Notes to Financial Statements
1. NATURE OF BUSINESS, ORGANIZATION AND
BASIS OF PRESENTATION
TGI Solar Power Group,
Inc. (“TGI” or the “Company”) is a publicly held corporation formed under the laws of the State of Delaware
as Liberty Leasing Co. Inc. in 1967. The Company changed its name to LIBCO Corporation on June 29, 1973, RDIS Corporation on Jan
11, 1993 and TenthGate International, Inc. On February 20, 2007, before adopting its current name, TGI Solar Power Group, Inc.
in June 2008. The Company’s fiscal year end is July 31st.
The Company’s strategy
is to acquire innovative and patented technologies, components, processes, designs a method with commercial value that will give
the Company a competitive market advantage and generate shareholder value. In addition, The Company plans to align itself through
acquisition and joint ventures with partners whereby the Company can provide project management consulting and develop custom tools
software.
The Company has also
entered into several non-binding memorandums of understanding to explore and pursue the possibility of entering into joint ventures
to establish a manufacturing facility to produce electric batteries to power electric vehicles and/or homes in conjunction with
solar and wind power. These memorandums of understandings are also exploring the possibility of providing comprehensive policies
to future car owns, extended warranties, roadside assistance and battery replacement.
2. GOING CONCERN
The accompanying unaudited
condensed financial statements have been prepared on the basis the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a history of operating
losses and the Company continues to rely on financing and the issuance of Preferred and Common shares to raise capital. The Company’s
significant losses from operations and the Company’s dependence on equity and debt financing raise substantial doubt about
the Company's ability to continue as a going concern. The unaudited condensed financial statements of the Company do not include
any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities
that might be necessary should the Company be unable to continue as a going concern.
3. BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited
condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted
in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments October
31, 2017 are not necessarily indicative of the results that may be expected for the year ending July 31, 2018. The unaudited condensed
consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended July 31, 2017 as filed on January 31, 2018.
Use of Estimates
The preparation of unaudited
condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed financial
statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those
estimates.
Income Taxes
Estimates of
taxable income of the legal entity and jurisdiction are used in the tax rate calculation. Management uses judgment in
estimating what the Company's income tax will be for the year. Since judgment is involved, there is a risk that the tax rate
may increase or decrease in any period. In determining income/(loss) for financial statement purposes, management must make
certain estimates and judgments. These estimates and judgments occur in the calculation of certain tax liabilities and in the
determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax
and financial statement recognition of revenue and expense. FASB issued authoritative guidance concerning accounting for
income taxes also requires that the deferred tax assets be reduced by a valuation allowance if, based on the available
evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in
future periods. In evaluating the Company's ability to recover the Company's deferred tax assets, management considers all
available positive and negative evidence including the Company's past operating results, the existence of management is using
to manage the underlying businesses.
Through October 31, 2017,
the Company has recorded a valuation allowance against the Company's deferred tax assets arising from net operating losses due
to uncertainty of their realization as a result of the Company's earnings history, the number of years the Company's net
operating losses and tax credits can be carried forward, the existence of taxable temporary differences and near-term earnings
expectations. The amount of the valuation allowance could decrease if facts and circumstances change that materially increase taxable
income prior to the expiration of the loss carry forwards. Any reduction in the valuation allowance would result in an income tax
benefit in the period such determination is made by the Company.
Due to the Company
experiencing several events that qualify as a change in control since its inception, the Company may be limited by
section 382 of the Internal Revenue Code as to the amount of net operating losses that may be used in future years.
On December 22, 2017,
President Trump signed into law the “Tax Cuts and Jobs Act” ("US Tax Reform"). The US Tax Reform provides
for significant changes in the U.S. Internal Revenue Code of 1986, as amended. Certain provisions of the US Tax Reform will
be effective during the Company’s fiscal year ending July 31, 2018 with all provisions of the US Tax Reform effective as
of the beginning of the Company’s fiscal year ending July 30, 2019. As the US Tax Reform was enacted after the Company’s
year end of July 31, 2017, it had no impact on the Company’s fiscal 2017 financial results. The US Tax Reform contains
provisions with separate effective dates but is generally effective for taxable years beginning after December 31, 2017.
Beginning on January
1, 2018, the US Tax Reform lowers the US corporate income tax rate to 21% from that date and beyond. The Company estimates
that the revaluation of its US deferred tax assets and liabilities to the 21% corporate tax rate will have no net effect on its
deferred tax assets and liabilities as the Company has a full valuation allowance as of October 31, 2017.
Although the Company
believes it has accounted for the parts of the US Tax Reform that will have the most significant impact on its financials, the
ultimate impact of the US Tax Reform on the company’s reported results in 2018 may differ from the estimates provided herein,
due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued, and other
actions the Company may take as a result of the US Tax Reform different from that presently contemplated.
NET (LOSS) EARNINGS PER SHARE
Basic earnings per share
are calculated on the basis of the weighted-average number of common shares outstanding during the year. Basic earnings per share
are computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period. Diluted
earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common
stock were exercised and converted to common stock.
Dilutive common share
equivalents consist of shares issuable upon conversion of convertible debt, and Preferred Stock.
As of October 31, 2017,
and July 31, 2017 there were 10,000,000 outstanding shares of Preferred Series A Stock which convert to 30,000,000 common shares,
2,000,000 outstanding shares of Preferred Series B Stock which convert to 200,000,000 common shares and 275,000 outstanding shares
of Preferred Series C Stock which convert to 17,055,321,260 common shares.
4. NOTES PAYABLE –
RELATED PARTY
The Company
received advances totaling $14,300 from a holder of our Preferred C shares in year ended July 31, 2017 to cover the expenses
of the Company. The Company received additional advances from this shareholder subsequent to quarter end totaling $46,100.
These advances were converted to a Note Payable in November 2017 in the amount of $31,900 and a second Note Payable in the
amount of $28,500 in March 2018. The Notes are subject to interest at 8 percent per annum, except in the case of a default
whereby interest would accrue at 18 percent per annum. The Notes mature on December 31, 2018 and March 2019 at which
point unpaid principal amount and accrued interest will be due. The Notes are secured by substantially all the assets of the
Company.
5. RELATED PARTY TRANSACTION
During the three months
ended October 31, 2017 and 2016 the Company incurred $0 and $45,000 and paid $0 and $35,000 to its officer for consulting services.
As of October 31, 2017, and July 31, 2017 the Company had accrued consulting fees to its officer of $45,000.
6. CAPITAL STRUCTURE
Common:
At October 31, 2017 and
July 31, 2017, the Company had 2,400,000,000 shares authorized and 1,705,036,105 shares of $.001 par value common stock issued
and outstanding.
Common shares are voting
and dividends are paid at the discretion of the Board of Directors.
Series A Preferred
Stock
At October, 31 2017 and
July 31, 2017, the Company had 10,000,000 shares of Series A Preferred Stock, $.001 par value, authorized, issued and outstanding.
The Series A Preferred Stock has a liquidation preference over the common stock and any other class or series of capital stock
whose terms expressly provide that the holders of the Series A Preferred Stock should receive preferential payment. Holders of
the Series A Preferred Stock are entitled to vote on all matters submitted to shareholders of the Company and are entitled to 10
votes for each share of the Series A Preferred Stock owned.
Each share of Series
A Preferred Stock is convertible, at the option of the holder, into three shares of the Company's common stock. However, holders
cannot convert any share of Series A Preferred Stock into shares of common stock until (a) the Series A Preferred Stock has been
held for a minimum of 24- months; (b) the Common Stock is trade for at least $0.50 per share (c) the Company has a positive Net
Worth; and (c) the Company is traded on the Pink Sheets, or higher exchange.
Holders of the Series
A Preferred Stock are entitled to receive dividends as declared at the discretion of the Board of Directors. These dividends are
based on the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible.
Series B Preferred
Stock
At October 31, 2017 and
July 31, 2017, the Company had 2,000,000 shares of Series B Preferred Stock, $.001 par value, authorized, issued and outstanding.
Holders of the Series B Preferred Stock Series B are entitled to vote on all matters submitted to shareholders of the Company and
are entitled to 1,000 votes for each share of the Series B Preferred Stock owned.
Each share of the Series
B Preferred Stock is convertible, at the option of the holder, into one hundred shares of the Company's common stock. However,
holders cannot convert any share of Series B Preferred Stock into shares of common stock until (a) the Series B Preferred Stock
has been held for a minimum of 12 months; (b) the Common Stock is traded at least $0.01 per share (c) the Company is traded
on the Pink Sheets, or higher exchange.
Holders of the Series
B Preferred Stock are entitled to receive dividends as declared at the discretion of the Board of Directors. These dividends are
based on the number of shares of Common Stock into which each share of Series B Preferred Stock is convertible.
Series C Preferred Stock
On June 22, 2016, the
Company authorized 275,000 shares of $1 Par Value Series C Convertible Preferred Stock. On June 26, 2016, the Company sold 137,500
shares of its Series C Convertible Preferred Stock each to Ensure HR, LLC, a New Jersey limited liability company, and Meros HR,
LLC, a New Jersey limited liability company for $275,000. The proceeds were reduced by $19,460 of legal expenses related to the
sale. These 275,000 shares of Series C Preferred Stock are authorized issued and outstanding as of July 31, 2016.
The Series Preferred
C Stock has a liquidation of twice its stated value and converts into shares of Common Stock at the initial conversion price of
$.000016124 per share, subject to adjustment for stock splits, reclassification and distributions. The Series C Preferred Stock
votes on an as-converted basis multiplied by 1.9. The conversion price is initially $.000016124 per share, subject to adjustment
for dilutive issuances, so that upon conversion the holders of the Series C Preferred Stock would hold shares of Common constituting
90 % of the fully diluted Common Stock upon conversion. Accordingly, the sale of the Series C Stock resulted in a change of control
of the Company. The Series C Preferred Stock cannot be converted until the Company files an amendment increasing the authorized
number of shares of Common Stock and/or effecting a reverse stock split of the Common Stock so that the Company has a sufficient
number of authorized and unissued shares of Common Stock to permit the conversion of all outstanding shares of Series C Preferred
Stock.
Holders of the Series
C Preferred Stock are entitled to receive dividends as declared at the discretion of the Board of Directors. These dividends are
based on the number of shares of Common Stock into which each share of Series C Preferred Stock is convertible.
7. SUBSEQUENT EVENTS
On November 6, 2017,
the Company and Data Boss International Corp. (“Boss”), a Company specializing in engineering, IT consulting and internet
security product development entered into a stock purchase agreement where the Company purchased 25% of the outstanding common
shares of Boss, $0.001 par value, for $100,000 in consideration for a Note Payable (“Note”) with Boss in the amount
of $100,000 to finance this transaction. The Note is subject to interest at six percent per annum. The Note matures on November
6, 2018, at which point all outstanding principal and accrued interest under the Note will be due.
On November 6, 2017
the Company and Boss entered into an Stock Option Agreement (“Option”) where the Company was granted an option to
purchase the remaining 75% of all outstanding common shares for the purchase price of $350,000. The Option may be exercised from
November 6, 2017 until November 6, 2018. Subsequently, the Option can be exercised at a purchase price of $400,000 from through
April 15, 2019. The Option terminates on April 15, 2019.
