase of a certain technology owned and developed by the Seller (the "Technology") to be used to design, develop and construct a prototype machine and thereafter a production quality machine for the cryogenic disintegration of used tires. The Technology was conceptually developed by the Seller prior to their affiliation or association with the Company. On March 26, 1993, the Company entered the development stage.
CHANGE OF NAME
On July 11, 1997, the Company changed its name from Tirex America, Inc. to The Tirex Corporation.
DEVELOPMENT STAGE
At June 30, 2015, the Company is still in the development stage. The operations consist mainly of raising capital, obtaining financing, developing equipment, obtaining customers and supplies, installing and testing equipment and administrative activities.
NOTE 2 GOING CONCERN
The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
In March 1993, the Company had begun its developmental stage with a new business plan. As of March 2000, the Company had developed a production quality prototype of its patented system for the disintegration of scrap tires, but nonetheless continued its research and development efforts to improve the machine's performance and to permit greater flexibility in design for specific customer applications. Due to the Company’s lack of working capital during the year ended June 30, 2002, all rubber crumb production was suspended and research and development efforts have been hampered. Pending receipt of funding from operations, government assistance, loans or equity financing, crumb rubber production and previous research and development efforts will not be resumed. While the Company has engaged the process of marketing the TCS System to numerous potential clients since the beginning of the fiscal year commencing July 1, 2000, as of June 30, 2015, the Company had not yet consummated an unconditional purchase order for a TCS System. As a result, the Company expects to continue to incur operating losses and may not have enough capital to grow its business in the future or continue as a going concern. The Company can give no assurance that it will achieve profitability or be capable of sustaining profitable operations. As a result, operations in the near future are expected to continue to use working capital. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result if the Company is unable to continue as a going concern.
6
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
To successfully grow the business, the Company must decrease its cash outflows, improve its cash position and succeed in its ability to raise additional capital through a combination of primarily public or private equity offerings or strategic alliances. The Company is also dependent on the success of its marketing of its TCS Systems. The Company's uncertainty as to its ability to generate revenue and its ability to raise sufficient capital, raise substantial doubt about the entity's ability to continue as a going concern.
The Company is currently in the process of trying to obtain additional financing for its current operations and consummate an initial sale of its TCS Systems.
As reported in the accompanying financial statements, the Company incurred a net loss of $131,275 for the year ended June 30, 2015 and a net gain of $2,852,181 for the year ended June 30, 2014.
NOTE 3 SUMMARY OF ACCOUNTING POLICIES
This summary of significant accounting policies is provided to assist the reader in understanding the Company’s financial statements. The financial statements and notes thereto are the representations of the Company’s management. The Company’s management is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
BASIS OF PRESENTATION
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. Dollars. The Company’s fiscal year-end is June 30.
BASIS OF CONSOLIDATION
The consolidated financial statements include the consolidated accounts of The Tirex Corporation, Tirex Canada R&D Inc., The Tirex Corporation Canada Inc., Tirex Advanced Products Quebec Inc. and Tirex Acquisition Corp., all of these subsidiaries currently being dormant. Certain of these companies have actually been de-registered by government authorities but could easily be revived if circumstances would warrant such action. Tirex Canada R&D Inc. is held 51% by two shareholders of the Company. The shares owned by these shareholders are held in escrow by the Company's attorney and are restricted from transfer thereby, substantively for recording purposes, allowing for a full consolidation of this Company. The Tirex Corporation Canada Inc., Tirex Advanced Products Quebec Inc. and Tirex Acquisition Corp. are 100% held by the Company. All subsidiary companies are dormant. All material inter-company transactions and accounts have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments, with a maturity of three months or less, to be cash equivalents. There were no cash equivalents as of June 30, 2015 and 2014.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and provisions for write-downs. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets which is generally five years for machinery and equipment.
7
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Maintenance and repair costs are expensed as incurred while additions and betterments are capitalized. The cost and related accumulated depreciation of assets sold or retired are eliminated from the accounts and any gains or losses are reflected in earnings.
The Company has taken depreciation and impairment charges over the years on its machinery and equipment bringing its carrying value to $0.
INTANGIBLE ASSETS
Intangible assets are carried at the purchased cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.
ESTIMATES
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding and, when dilutive, potential shares from stock options, stock warrants to purchase common stock using the treasury method and conversions of outstanding debt using the “if converted” method. A net loss was reported in 2015, and accordingly, in that year, the denominator for the Basic EPS calculation was equal to the weighted average of outstanding shares with no consideration for outstanding stock options, share awards and warrants to purchase shares of the Company's common stock because to do so would have been anti-dilutive. A net gain was reported in 2014 but Diluted EPS was not materially different from Basic EPS.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company accounts for its financial instruments in accordance with ASC Topic 825, which requires the disclosure of fair value information about financial instruments when it is practicable to estimate that value. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, inventory, accounts payable, accrued liabilities and convertible notes. The estimated fair value of cash, cash equivalents, accounts receivable, accounts payable and accrued liabilities and other short-term liabilities approximate their carrying amounts due to the short-term nature of these instruments. The fair value of related party transactions is not determinable due to their related party nature. The carrying value of the convertible notes also approximates fair value since their terms are similar to those in the lending market for comparable loans with comparable risks. None of these instruments are held for trading purposes.
FAIR VALUE MEASUREMENTS
In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data (observable inputs) obtained from sources independent of the reporting entity, and a reporting entity’s own assumptions (unobservable inputs) about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.
8
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the Company’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.
The levels of fair value hierarchy are as follows:
· | Level one – Quoted market prices in active markets for identical assets or liabilities; |
· | Level two – Inputs other than level one inputs that are either directly or indirectly observable; and |
· | Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Level 1 investments are valued based on quoted market prices in active markets. Level 2 investments are valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.
A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company evaluates its hierarchy disclosures each quarter.
The Company utilizes various types of financing to fund its business needs including convertible notes with warrants attached. The Company reviews its warrants and conversion features of securities issued as to whether they are freestanding or contain an embedded derivative, and if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized in current earnings. At June 30, 2015 and 2014, the Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with the units consisting of convertible notes. The Company classifies the fair value of these warrants under level three. The fair value of the derivative liability as of June 30, 2015 was $0 (June 30, 2014 - $0) and the gain(loss) due to valuation for the twelve months ended June 30, 2015 was $0 and the gain due to valuation for the twelve months ended June 30, 2014 was $2,604,547.The gain during the year ended June 30, 2014 resulted as the Company wrote-off the units consisting of the convertible notes in the statement of operations as the Company recognized that they had expired as a legal liability.
INCOME TAXES
The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the estimated 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 carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year 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 as part of the provision for income taxes in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized in the future.
The Company has net operating loss carryforwards of approximately $32.7 million as of June 30, 2015, expiring through 2035, that may be offset against future taxable income. Because of the uncertainties discussed in Note 2, however, any deferred tax asset established for utilization of the Company's tax-loss carryforwards correspondingly requires a valuation allowance of the same amount. The Company had no uncertain tax positions at June 30, 2015 or 2014.
9
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Utilization of net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as well as state and foreign provisions. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. Subsequent ownership changes could further affect the limitation in future years. These annual limitation provisions may result in the expiration of certain net operating losses and credits before utilization.
DERIVATIVE INSTRUMENTS
The Company does not enter into derivative contracts for purposes of risk management or speculation. However, from time to time, the Company enters into contracts, namely convertible notes, that are not considered derivative financial instruments in their entirety, but that include embedded derivative features.
In accordance with FASB ASC Topic 815-15, Embedded Derivatives, and guidance provided by the SEC Staff, the Company accounts for these embedded features as a derivative liability at fair value, and the unrealized changes in the values of these derivatives are recorded in the statement of operations as gain or loss on derivatives.
FOREIGN CURRENCY TRANSLATION
a) Reporting Currency
The Company's functional and reporting currency is the United States dollar. Accordingly, the consolidated financial statements are converted into the reporting currency (the U.S. dollar) using the current rate method. Under this method, the consolidated financial statements are converted into U.S. dollars as follows: assets and liabilities are converted at the exchange rate in effect at the date of the balance sheet, and revenue and expenses are converted using the average exchange rate for the period. All gains and losses resulting from the conversion of the consolidated financial statements into the reporting currency are included in other comprehensive income or loss for the period and accumulated in a separate component of stockholders’ equity as accumulated other comprehensive income or loss.
b) Foreign Currency Transactions
Transactions denominated in currencies other than the functional currency are converted into U.S. dollars using the exchange rate in effect at the date of the transaction or the average rate for the period in the case of recurring revenue and expense transactions. Monetary assets and liabilities are revalued into the functional currency at each balance sheet date using the exchange rate in effect at that date, with any resulting exchange gains or losses being credited or charged to the statement of operations. Non-monetary assets and liabilities are recorded in the functional currency using the exchange rate in effect at the date of the transaction and are not revalued for subsequent changes in exchange rates.
STOCK BASED COMPENSATION
The Company estimates the fair value of share-based payment awards made to employees and directors, including stock options, restricted stock and employee stock purchases related to employee stock purchase plans, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. The Company uses the Black-Scholes option pricing model to determine the fair value of the stock-based compensation that it grants to employees and non-employees. The Company is required to make certain assumptions in connection with this determination, the most important of which involves the calculation of volatility with respect to the price of its common stock. The computation of volatility is intended to produce a volatility value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict how the price of its common shares of common stock will react on the open market in the future. As a result, the volatility value that the Company calculated may differ from the future volatility of the price of its shares of common stock.
10
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
CASHLESS EXERCISE OF STOCK OPTIONS
The Company issued stock options to directors to purchase common stock where the holder is entitled to exercise the stock options on a cashless basis. The Company accounts for the issuance of common stock on the cashless exercise of stock options on a net basis.
REVENUE RECOGNITION
The Company will generally recognize revenue from the sale of TCS Systems using the percentage-of-completion method when persuasive evidence of an arrangement exists, the fee is fixed or determinable and collectability is probable. The percentage-of-completion method will also require management to make certain estimates and assumptions that will affect the reported amounts of revenues and expenses.
All other revenue from other products will be recognized when shipped to the customer. The Company has recognized a small amount of revenue since entering the development stage.
Note 4 PROPERTY AND EQUIPMENT
As at June 30, 2015 and 2014, plant and equipment consisted of the following:
Furniture, fixtures and equipment | $ | 149,516 | ||
Manufacturing equipment | 87,400 | |||
Subtotal | 236,916 | |||
Less: Accumulated depreciation and amortization | 236,916 | |||
Total | $ | 0 |
Depreciation and amortization expense charged to operations for the years ended June 30, 2015 and 2014 was $0.
NOTE 5 PATENTS
The Company’s technology is patent protected in the United States. Patent maintenance fees are current. The valuation on the Balance Sheet reflects recognition of valid patents and does not attempt to establish the true commercial value.
NOTE 6 CONVERTIBLE SUBORDINATED DEBENTURES
The Company issued Type B Convertible Subordinated Debentures between December 1997 and February 1998. These debentures bore interest at 10% and were convertible into common shares of the Company at $0.20 per share. The conversion privilege on the remaining $55,000 of these debentures expired.
11
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
NOTE 7 CONVERTIBLE NOTES
The Convertible Notes appearing on the balance sheet consisted of an investment arrangement with a group of institutional investors involving a multi-stage financing under which the Company had access to, at its option, up to $5,000,000. A first tranche of $750,000 was completed but no further draw downs were made. The terms of the convertible note were:
Balance at June 30, 2013 | $399,389 |
Interest rate |
8%, payable quarterly, commencing June 30, 2001, and 18% after March 10, 2003, the default date |
Issue date | February 26, 2001 |
Maturity date | February 26, 2003 |
Redemption rights | If not converted, the holder may require the Company to redeem at any time after maturity for the principal amount plus interest. |
Conversion ratio | Lower of (i) – 80% of the average of the three lowest closing bid prices for the thirty trading days prior to the issue date, which equals $.073, or (ii) – 80% of the average of the three lowest closing bid prices for the sixty trading days prior to the conversion date. |
Common stock warrants | The Convertible Notes carried an option to purchase Common stock warrants at the rate of one Warrant for each $1.25 of purchase price. The exercise price on the first tranche of $ 750,000 is $ .077 per share. As of June 30, 2013 and 2012, the term of these warrants had expired. |
Certain current and previous Directors and Officers of the Company have pledged approximately 12,000,000 of their personal shares of Common Stock of the Company as security for the Convertible Notes until such time as the Company would successfully file with the Securities and Exchange Commission a Registration Statement on Form SB-2, to register common stock and warrants issuable upon the conversion of the notes, no later than 150 days after the issue date of the Convertible Notes. This deadline was not met and, as such, the investors served a notice of default to the Company on July 19, 2001. The Registration Statement was never declared effective by the Securities and Exchange Commission and was eventually withdrawn. Thus, the Convertible Notes cannot be converted to Common Stock nor may the Common Stock warrants be exercised. On April 24, 2002 the Company entered into a Settlement Agreement with the Note holders. The Company was forced to default on this Settlement Agreement. Accordingly, the terms of the Convertible Notes have become effective once again. 8,371,597 collateral common shares provided to the investors were the property of former Tirex Director, Louis A, Sanzaro, now deceased. The shares due to Louis A. Sanzaro have been issued during the quarter ended September 30, 2008 to a family member. The collateral shares provided by Louis V. Muro, 1,723,514 common shares, were replaced during the quarter ended September 30, 2008. The collateral shares provided by John L. Threshie Jr., 1,891,204 shares, were replaced during the quarter ended December 31, 2008.
12
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Balance at June 30, 2015 and 2014 $ 0
During the year ended June 30, 2014, the Company wrote-off the Convertible Notes in the statement of operations as the Company recognized that they had expired as a legal liability.
A convertible note, under a private arrangement, consists of the following:
Balance at June 30, 2015 and 2014 | $ 185,556 |
Interest rate | 8% |
Issue date | July 19th, 2000 |
Maturity date | January 19th, 2002 |
Redemption rights | If not converted, the holder may require the Company to redeem at any time after maturity for the principal amount plus interest. |
Conversion ratio |
As stated in the note agreement, it is not convertible prior to July 19th, 2001, at 20% discount to market between July 19th, 2001 and January 19th, 2002 or at 25% to market if held to maturity, to a maximum of not more than 2,500,000 shares. The note holder subsequently amended the agreement to provide for a conversion price of $0.33 per share.
|
NOTE 8 CONVERTIBLE NOTES - PRIVATE INVESTORS
Commencing in Fiscal year 2006, certain expenses of the Company have been funded by a series of non-interest bearing convertible notes with no specific terms of repayment made by a significant number of private individuals investing modest amounts. The total dollars received from these private investors up to June 30, 2015 is U.S.$571,765. These private investors, fully cognizant of the Company’s situation, accepted that their investments were being made and represented by a convertible debt, the conversion of which could occur only once the Company would have shares available for issuance. These debts are convertible at fixed prices rather than as a discount to market and range from $.0002 to $.005 per share.
13
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Dollars | Shares to | |||||||||
received | be issued | |||||||||
Year ended June 30, 2006 | 60,700 | 13,140,000 | ||||||||
Year ended June 30, 2007 | 54,000 | 12,900,000 | ||||||||
Year ended June 30, 2008 | 77,100 | 21,700,000 | ||||||||
Year ended June 30, 2009 | 47,300 | 38,371,429 | ||||||||
Year ended June 30, 2010 | 64,300 | 87,520,000 | ||||||||
Year ended June 30, 2011 | 103,335 | 412,569,048 | ||||||||
Year ended June 30, 2012 | 14,250 | 142,500,000 | ||||||||
Year ended June 30, 2013 | 41,220 | 103,888,745 | ||||||||
Year ended June 30, 2014 | 65,020 | 137,290,000 | ||||||||
Year ended June 30, 2015 | 44,540 | 181,466,665 | ||||||||
571,765 |
The balance owing to private investors awaiting conversion to common shares at June 30, 2015 and 2014 was $178,030 and $133,490, respectively, and the amount of shares remaining to be issued was 655,145,410 and 473,678,745, respectively.
NOTE 9 DERIVATIVE FINANCIAL INSTRUMENTS
ASC Topic 815 (“ASC 815”) requires that all derivative financial instruments be recorded on the balance sheet at fair value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.
The Company issued convertible notes and stock warrants and has evaluated the terms and conditions of the conversion features contained in the notes and warrants to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the conversion features contained in the notes and warrants represent freestanding derivative instruments that meet the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instruments in the notes and warrants is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instruments of the convertible notes and warrants was measured at the inception date of the notes and warrants and each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense at each balance sheet date.
14
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Tirex valued the conversion features in its convertible notes using the Black-Scholes model. The Black-Scholes model values the embedded derivatives based on a risk-free rate of return, grant dates of stock warrants, the term of the stock warrants stock warrants conversion prices, current stock prices, annual expected dividends and the computed measure of the Company’s stock volatility.
Derivative liability, June 30, 2010 | 1,069,075 | |||
Change in derivative liability | 336,559 | |||
Derivative liability, June 30, 2011 | 1,405,634 | |||
Change in derivative liability | 195,330 | |||
Derivative liability, June 30, 2012 | 1,600,964 | |||
Change in derivative liability | 1,003,583 | |||
Derivative liability, June 30, 2013 | 2,604,547 | |||
Change in derivative liability | (2,604,547 | ) | ||
Derivative liability, June 30, 2014 | — | |||
Change in derivative liability | — | |||
Derivative liability, June 30, 2015 | — |
NOTE 10 RELATED PARTY TRANSACTIONS
Accrued liabilities include amounts primarily due to Directors, Officers and employees. Historically, such amounts due have been repaid through the issuance of stock. At June 30, 2015 and June 30, 2014, the balances owing to Directors and Officers was $525,605 and $525,605, respectively. These amounts are without interest or terms of repayment. On August 1, 2011, the Company authorized the issuance of 100,066,256 stock options in exchange for $1,000,663 of accrued unpaid salaries and consulting fees owed to Directors and Officers of the Company.
Notes payable at June 30, 2008 included an amount of $162,500 which was payable to Ocean Tire Recycling & Processing Co., Inc., a company previously owned by a former Director of the Company, Louis A. Sanzaro, and now deceased. The Company negotiated a Settlement Agreement with the family of Louis A. Sanzaro with respect to this note, lease obligations and other expenses paid by Mr. Sanzaro, under which the Company would issue a total of 50,000,000 shares. 34,249,800 million shares were issued during the quarter ended September 30, 2008 and the remaining 15,750,200 shares will be issued in the future. A common stock payable of $43,500 was recorded for the remaining 15,750,200 shares to be issued in the future. During the year ended June 30, 2010, an additional 5,000,000 shares were issued reducing the common stock payable by $13,810.
15
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Note 11 COMMON STOCK
On January 31, 2001, the Company's stockholders approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of Common stock, par value $0.001, from 165,000,000 shares to 250,000,000 shares. On February 11, 2008, the Company's Board of Directors approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of Common stock, par value $0.001, from 250,000,000 shares to 1,000,000,000 shares. On May 7, 2009, the Company's Board of Directors approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of Common stock, par value $0.001, from 1,000,000,000 shares to 1,500,000,000 shares. On February 17, 2010, the Company's Board of Directors approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of Common stock, par value $0.001, from 1,500,000,000 shares to 2,000,000,000 shares. On December 6, 2010, the Company's Board of Directors approved an amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of Common stock, par value $0.001, from 2,000,000,000 shares to 2,500,000,000 shares.
As at June 30, 2015, the Company had 2,885,755,714 Common shares issued and outstanding.
During the year ended June 30, 2015, the Company did not issue any common shares.
During the year ended June 30, 2014, the Company did not issue any common shares.
During the year ended June 30, 2013, the Company issued 65,000,000 common shares summarized as follows:
a) | Common Stock Issued for Services |
During 2013, the Company issued 25,000,000 common shares, valued at $25,000 in settlement of services rendered at a stock price of $.001. The common stock was valued at the market price on the date of issuance of the shares.
b) | Common Stock Issued to Related Parties |
During 2013, the Company issued 40,000,000 common shares, valued at $32,000, in settlement of $40,000 of convertible debts and accrued liabilities from related parties, Directors and Officers, as described in Note 10, at a stock price of $.0008, recording a total net gain on settlement of $8,000. The common stock was valued at the market price on the date of issuance of the shares.
16
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
Note 12 PREFERRED STOCK
On June 19, 2008, the Company’s Board of Directors approved an amended Certificate of Designation with respect to the authorization and issuance of up to 3,000,000 Series A Preferred shares, an increase from the 1,000,000 shares of Series A Preferred stock that were authorized to be issued in the Certificate of Designation of Series A Preferred stock passed by the Board of Directors on May 12, 2008. No cash dividends shall be paid with respect to the shares of Series A Preferred stock. The Series A Preferred stock shall give its holders the right to 100 votes per share on any matter properly before the shareholders for a vote. The voting rights of the Series A Preferred stock shall be subject to all splits and each share will be convertible into 5 shares of Common stock upon the earlier of: (i) the holders’ election or (ii) January 8, 2009. The holders of all shares of Series A Preferred stock shall not be subject to any non-cash distributions to holders of shares of Common stock, including without limitation, stock dividends, stock splits and securities issued in a recapitalization. In the event of liquidation or winding up of the Corporation, the holders of the Series A Preferred stock will be entitled to receive, prior and in preference to the holders of the Common stock, an amount up to but not greater than the original purchase price per share of Series A Preferred stock, notwithstanding the par value of the Series A Preferred stock. These three million Series A Preferred Shares were issued to three Directors and Officers in June 2008. The value assigned to this issuance is $286,000, based on an estimate of the fair market value on the issuance date. The fair market value is calculated as the greater of (i) the converted value to common stock at a ratio of 1:5 and, (ii) the value of the voting rights. These shares as a group represent a controlling voting interest. The fair market value also takes into account this control premium. The control premium is based on publicly traded companies or comparable entities which have been recently acquired in arm’s-length transactions. The preferred shares were issued to settle accrued liabilities to the Directors and Officers in the amount of $15,000. A loss on issuance of these preferred shares was recognized in the income statement in the amount of $271,000.
On March 31, 2009, the Company’s Board of Directors approved an amended Certificate of Designation with respect to the authorization and issuance of up to 15,000,000 Series A Preferred shares, an increase from the 3,000,000 shares of Series A Preferred stock that were authorized to be issued in the Certificate of Designation of Series A Preferred stock passed by the Board of Directors on May 12, 2008. No cash dividends shall be paid with respect to the shares of Series A Preferred stock. The Series A Preferred stock shall give its holders the right to 100 votes per share on any matter properly before the shareholders for a vote. The voting rights of the Series A Preferred stock shall be subject to all splits and each share will be convertible into 5 shares of Common stock upon the earlier of: (i) the holders’ election or (ii) January 8, 2009. The holders of all shares of Series A Preferred stock shall not be subject to any non-cash distributions to holders of shares of Common stock, including without limitation, stock dividends, stock splits and securities issued in a recapitalization. In the event of liquidation or winding up of the Corporation, the holders of the Series A Preferred stock will be entitled to receive, prior and in preference to the holders of the Common stock, an amount up to but not greater than the original purchase price per share of Series A Preferred stock, notwithstanding the par value of the Series A Preferred stock. These twelve million Series A Preferred Shares were issued to three Officers of the Company. The value assigned to this issuance is $175,000, based on an estimate of the fair market value on the issuance date. The fair market value is calculated as the greater of (i) the converted value to common stock at a ratio of 1:5 and, (ii) the value of the voting rights. These shares as a group represent a controlling voting interest. The fair market value also takes into account this control premium. The control premium is based on publicly traded companies or comparable entities which have been recently acquired in arm’s-length transactions. The preferred shares were issued to settle accrued liabilities to the Directors and Officers in the amount of $60,000. A loss on issuance of these preferred shares was recognized in the income statement in the amount of $115,000.
17
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
On February 16, 2010, the Company’s Board of Directors approved an amended Certificate of Designation with respect to the authorization and issuance of up to 25,000,000 Series A Preferred shares, an increase from the 15,000,000 shares of Series A Preferred stock that were authorized to be issued in the Certificate of Designation of Series A Preferred stock passed by the Board of Directors on March 31, 2009. No cash dividends shall be paid with respect to the shares of Series A Preferred stock. The Series A Preferred stock shall give its holders the right to 100 votes per share on any matter properly before the shareholders for a vote. The voting rights of the Series A Preferred stock shall be subject to all splits and each share will be convertible into 5 shares of Common stock upon the earlier of: (i) the holders’ election or (ii) January 8, 2009. The holders of all shares of Series A Preferred stock shall not be subject to any non-cash distributions to holders of shares of Common stock, including without limitation, stock dividends, stock splits and securities issued in a recapitalization. In the event of liquidation or winding up of the Corporation, the holders of the Series A Preferred stock will be entitled to receive, prior and in preference to the holders of the Common stock, an amount up to but not greater than the original purchase price per share of Series A Preferred stock, notwithstanding the par value of the Series A Preferred stock. On December 6, 2010, the Company’s Board of Directors approved an amended Certificate of Designation with respect to the issuance of 10,000,000 Series A Preferred shares. These ten million Series A Preferred Shares were issued to two Officers of the Company. The value assigned to this issuance is $152,000, based on an estimate of the fair market value on the issuance date. The fair market value is calculated as the greater of (i) the converted value to common stock at a ratio of 1:5 and, (ii) the value of the voting rights. These shares as a group represent a controlling voting interest. The fair market value also takes into account this control premium. The control premium is based on publicly traded companies or comparable entities which have been recently acquired in arm’s-length transactions. The preferred shares were issued to settle accrued liabilities to the Directors and Officers in the amount of $50,000. A loss on issuance of these preferred shares was recognized in the income statement in the amount of $102,000.
As at June 30, 2015, the Company had 25,000,000 Series A preferred shares issued and outstanding.
Note 13 STOCK OPTIONS
a) Stock Options
Under executive employment agreements with Tirex, its three officers, John Threshie, Lou Muro and Michael Ash have been granted stock options for each of the fiscal years June 30, 2011, 2012 and 2013.
1) John L. Threshie Jr., President
3,000,000 stock options at the beginning of the fiscal years 2011, 2012 and 2013. The stock options are exercisable within three years of the date of issue of the stock options. The exercise price of the stock options are as follows:
Year 1 – Lesser of $.20 or 50% of market
Year 2 – Lesser of $.40 or 50% of market
Year 3 – Lesser of $.50 or 50% of market
18
THE TIREX CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2015
2) Michael D.A. Ash, Secretary-Treasurer & Chief Financial Officer
2,000,000 stock options at the beginning of the fiscal years 2011, 2012 and 2013. The stock options are exercisable within three years of the date of issue of the stock options. The exercise price of the stock options are as follows:
Year 1 – Lesser of $.20 or 50% of market.
Year 2 – Lesser of $.40 or 50% of market.
Year 3 – Lesser of $.50 or 50% of market.
3) Louis V. Muro, Vice President - Engineering
2,000,000 stock options at the beginning of the fiscal years 2011, 2012 and 2013. The stock options are exercisable within three years of the date of issue of the stock options. The exercise price of the stock options are as follows:
Year 1 – Lesser of $.20 or 50% of market.
Year 2 – Lesser of $.40 or 50% of market.
Year 3 – Lesser of $.50 or 50% of market.
Also, on August 1, 2011, the Company authorized the issuance of 100,066,256 stock options in exchange for $1,000,663 of accrued unpaid salaries and consulting fees owed to Directors and Officers of the Company. The stock options (i) fully vest upon issuance, (ii) have an exercise price of $0.01, (iii) expire within 5 years of the date of issuance, (iv) are exercisable for cash or on a cashless basis, at the option of the holder, and (v) are subject to any and all future recapitalizations of the issued and outstanding capital stock of the Company on a pro forma basis.
A summary of the changes in the Company’s common share stock options is presented below
June 30, 2015 | June 30, 2014 | |||||||||||||||
Number | Weighted | Number | Weighted | |||||||||||||
of Stock | Average Exercise | of Stock | Average Exercise | |||||||||||||
Options | Price ($) | Options | Price ($) | |||||||||||||
Balance at beginning of the year | 127,066,256 | 0.001 | 127,066,256 | 0.001 | ||||||||||||
Granted | — | — | — | 0.001 | ||||||||||||
Exercised | — | — | — | — | ||||||||||||
Forfeited | — | — | — | — | ||||||||||||
Balance at end of the year | 127,066,256 | 0.001 | 127,066,256 | 0.001 |
The fair value of the options issued during the year was measured at the date of grant using the Black-Scholes option pricing model with the following weigthed-average assumptions:
Year ended | ||||||||
June 30, | ||||||||
2012 | 2011 | |||||||
Risk - free interest rate | 1.32% | 1.80% | ||||||
Expected volatility | 251 | 261.5 | ||||||
Expected life of stocks options (in years) | 2.5 | 2.5 | ||||||
Assumed dividends | None | None |
The Company recognized compensation expense related to stock options for the years ended June 30, 2015 and 2014 of $0 and $0, respectively.
19
Note 14 RENTAL EXPENSE AND COMMITMENTS
Rental expense for the years ended June 30, 2015 and 2014 amounted to nil and nil, respectively.
As at June 30, 2015, the Company does not have any outstanding lease commitments or minimum annual rental payments and sub-lease income.
Note 15 LITIGATION
An action was instituted by Plaintiffs, an individual and a corporation, in March 2001, in a Canadian court alleging a breach of contract and claims damages of approximately $795,000 representing expenses and an additional approximate amount of $5,411,000 in loss of profits. The current action follows two similar actions taken in United States courts, the first of which was withdrawn and the second of which was dismissed based on forum non convenience and other considerations. A detailed answer has been filed by the Company denying all liability, stating further that Plaintiffs failed to comply with their obligations. Counsel for the Company believes that the Company has meritorious defenses to all of the Plaintiff's claims. The action is still pending.
A Plaintiff instituted an action, a corporation, in August 2001 in a Canadian court claiming approximately $99,000 is due and owing for the manufacture and delivery of tire disintegrators. The Company has prepared its defense and a cross claim of $100,000 against the Plaintiff as the product delivered was defective and the Company believes it is entitled to a reimbursement of sums paid. The action is still pending.
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