VERDE BIO HOLDINGS, INC. - Quarter Report: 2016 July (Form 10-Q)

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Nevada		30-0678378
(State of incorporation)		(I.R.S. Employer Identification No.)

TABLE OF CONTENTS		Page
PART I.                 FINANCIAL INFORMATION
ITEM 1.	CONDENSED FINANCIAL STATEMENTS	2
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	16
ITEM 4.	CONTROLS AND PROCEDURES	16
PART II.               OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	17
ITEM 1A.	RISK FACTORS	17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	MINE SAFETY DISCLOSURES	17
ITEM 5.	OTHER INFORMATION	17
ITEM 6.	EXHIBITS	18

		July 31, 2016 $				April 30, 2016 $
		(unaudited)
ASSETS
Current Assets
Cash			61,448				323
Accounts receivable			8,623				1,004
Total Assets			70,071				1,327
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities			210,298				195,999
Due to related parties			34,528				62,486
Convertible debenture, net of unamortized discount of $91,573 and $6,982, respectively			126,094				73,905
Notes payable			14,616				4,616
Derivative liability			360,746				140,196
Total Liabilities			746,282				477,202
STOCKHOLDERS' DEFICIT
Preferred stock
Authorized: 10,000,000 preferred shares with a par value of $0.001 per share Issued and outstanding: nil preferred shares			–				–
Common stock
Authorized: 250,000,000 common shares with a par value of $0.001 per share Issued and outstanding: 39,772,124 and 33,798,502 common shares, respectively			39,772				33,799
Additional paid-in capital			1,402,709				1,281,817
Accumulated deficit			(2,118,692	)			(1,791,491	)
Total Stockholders' Deficit			(676,211	)			(475,875	)
Total Liabilities and Stockholders' Deficit			70,071				1,327

		For the three months ended July 31, 2016 $				For the three months ended July 31, 2015 $
Revenues			11,567				–
Cost of goods sold			5,667				–
Gross profit			5,900				–
Operating Expenses
Consulting fees			45,500				–
General and administrative			13,648				(1,661	)
Professional fees			27,684				12,299
Total Operating Expenses			86,832				10,638
Net loss before other income (expense)			(80,932	)			(10,638	)
Other Income (Expense)
Interest expense			(4,385	)			(10,339	)
Gain (loss) on change in fair value of derivative liability			(237,379	)			199,600
Loss on extinguishment of debt			(4,505	)			–
Total Other Income (Expense)			(246,269	)			189,261
Net Income (Loss)			(327,201	)			178,623
Net Income (Loss) Per Share, Basic			(0.01	)			0.10
Net Income (Loss) Per Share, Diluted			(0.01	)			0.00
Weighted Average Shares Outstanding – Basic			35,949,635				1,856,671
Weighted Average Shares Outstanding –Diluted			35,949,635				46,332,464

	Expected Volatility	Risk-free Interest Rate	Expected Dividend Yield	Expected Life (in years)
December 17, 2013 convertible debenture:
As at April 30, 2016 (mark to market)	366%	0.56%	0%	1.00
As at May 17, 2016 (date of exchange)	433%	0.58%	0%	0.84
May 21, 2014 convertible debenture:
As at April 30, 2016 (mark to market)	312%	0.56%	0%	0.83
As at June 13, 2016 (date of conversion)	485%	0.40%	0%	0.71
As at July 31, 2016 (mark to market)	468%	0.38%	0%	0.58
May 23, 2014 convertible debenture:
As at April 30, 2016 (mark to market)	111%	0.56%	0%	0.06
As at July 31, 2016 (mark to market)	472%	0.50%	0%	0.81
May 17, 2016 convertible debenture for $10,000:
As at May 17, 2016 (date note became convertible)	467%	0.58%	0%	1.00
As at June 28, 2016 (date of conversion)	490%	0.35%	0%	0.88
As at July 27, 2016 (date of conversion)	508%	0.40%	0%	0.81
As at July 31, 2016 (mark to market)	513%	0.38%	0%	0.79
May 17, 2016 convertible debenture for $33,000:
As at May 17, 2016 (issuance date)	476%	0.58%	0%	1.00
As at July 31, 2016 (mark to market)	458%	0.50%	0%	0.79
July 21, 2016 convertible debenture:
As at July 21, 2016 (issuance date)	470%	0.54%	0%	0.75
As at July 31, 2016 (mark to market)	481%	0.50%	0%	0.72

		$
Balance, April 30, 2016			140,196
New issuances			925,403
Debt discounts			78,500
Adjustment for conversion			(111,468	)
Mark to market adjustment at July 31, 2016			(671,885	)
Balance, July 31, 2016			360,746

 

(a)

On June 13, 2016, the Company issued 3,217,352 common shares for the conversion of $8,368 of convertible debentures, as noted in Note 5(e).

(b)

On June 28, 2016, the Company issued 1,176,470 common shares for the conversion of $3,000 of convertible debentures, as noted in Note 5(d).

(c)

On July 27, 2016, the Company issued 1,579,800 common shares for the conversion of $4,000 of convertible debentures and $28 of accrued interest, as noted in Note 5(d).

We have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events after July 31, 2016 other than the following:

(a) On August 18, 2016, the Company issued a convertible debenture to a non-related party for $27,000. Pursuant to the agreement, the note was issued with a 10% original issue discount and as such the purchase price was $30,000.  Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and is due on August 18, 2017. The debenture is convertible into common shares of the Company at a conversion price equal to 55% of the lowest trading price of the Company's common shares for the past 15 trading days prior to notice of conversion. In connection with the debt financing, the Company paid financing costs of $7,000.

(b)

On September 6, 2016, the Company issued 500,000 common shares to a consultant pursuant to a consulting agreement dated August 26, 2016.

ITEM 2.

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

FORWARD-LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

Working Capital

		July 31, 2016 $				April 30, 2016 $
Current Assets			70,071				1,327
Current Liabilities			746,282				477,202
Working Capital (Deficit)			(676,211	)			(475,875	)

Cash Flows

		July 31, 2016 $				July 31, 2015 $
Cash Flows used in Operating Activities			(66,719	)			(1,651	)
Cash Flows from (used in) Investing Activities			-				-
Cash Flows from Financing Activities			127,844				1,651
Net increase (decrease) in Cash During Period			61,125				-

Operating Revenues

For the three months ended July 31, 2016, the Company earned revenues of $11,567 compared with $nil during the three months ended July 31, 2015 from the sale of online fraud protection services.  The Company had gross profit of $5,900 for the three months ended July 31, 2016 compared to $nil for the three months ended July 31, 2015.  The increase in sales revenue and gross profit was due to the fact that the Company did not acquire the rights to the online fraud protection services until January 2016.

Operating Expenses and Net Income (Loss)

For the three months ended July 31, 2016, the Company incurred operating expenses of $86,832 compared to $10,638 during the three months ended July 31, 2015.  The increase in operating expenses was based on the fact that the Company had commenced its online fraud protection services during the current period which resulted in higher day-to-day operating costs of $15,309 compared to the three month period ended July 31, 2015.  Furthermore, there was an increase of $45,500 for consulting expenses to hire consultants to assist with the day-to-day operations and oversight of the Watchdog license agreement, and $15,385 of professional fees for increases in accounting, audit, and legal fees with respect to the overall increase in business activity.

During the three months ended July 31, 2016, the Company recorded a net loss of $327,201 compared to a net income of $178,623 during the three months ended July 31, 2015.  In addition to operating expenses, the Company recorded a loss on the change in the fair value of the derivative liability of $237,379, interest and amortization expense of $4,385 and a loss on extinguishment of debt of $4,505.  During the period ended July 31, 2015, the Company recorded a gain on the change in fair value of the derivative liability of $199,600 and interest and amortiztion expense of $10,339.

The loss per share on a basic and diluted basis for the three months ended July 31, 2016 was $0.01 compared to a basic net income per share of $0.10 for the three months ended July 31, 2015 adjusted to $0.00 on a fully diluted basis.

Liquidity and Capital Resources

As at July 31, 2016, the Company had cash of $61,448 and total assets of $70,071 compared to cash of $323 and total assets of $1,327 at April 30, 2016.  The increase in cash and total assets was due to the fact that the Company received net proceeds of $127,844 from financing activities during the period, of which a significant amount of cash was remaining as at July 31, 2016.  Furthermore, the Company recorded revenues of $11,567 during the period which resulted in an increase to trades accounts receivable of $7,916 at July 31, 2016 of which management estimates the entire balance to be collectible.

As at July 31, 2016, the Company had total liabilities of $746,282 compared to $477,202 at April 30, 2016.  The increase in total liabilities is due to an increase in trade accounts payable and accrued liabilities of $14,077 due to an overall increase in business activity during the period, an increase in derivative liability of $220,550 as the Company entered into three new convertible debenture agreements during the current period, and an increase of $49,535 in the carrying value of convertible debentures and notes payable which reflects the net amount of the new convertible debentures and note payable that was entered into during the period.  The increases were offset by a decrease in the amounts owed to related parties of $27,156 which is reflected by the amount that was repaid to related parties during the period.

As at July 31, 2016, the Company had a working capital deficit of $676,211 compared with a working capital deficit of $475,875 as at April 30, 2016.  The increase in working capital deficit was due to an increase in total liabilities from the issuance of new convertible debentures and the adjustment of the fair value of the beneficial conversion feature for the Company's issued convertible debentures.

Cash Flow from Operating Activities

During the period ended July 31, 2016, the Company used $66,719 of cash for operating activities as compared to $1,651 during the three months ended July 31, 2015.  The increase in the use of cash for operating activities was due to increased operations.

Cash Flow from Investing Activities

During the periods ended July 31, 2016 and 2015, the Company did not have any investing activities.

Cash Flow from Financing Activities

During the period ended July 31, 2016, the Company received $127,844 net cash from financing activities which included net cash of $155,000 from the issuance of convertible debentures and notes payable during the period offset by repayments to related parties of $27,156.  During the three months ended July 31, 2015, the Company received $1,651 from related parties to assist in funding the cash needs of the Company.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities.  For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. 

Future Financings

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

 

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

Recently Issued Accounting Pronouncements

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

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

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").  Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of July 31, 2016, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.  Please refer to our Annual Report on Form 10-K/A as filed with the SEC on August 18, 2016, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

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

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

1.	Quarterly Issuances:

Other than as previously disclosed, we did not issue any unregistered securities during the quarter.

2.	Subsequent Issuances:

Other than as previously disclosed, we did not issue any unregistered securities subsequent to the quarter.

None.

Not Applicable.

None.

Exhibit Number	Description of Exhibit	Filing
3.01	Articles of Incorporation	Filed with the SEC on June 11, 2010 as part of our Registration Statement on Form S-1.
3.02	Bylaws	Filed with the SEC on June 11, 2010 as part of our Registration Statement on Form S-1.
4.01	2012 Equity Incentive Plan	Filed with the SEC on November 9, 2012 as part of our Registration Statement on Form S-8.
10.01	Share Exchange Agreement between the Company and Appiphany Technologies Corp. dated May 1, 2010	Filed with the SEC on June 11, 2010 as part of our Registration Statement on Form S-1.
10.02	Contract License Agreement between Appiphany Technologies Corp. and Apple, Inc. dated September 25, 2009	Filed with the SEC on June 11, 2010 as part of our Registration Statement on Form S-1.
10.03	Promissory Note between the Company and Scott Osborne dated July 22, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.04	Promissory Note between the Company and Fraser Tolmie dated October 28, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.05	Promissory Note between the Company and Darren Wright dated October 28, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.06	Promissory Note between the Company and Joshua Kostyniuk dated October 28, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.07	Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.08	Consulting Agreement between the Company and Garth Roy dated January 16, 2012	Filed with the SEC on January 18, 2012 as part of our Current Report on Form 8-K.
10.09	Consulting Agreement between the Company and Brian D. Jones dated November 9, 2012	Filed with the SEC on November 19, 2012 as part of our Current Report on Form 8-K.
10.10	Consulting Agreement between the Company and Jon Trump dated November 27, 2012	Filed with the SEC on November 29, 2012 as part of our Current Report on Form 8-K.
10.11	Consulting Agreement between the Company and Jon Trump dated March 1, 2013	Filed with the SEC on March 5, 2013 as part of our Current Report on Form 8-K.
16.01	Letter from M&K CPAS, PLLC dated September 19, 2011	Filed with the SEC on September 19, 2011 as part of our Current Report on Form 8-K.
21.01	List of Subsidiaries	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

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

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			APPIPHANY TECHNOLOGIES HOLDINGS CORP.
Dated: September 19, 2016			/s/ Rob Sargent
			By:  Rob Sargent
			Its: President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

 

Dated:  September 19, 2016	/s/ Rob Sargent
	By:  Rob Sargent Its:  Director