Colorado
|
20-8980078
|
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
|
Incorporation or organization)
|
||
1350 Independence St., Suite 300
|
||
Lakewood, CO
|
80215
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
|
|
Emerging growth company
|
☒ |
July 31,
2016
|
January 31,
2016
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
7,500
|
$
|
151,311
|
||||
Accounts receivable
|
6,000
|
—
|
||||||
Assets of discontinued operations, net
|
1,385,467
|
1,417,719
|
||||||
Total current assets
|
1,398,967
|
1,569,030
|
||||||
Tenant improvements and office equipment, net of accumulated amortization and depreciation of $19,418 and $15,284 at July 31, 2016 and January 31, 2016, respectively
|
5,033
|
9,167
|
||||||
Equity method investment in unconsolidated subsidiary
|
39,159
|
11,659
|
||||||
Trademark, net of accumulated amortization of $1,891 and $1,525 at July 31, 2016 and January 31, 2016, respectively
|
9,119
|
9,485
|
||||||
Total assets
|
$
|
1,452,278
|
$
|
1,599,341
|
||||
LIABILITIES AND STOCKHOLERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
202,806
|
$
|
306,128
|
||||
Due to related party
|
156,100
|
—
|
||||||
Liabilities of discontinued operations
|
4,215,320
|
3,719,247
|
||||||
Total current liabilities
|
4,574,226
|
4,025,375
|
||||||
Commitments and contingencies
|
—
|
—
|
||||||
Stockholders' deficit
|
||||||||
Common stock, no par value, 100,000,000 shares authorized, 27,140,550 issued and outstanding at July 31, 2016 and January 31, 2016, respectively
|
—
|
—
|
||||||
Additional Paid in Capital
|
3,152,658
|
3,152,658
|
||||||
Retained deficit
|
(6,274,606
|
)
|
(5,578,692
|
)
|
||||
Total stockholders' deficit
|
(3,121,948
|
)
|
(2,426,034
|
)
|
||||
Total liabilities and stockholders' deficit
|
$
|
1,452,278
|
$
|
1,599,341
|
STWC HOLDINGS, INC.
|
||||||||||||||||
CONDENSED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
For the Three Months Ended
July 31,
|
For the Six months Ended
July 31,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Consulting services
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
2,000
|
||||||||
Cost of consulting services
|
(1,750
|
)
|
—
|
(1,750
|
)
|
—
|
||||||||||
Gross profit
|
(1,750
|
)
|
—
|
(1,750
|
)
|
2,000
|
||||||||||
Operating costs and expenses
|
||||||||||||||||
Rents and other occupancy
|
16,984
|
16,984
|
33,969
|
33,453
|
||||||||||||
Compensation
|
189,882
|
134,874
|
353,113
|
269,748
|
||||||||||||
Professional, legal and consulting
|
54,239
|
52,057
|
150,506
|
112,484
|
||||||||||||
Depreciation and amortization
|
2,250
|
2,250
|
4,500
|
4,134
|
||||||||||||
General and administrative
|
20,469
|
4,270
|
64,808
|
17,890
|
||||||||||||
Total operating costs and expenses
|
283,824
|
210,435
|
606,896
|
438,075
|
||||||||||||
Loss from continuing operations
|
(285,574
|
)
|
(210,435
|
)
|
(608,646
|
)
|
(436,075
|
)
|
||||||||
Other costs and expenses
|
||||||||||||||||
Loss on equity investment in unconsolidated subsidiary
|
7,500
|
—
|
7,500
|
—
|
||||||||||||
Interest and financing costs
|
(391
|
)
|
—
|
(2,907
|
)
|
—
|
||||||||||
Loss from continuing operations, before provision for taxes on income
|
(278,465
|
)
|
(210,435
|
)
|
(604,053
|
)
|
(435,709
|
)
|
||||||||
Provision for taxes on income
|
—
|
—
|
—
|
—
|
||||||||||||
Loss from continuing operations, net of tax
|
(278,465
|
)
|
(210,435
|
)
|
(604,053
|
)
|
(435,709
|
)
|
||||||||
Income (loss) from discontinued operations, net of tax
|
228,505
|
(789,977
|
)
|
(91,861
|
)
|
(2,078,511
|
)
|
|||||||||
Net loss
|
$
|
(49,960
|
)
|
$
|
(1,000,412
|
)
|
$
|
(695,914
|
)
|
$
|
(2,514,586
|
)
|
||||
Basic earnings and fully diluted loss per common share
|
||||||||||||||||
Continuing operations
|
$
|
(0.01
|
)
|
$
|
*
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
|||||
Discontinued operations
|
$
|
0.01
|
$
|
(0.03
|
)
|
$
|
*
|
$
|
(0.08
|
)
|
||||||
Basic and fully diluted weighted average number of shares outstanding
|
27,140,550
|
27,140,550
|
27,140,550
|
27,140,550
|
For the Six Months
Ended July 31,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss)
|
$
|
(695,914
|
)
|
$
|
(2,514,586
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
4,134
|
3,768
|
||||||
Decrease in trademark
|
366
|
366
|
||||||
Income on equity investment in unconsolidated subsidiary
|
(7,500
|
)
|
—
|
|||||
Increase in accounts receivable
|
(6,000
|
)
|
—
|
|||||
Increase in accounts payable and accrued expenses
|
(103,322
|
)
|
90,062
|
|||||
Net cash flow used in operating activities from continuing operations
|
(808,236
|
)
|
(2,420,390
|
)
|
||||
Net cash flow used in operating activities from discontinued operations
|
291,558
|
512,634
|
||||||
Net cash flow used in operating activities
|
(516,678
|
)
|
(1,907,756
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Investment in unconsolidated subsidiary
|
(20,000
|
)
|
—
|
|||||
Net cash flow used in investing activities from continuing operations
|
(20,000
|
)
|
—
|
|||||
Net cash flow used in investing activities from discontinued activities
|
—
|
(75,000
|
)
|
|||||
Net cash flow used in investing activities
|
(20,000
|
)
|
(75,000
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Cash advances from related parties
|
156,100
|
—
|
||||||
Net cash flows provided by financing activities from continuing operations
|
156,100
|
—
|
||||||
Net cash flow provided by financing activities from discontinued activities
|
236,767
|
1,311,797
|
||||||
Net cash flows provided by financing activities
|
392,867
|
1,311,797
|
||||||
Net cash flows
|
(143,811
|
)
|
(670,959
|
)
|
||||
Cash and equivalent, beginning of period
|
151,311
|
674,495
|
||||||
Cash and equivalent, end of period
|
$
|
7,500
|
$
|
3,536
|
||||
Supplemental cash flow disclosures:
|
||||||||
Cash paid for interest
|
$
|
407,814
|
$
|
373,441
|
||||
Cash paid for income taxes
|
$
|
—
|
$
|
—
|
Common Stock
|
Additional
Capital In
Excess of Par
|
Deficit | ||||||||||||||||||
Shares
|
Amount
|
Value
|
Accumulated
|
Total
|
||||||||||||||||
Balance, January 31, 2016
|
27,140,550
|
—
|
$
|
3,152,658
|
$
|
(5,578,692
|
)
|
$
|
(2,426,034
|
)
|
||||||||||
Net Loss
|
—
|
—
|
—
|
(695,914
|
)
|
(695,914
|
)
|
|||||||||||||
Balance, July 31, 2016
|
27,140,550
|
—
|
$
|
3,152,658
|
$
|
(6,274,606
|
)
|
$
|
(3,121,948
|
)
|
● |
Opportunity Assessment: For a standard fee, the Company will complete an Opportunity Assessment for a client, which would include financial modeling, completed with the Company's proprietary assessment software.
|
● |
Application Filing Assistance: Based upon the Company's knowledge of the various rules and regulations of respective state and local jurisdictions, the Company will provide turn-key application preparation and submission services for a client, and/or provide consulting assistance to a client who is self-preparing their application.
|
● |
Branding, Marketing and Administrative Consulting Services: Customers may contract with the Company to use the Strainwise®name, logo and affinity images in their retail store locations. A monthly fee will permit a branding customer to use the Strainwise® brand at a specific location. In addition, the Company will assist operators in marketing and managing their businesses, setting up new retail locations and general business planning and execution at an hourly rate. This includes services to establish an efficient, predictable production process, as well as, nutrient recipes for consistent and appealing marijuana strains.
|
● |
Accounting and Financial Services: For a monthly fee, the Company will provide a customer with a fully implemented general ledger system, with an industry centric chart of accounts, which enables management to readily monitor and manage all facets of a marijuana medical dispensary and cultivation facility. The Company will provide bookkeeping, accounts payable processing, cash management, general ledger processing, financial statement preparation, state and municipal sales tax filings, and state and federal income tax compilation and filings.
|
● |
Compliance Services: The rules, regulations and state laws governing the production, distribution and retail sale of marijuana can be complex, and compliance may prove cumbersome. Thus, customers may contract with the Company to implement a compliance process, based upon the number and type of licenses and permits for their specific business. The Company will provide this service on both an hourly rate and stipulated monthly fee.
|
● |
Lending: The Company will provide loans to individuals and businesses in the cannabis industry.
|
July 31,
2016
|
January 31,
2016
|
|||||||
Leasehold improvements
|
$
|
2,200
|
$
|
2,200
|
||||
Office equipment, furniture and fixtures
|
22,251
|
22,251
|
||||||
24,451
|
24,451
|
|||||||
Accumulated amortization and depreciation
|
(19,418
|
)
|
(15,284
|
)
|
||||
$
|
5,033
|
$
|
9,167
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net
|
||||||||||
Trademarks
|
$
|
11,010
|
$
|
1,891
|
$
|
9,119
|
Discontinued Operations Income Statement
|
||||||||||||||||
Three Months
Ended July 31,
|
Six Months
Ended July 31,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Rental income from the Regulated Entities (Affiliates)
|
$
|
973,797
|
$
|
1,193,579
|
$
|
1,947,995
|
$
|
2,416,965
|
||||||||
Total revenues
|
973,797
|
1,193,579
|
1,947,995
|
2,416,965
|
||||||||||||
Operating costs and expenses
|
||||||||||||||||
Reserve for amounts due from Regulated Entities (Affiliates)
|
(276,685
|
)
|
448,735
|
(331,211
|
)
|
1,392,384
|
||||||||||
Rents and other occupancy
|
803,464
|
1,016,930
|
1,624,662
|
2,156,868
|
||||||||||||
Depreciation and amortization
|
37,202
|
70,851
|
81,864
|
147,631
|
||||||||||||
Total operating costs and expenses
|
563,981
|
1,536,516
|
1,375,315
|
3,696,883
|
||||||||||||
Operating (loss)/income from discontinued operations
|
409,816
|
(342,937
|
)
|
572,680
|
(1,279,918
|
)
|
||||||||||
Other income and (expenses)
|
||||||||||||||||
Interest expense
|
(181,313
|
)
|
(235,682
|
)
|
(664,141
|
)
|
(415,906
|
)
|
||||||||
Loss from discontinued operations
|
$
|
(228,503
|
)
|
$
|
(578,619
|
)
|
$
|
(91,461
|
)
|
$
|
(1,695,824
|
)
|
Discontinued Operations Balance Sheet
|
||||||||
July 31,
2016
|
January 31,
2016
|
|||||||
ASSETS
|
||||||||
Due from Regulated Entities (Affiliates), net of collection allowance reserve of $2,565,516 and $3,222,535 at July 31, 2016 and January 31, 2016, respectively.
|
$
|
—
|
$
|
—
|
||||
Prepaid rent
|
27,112
|
—
|
||||||
Tenant improvements and office equipment, net of accumulated amortization and depreciation of $143,389 and $62,025 at July 31, 2016 and January 31, 2016, respectively
|
549,022
|
630,386
|
||||||
Commercial operating property, net of accumulated amortization of $30,667 and $22,667 at July 31, 2016 and January 31, 2016, respectively
|
629,333
|
637,333
|
||||||
Prepaid expenses and other assets
|
180,000
|
150,000
|
||||||
Total assets
|
$
|
1,385,467
|
$
|
1,417,719
|
||||
LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
—
|
$
|
34,477
|
||||
Settlement of equipment advance payable
|
150,100
|
|||||||
Accrued interest payable
|
397,692
|
138,458
|
||||||
Deferred rent
|
1,139,643
|
965,319
|
||||||
Mortgage payable
|
202,660
|
357,010
|
||||||
Convertible notes payable
|
—
|
2,073,883
|
||||||
Notes payable
|
2,465,000
|
—
|
||||||
Total liabilities
|
$
|
4,204,996
|
$
|
3,719,247
|
Three Months Ended July 31,
2015
|
Six Months
Ended July 31,
2015
|
|||||||
Revenues
|
$
|
288,159
|
$
|
764,071
|
||||
Expenses
|
(499,517
|
)
|
(1,146,758
|
)
|
||||
$
|
(211,358
|
)
|
$
|
(382,687
|
)
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2:
|
Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
|
Level 3:
|
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
For the Fiscal Year Ending January 31,
|
||||
Remainder of 2017
|
$
|
30,234
|
||
2018
|
53,250
|
|||
2019
|
54,250
|
|||
2020
|
55,250
|
|||
2021
|
56,250
|
|||
2022
|
42,750
|
|||
Thereafter
|
—
|
|||
Total minimum lease payments
|
$
|
291,984
|
● |
Opportunity Assessment: For a standard fee, we will complete an Opportunity Assessment for a client, which would include financial modeling, completed with our proprietary assessment software.
|
● |
Application Filing Assistance: Based upon our knowledge of the various rules and regulations of respective state and local jurisdictions, we will provide turn-key application preparation and submission services for a client, and/or provide consulting assistance to a client who is self-preparing their application.
|
● |
Branding, Marketing and Administrative Consulting Services: Customers may contract with us to use the Strainwise® name, logo and affinity images in their retail store locations. A monthly fee will permit a branding customer to use the Strainwise® brand at a specific location. In addition, we will assist operators in marketing and managing their businesses, setting up new retail locations and general business planning and execution at an hourly rate. This includes services to establish an efficient, predictable production process, as well as, nutrient recipes for consistent and appealing marijuana strains.
|
● |
Accounting and Financial Services: For a monthly fee, we will provide customers with a fully implemented general ledger system, with an industry centric chart of accounts, which enables management to readily monitor and manage all facets of a marijuana medical dispensary and cultivation facility. We will provide bookkeeping, accounts payable processing, cash management, general ledger processing, financial statement preparation, state and municipal sales tax filings, and state and federal income tax compilation and filings.
|
● |
Compliance Services: The rules, regulations and state laws governing the production, distribution and retail sale of marijuana can be complex, and compliance may prove cumbersome. Thus, customers may contract with us to implement a compliance process, based upon the number and type of licenses and permits for their specific business. We will provide this service on both an hourly rate and stipulated monthly fee.
|
● |
Lending: We will provide loans to individuals and businesses in the cannabis industry.
|
For the Three Months Ended
July 31,
|
Change
|
|||||||||||||||
2016
|
2015
|
$ |
|
%
|
||||||||||||
Consulting services
|
$
|
—
|
$
|
—
|
$
|
—
|
—
|
|||||||||
Cost of consulting services
|
(1,750
|
)
|
—
|
(1,750
|
)
|
3,252
|
||||||||||
Gross profit
|
(1,750
|
)
|
—
|
(1,750
|
)
|
1,823
|
||||||||||
Operating costs and expenses
|
||||||||||||||||
Rents and other occupancy
|
16,984
|
16,984
|
—
|
—
|
||||||||||||
Compensation
|
189,882
|
134,874
|
55,008
|
41
|
||||||||||||
Professional, legal and consulting
|
54,239
|
52,057
|
2,182
|
4
|
||||||||||||
Depreciation and amortization
|
2,250
|
2,250
|
—
|
—
|
||||||||||||
General and administrative
|
20,469
|
4,270
|
16,199
|
379
|
||||||||||||
Total operating costs and expenses
|
283,824
|
210,435
|
73,389
|
36
|
||||||||||||
Loss from continuing operations
|
(285,574
|
)
|
(210,435
|
)
|
(75,139
|
)
|
36
|
|||||||||
Other costs and expenses
|
7,109
|
—
|
7,109
|
100
|
||||||||||||
Loss from continuing operations, before provision for taxes on income
|
(278,465
|
)
|
(210,435
|
)
|
(68,030
|
)
|
32
|
|||||||||
Provision for taxes on income
|
—
|
—
|
—
|
—
|
||||||||||||
Loss from continuing operations, net of tax
|
(278,465
|
)
|
(210,435
|
)
|
(68,030
|
)
|
28
|
|||||||||
Income (loss) from discontinued operations, net of tax
|
228,505
|
(789,977
|
)
|
1,018,482
|
(129
|
)
|
||||||||||
Net income/(loss)
|
$
|
(49,960
|
)
|
$
|
(1,000,412
|
)
|
$
|
950,452
|
(95
|
)
|
For the Six Months Ended
July 31,
|
Change
|
|||||||||||||||
2016
|
2015
|
$ |
|
%
|
||||||||||||
Consulting services
|
$
|
—
|
$
|
2,000
|
$
|
(2,000
|
)
|
(100
|
)
|
|||||||
Cost of consulting services
|
(1,750
|
)
|
—
|
(1,750
|
)
|
100
|
||||||||||
Gross profit
|
(1,750
|
)
|
2,000
|
3,750
|
188
|
|||||||||||
Operating costs and expenses
|
||||||||||||||||
Rents and other occupancy
|
33,969
|
33,453
|
516
|
2
|
||||||||||||
Compensation
|
353,113
|
269,748
|
83,365
|
31
|
||||||||||||
Professional, legal and consulting
|
150,506
|
112,484
|
38,022
|
34
|
||||||||||||
Depreciation and amortization
|
4,500
|
4,500
|
—
|
—
|
||||||||||||
General and administrative
|
64,808
|
17,890
|
46,918
|
262
|
||||||||||||
Total operating costs and expenses
|
606,896
|
438,075
|
(172,571
|
)
|
39
|
|||||||||||
Loss from continuing operations
|
(608,646
|
)
|
(436,075
|
)
|
170,014
|
40
|
||||||||||
Other costs and expenses
|
4,593
|
—
|
4,593
|
100
|
||||||||||||
Loss from continuing operations, before provision for taxes on income
|
(604,053
|
)
|
(436,075
|
)
|
(172,571
|
)
|
40
|
|||||||||
Provision for taxes on income
|
—
|
—
|
—
|
—
|
||||||||||||
Loss from continuing operations, net of tax
|
(604,053
|
)
|
(436,075
|
)
|
(167,978
|
)
|
39
|
|||||||||
Income (loss) from discontinued operations, net of tax
|
(91,861
|
)
|
(2,078,511
|
)
|
(653,500
|
)
|
(96
|
)
|
||||||||
Net income/(loss)
|
$
|
(695,914
|
)
|
$
|
(2,514,586
|
)
|
$
|
1,818,672
|
(72
|
)
|
||||||
● |
Rent and other occupancy – Rent increased for six months as the result of the imbedded price increases in our lease.
|
● |
Compensation – Compensation increased as a result of discontinuing operations and our focus on our consulting services.
|
● |
Professional, legal, and consulting – Professional fees increased due to reduced regulatory compliance during the current periods.
|
● |
General and administrative – General and administrative expenses include marketing, travel, and office expenses. These expenses fluctuate from period to period but have been driven by our shift in focus from discontinued operations to consulting services.
|
For the Six Months
Ended July 31,
|
||||||||
2016
|
2015
|
|||||||
Consolidated Statements of Cash Flows Data:
|
||||||||
Net cash used in operating activities
|
$
|
(516,678
|
)
|
$
|
(1,907,756
|
)
|
||
Net cash used in investing activities
|
(20,000
|
)
|
(75,000
|
)
|
||||
Net cash used in/provided by financing activities
|
392,867
|
1,311,797
|
||||||
Net change in cash
|
$
|
(143,811
|
)
|
$
|
(670,959
|
)
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
No. |
Description
|
Form
|
SEC File
Number
|
Exhibit
|
Filing Date
|
|||||
31.1**
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||||||||
31.2**
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||||||||
32.1***
|
|
Certification of the Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||||||||
101**
|
The following materials from STWC Holdings, Inc.'s quarterly report on Form 10-Q for the three months ended July 31, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Statement of Changes in Stockholders' Deficit; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.
|
*
|
Indicates management contract or compensatory plan or arrangement.
|
**
|
Filed herewith
|
***
|
Furnished herewith
|
STWC HOLDINGS, INC. | |||
October 3, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, President, Chief Financial and | |||
Accounting Officer |
1. |
I have reviewed this quarterly report on Form 10-Q of STWC Holdings, Inc.;
|
2. |
Based on my knowledge, this report, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
October 3, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, | |||
Principal Executive Officer |
1. |
I have reviewed this quarterly report on Form 10-Q of STWC Holdings, Inc.;
|
2. |
Based on my knowledge, this report, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
October 3, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, | |||
Principal Financial Officer |
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects the financial condition and results of the Company.
|
October 3, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, Principal Executive and | |||
Financial Officer |
Document and Entity Information |
6 Months Ended |
---|---|
Jul. 31, 2016
USD ($)
shares
| |
Document and Entity Information: | |
Entity Registrant Name | STWC. Holdings, Inc. |
Document Type | 10-Q |
Document Period End Date | Jul. 31, 2016 |
Trading Symbol | stwc |
Amendment Flag | false |
Entity Central Index Key | 0001400683 |
Current Fiscal Year End Date | --01-31 |
Entity Common Stock, Shares Outstanding | shares | 27,140,550 |
Entity Public Float | $ | $ 0 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | Q2 |
CONDENSED BALANCE SHEETS (Unaudited for July 31, 2016) - USD ($) |
Jul. 31, 2016 |
Jan. 31, 2016 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current assets: | ||||||||||||||
Cash | $ 7,500 | $ 151,311 | ||||||||||||
Accounts receivable | 6,000 | |||||||||||||
Assets of discontinued operations, net | 1,385,467 | 1,417,719 | ||||||||||||
Total current assets | 1,398,967 | 1,569,030 | ||||||||||||
Tenant improvements and office equipment | 5,033 | [1] | 9,167 | [2] | ||||||||||
Equity method investment in unconsolidated subsidiary | 39,159 | 11,659 | ||||||||||||
Trademark | 9,119 | [3] | 9,485 | [4] | ||||||||||
Total assets | 1,452,278 | 1,599,341 | ||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | 202,806 | 306,128 | ||||||||||||
Due to related party | 156,100 | |||||||||||||
Liabilities of discontinued operations | 4,215,320 | 3,719,247 | ||||||||||||
Total current liabilities | 4,574,226 | 4,025,375 | ||||||||||||
Stockholders' deficit | ||||||||||||||
Common stock | [5] | 0 | 0 | |||||||||||
Additional Paid in Capital | 3,152,658 | 3,152,658 | ||||||||||||
Retained deficit | (6,274,606) | (5,578,692) | ||||||||||||
Total stockholders' deficit | (3,121,948) | (2,426,034) | ||||||||||||
Total liabilities and stockholders' deficit | $ 1,452,278 | $ 1,599,341 | ||||||||||||
|
Note 1 - Organization |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Notes | |
Note 1 - Organization | Note 1 Organization
STWC HOLDINGS, INC., formerly known as Strainwise, Inc., (identified in these footnotes as "STWC" "we" "us" or the "Company") provides branding marketing, administrative, accounting, financial and compliance services ("Fulfillment Services") to entities in the cannabis retail and production industry. The Company was incorporated in the state of Colorado as a limited liability company on June 8, 2012, and subsequently converted to a Colorado corporation on January 16, 2014.
The Company was established to provide sophisticated Fulfillment Services to medical and retail stores, and cultivation facilities in the regulated cannabis industry throughout the United States. Such Fulfillment Services would only be provided to stores and facilities located in geographical areas where the governing state and local ordinances allow for the unfettered provisions of such services.
The Fulfillment Services that the Company is currently able to provide are summarized, as follows:
Opportunity Assessment: For a standard fee, the Company will complete an Opportunity Assessment for a client, which would include financial modeling, completed with the Company's proprietary assessment software.
Application Filing Assistance: Based upon the Company's knowledge of the various rules and regulations of respective state and local jurisdictions, the Company will provide turn-key application preparation and submission services for a client, and/or provide consulting assistance to a client who is self-preparing their application.
Branding, Marketing and Administrative Consulting Services: Customers may contract with the Company to use the Strainwise®name, logo and affinity images in their retail store locations. A monthly fee will permit a branding customer to use the Strainwise® brand at a specific location. In addition, the Company will assist operators in marketing and managing their businesses, setting up new retail locations and general business planning and execution at an hourly rate. This includes services to establish an efficient, predictable production process, as well as, nutrient recipes for consistent and appealing marijuana strains.
Accounting and Financial Services: For a monthly fee, the Company will provide a customer with a fully implemented general ledger system, with an industry centric chart of accounts, which enables management to readily monitor and manage all facets of a marijuana medical dispensary and cultivation facility. The Company will provide bookkeeping, accounts payable processing, cash management, general ledger processing, financial statement preparation, state and municipal sales tax filings, and state and federal income tax compilation and filings.
Compliance Services: The rules, regulations and state laws governing the production, distribution and retail sale of marijuana can be complex, and compliance may prove cumbersome. Thus, customers may contract with the Company to implement a compliance process, based upon the number and type of licenses and permits for their specific business. The Company will provide this service on both an hourly rate and stipulated monthly fee.
Lending: The Company will provide loans to individuals and businesses in the cannabis industry.
The Company does NOT grow marijuana plants, produce marijuana infused products, sell marijuana plants and/or sell marijuana infused products of any nature in any jurisdiction were such activity has not been legalized. |
Note 2 - Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 2 - Summary of Significant Accounting Policies | Note 2 Summary of significant accounting policies
Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents For purposes of the statement of cash flows, the Company considers all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents. Under current banking regulations, not all marijuana centric entities are afforded normal banking privileges. And thus, because of the Company's perceived association with the Regulated Entities, the Company has not been able to maintain a corporate bank account at any federally or state charted banking institution.
Tenant improvements and office equipment Tenant improvements and office equipment are recorded at cost and is depreciated under straight line methods over each item's estimated useful life. Management reviews the Company's tenant improvements and office equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Maintenance and repairs of property and equipment are charged to operations. Major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and any gain or loss is included in operations.
Tenant improvements and office equipment, net of accumulated amortization and depreciation are comprised of the following:
Tenant improvements are amortized over the term of the lease, and office equipment is depreciated over its useful lives, which has been deemed by management to be three years. Amortization and depreciation expense related to tenant improvements and office equipment for each of the three months ended July 31, 2016 and 2015 was $2,067, respectively. Amortization and depreciation expense related to tenant improvements and office equipment for each of the six months ended July 31, 2016 and 2015 was $4,134, respectively.
Income taxes The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Investment in Unconsolidated Entity The Company acquired a 50% interest in SentinelStrainwise, LLC ("SSL") in June 2015 for $25,000. The Company accounts for its investment SSL using the equity method based on the ownership interest. Accordingly, the investment was recorded at cost, and adjustments to the carrying amount of the investment to recognize the Company's share of the earnings or losses of SSL are made in each reporting period. In accordance with Accounting Standard Codification 810-10, Consolidation-Overall, the Company evaluated the fair value of the Company's investment in SLL and determined that there no adjustment required to the carrying amount of the Company's original investment, other than the recognition of the Company's share of the operating income $7,500 for the period.
Long-Lived Assets In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.
Trademarks Trademarks and other intangible assets are stated at cost and are amortized using the straight-line method over fifteen years. Accumulated amortization was $1,891 and $1,525 at July 31, 2016 and January 31, 2016, respectively, and consisted of the following at July 31, 2016:
Discontinued Operations During November 2017, the Company settled all remaining operations related to its rental activities with regulated entities. As a consequence of the disposition, the operating results and the assets and liabilities of the discontinued operations, which formerly comprised the rental operations, are presented separately in the Company's financial statements. Summarized financial information for the discontinued rental business is shown below. Prior period balances have been reclassified to present the operations of the rental business as a discontinued operation.
The Company anticipates continued expenses through the end of calendar 2017 related to the discontinued operations.
The individual assets and liabilities of the discontinued agricultural business are combined in the captions "Assets of discontinued operation" and "Liabilities of discontinued operation" in the consolidated Balance Sheet. The carrying amounts of the major classes of assets and liabilities included part of the discontinued business are presented in the following table:
In addition to discontinuing rental activities, the Company discontinued providing services under the Master Service agreements to the Regulated Entities on June 30, 2015. There were no components of major assets and liabilities associated with the discontinued operations at July 31, 2016 and 2015 and at January 31, 2016. The summarized discontinued operating results for the three six months ended July 31, 2015, respectively, are, as follows:
Comprehensive Income (Loss) - Comprehensive income is defined as all changes in stockholders' equity (deficit), exclusive of transactions with owners, such as capital investments. Comprehensive income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. Since the Company's inception there have been no differences between the Company's comprehensive loss and net loss.
Net income per share of common stock The Company has adopted applicable FASB Codification regarding Earnings per Share, which require presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.
Recently Issued Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and ensure that there are proper controls in place to ascertain that the Company's financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below:
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases ("ASU 2016-02"). The guidance in this new standard requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to the current accounting and eliminates the current real estate-specific provisions for all entities. The guidance also modifies the classification criteria and the accounting for sales-type and direct financing leases for lessors. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02.
In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which among other things, these amendments require the measurement of all expected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company is in the process of evaluating the impact of the pronouncement. |
Note 3 - Going Concern |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Notes | |
Note 3 - Going Concern: | Note 3 Going concern:
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since inception, the Company has not achieved profitable operations, and have cumulative losses through July 31, 2016 of $6.3 million. The Company's losses to date raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon the Company's achieving a sustainable level of profitability. The Company intends to continue financing its future development activities and its working capital needs largely from the private sale of its securities, with additional funding from other traditional financing sources, including convertible term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. However, the 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. |
Note 4 - Fair Value of Financial Instruments |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jul. 31, 2016 | |||||||
Notes | |||||||
Note 4 - Fair Value of Financial Instruments | Note 4 Fair value of financial instruments
The carrying amounts of cash and current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor do the Company utilize derivative instruments in the management of the Company's foreign exchange, commodity price or interest rate market risks.
The FASB Codification clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
Note 5 - Operating Leases |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||||||||
Note 5 - Operating Leases | Note 5 Operating Leases
The Company entered into a lease agreement with an affiliate for the Company's corporate office needs, consisting of 6,176 square feet of office space. The lease originally provided for a 31-month period, that commenced in January 2014 through October 31, 2016. The lease was extended in November 2016 for a 5-year period ending October 31, 2021. This lease to the Company is on the same terms and conditions as is the direct lease between the affiliate and the independent lessor. Consequently, the Company believes that the lease terms to the Company are comparable to lease terms the Company would receive directly from third party lessors in the Company's market, because the related party terms mirror the terms of the direct lease between the independent, third party lessor and the affiliated entity.
During the three months ended July 31, 2016 and 2015, rent expense for each period was $16,984. During the six months ended July 31, 2016 and 2015, rent expense was $33,969 and $33,453, respectively.
As of July 31, 2016, future minimum lease payments are as follows:
|
Note 6 - Due To Related Party |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Notes | |
Note 6 - Due To Related Party | Note 6 Due to Related Party
The Company borrowed $156,100 from related parties to fund operations during the six months ended July 31, 2016. The loans do not carry an interest rate and do not have a maturity date. As of July 31, 2016, the Company owed related parties $156,100. The Company did not owe any money to related parties as of January 31, 2016. |
Note 7 - Contingencies |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Notes | |
Note 7 - Contingencies | Note 7 Contingencies
Subsequent to the end of the quarter, the Company was named as a defendant in one civil suit filed with the District Court of the City and County of Denver, Colorado (the "Court"): This discussion of the Headgate Agreement is qualified in its entirety by the provisions of the agreement, which was attached as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on June 19, 2018. |
Note 8 - Subsequent Events |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Notes | |
Note 8 - Subsequent Events | Note 8 Subsequent Events
GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued ("subsequent events") as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, ("recognized subsequent events"). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date ("non-recognized subsequent events").
Recognized Subsequent Events
Subsequent to the end of the quarter the Company discontinued its rental of real property business and cancelled all remaining leases and settled all remaining related operations. These operations are now presented as discontinued operations on the Company's financial statements. A summary of the discontinued operations is included in Note 2 Summary of Significant Accounting Policies.
Unrecognized Subsequent Events
Subsequent to the end of the quarter the Company expects to dissolve Sentinel Strainwise, LLC in 2018. The agreement between the Company and the Confederated Tribes of Warm Springs described in the Company's 10-K report for the period ending January 31, 2016 was terminated on or around December 22, 2016. As a result of the termination of the agreement, the funds held by Sentinel Strainwise, LLC, a joint venture company in which the Company holds 50% equity interest, were distributed back to the partners of the joint venture.
Subsequent to the end of the quarter, the Company has entered into management and licensing agreements with a private entity in Puerto Rico 49% owned by Erin Phillips to operate five dispensaries and two cultivation operations in Puerto Rico. While public companies are not currently allowed to own a beneficial interest in licensed cannabis businesses in Puerto Rico, the Company intends to negotiate the right to acquire the private company at an agreed to price in the event that regulations permit public company ownership in the future.
Subsequent to the end of the quarter, in order to continue to fund ongoing California operations, on or around April 6, 2018, the Company entered into a loan agreement ("Loan Agreement") with Green Acres Partners, LLC, a California limited liability company ("Green Acres") whereby Green Acres agreed to loan the Company $205,000 in exchange for a promissory note ("Note") issued by the company in the principal amount of $205,000. The Note matures no later than September 1, 2020, with payments to begin no later than September 1, 2018; however, payments may begin sooner than such date in the event operations in San Diego begin sooner. The Note carries an interest rate of 12% per year, with an 18% default interest rate. The principal balance of the Note may be accelerated upon default or transfer. This discussion of the Note and loan agreement is qualified in its entirety by the provisions of those documents, which are attached hereto as Exhibits. The Company will require additional capital, which it may be required to raise on unfavorable terms, in order to continue its operations.
For additional information on the above subsequent events see the Company's Current Report on Form 8-K filed with the SEC on June 19, 2018. |
Note 2 - Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies) |
6 Months Ended |
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Jul. 31, 2016 | |
Policies | |
Use of Estimates, Policy | Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Note 2 - Summary of Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and cash equivalents For purposes of the statement of cash flows, the Company considers all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents. Under current banking regulations, not all marijuana centric entities are afforded normal banking privileges. And thus, because of the Company's perceived association with the Regulated Entities, the Company has not been able to maintain a corporate bank account at any federally or state charted banking institution. |
Note 2 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Policy | Tenant improvements and office equipment Tenant improvements and office equipment are recorded at cost and is depreciated under straight line methods over each item's estimated useful life. Management reviews the Company's tenant improvements and office equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Maintenance and repairs of property and equipment are charged to operations. Major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and any gain or loss is included in operations.
Tenant improvements and office equipment, net of accumulated amortization and depreciation are comprised of the following:
Tenant improvements are amortized over the term of the lease, and office equipment is depreciated over its useful lives, which has been deemed by management to be three years. Amortization and depreciation expense related to tenant improvements and office equipment for each of the three months ended July 31, 2016 and 2015 was $2,067, respectively. Amortization and depreciation expense related to tenant improvements and office equipment for each of the six months ended July 31, 2016 and 2015 was $4,134, respectively. |
Note 2 - Summary of Significant Accounting Policies: Income Tax, Policy (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Income Tax, Policy | Income taxes The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
Note 2 - Summary of Significant Accounting Policies: Investment, Policy (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Investment, Policy | Investment in Unconsolidated Entity The Company acquired a 50% interest in SentinelStrainwise, LLC ("SSL") in June 2015 for $25,000. The Company accounts for its investment SSL using the equity method based on the ownership interest. Accordingly, the investment was recorded at cost, and adjustments to the carrying amount of the investment to recognize the Company's share of the earnings or losses of SSL are made in each reporting period. In accordance with Accounting Standard Codification 810-10, Consolidation-Overall, the Company evaluated the fair value of the Company's investment in SLL and determined that there no adjustment required to the carrying amount of the Company's original investment, other than the recognition of the Company's share of the operating income $7,500 for the period. |
Note 2 - Summary of Significant Accounting Policies: Impairment or Disposal of Long-Lived Assets, Policy (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Impairment or Disposal of Long-Lived Assets, Policy | Long-Lived Assets In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. |
Note 2 - Summary of Significant Accounting Policies: Trademarks, Policy (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||
Policies | ||||||||||||||||||||||||||||||||||||||||
Trademarks, Policy | Trademarks Trademarks and other intangible assets are stated at cost and are amortized using the straight-line method over fifteen years. Accumulated amortization was $1,891 and $1,525 at July 31, 2016 and January 31, 2016, respectively, and consisted of the following at July 31, 2016:
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Note 2 - Summary of Significant Accounting Policies: Discontinued Operations, Policy (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations, Policy | Discontinued Operations During November 2017, the Company settled all remaining operations related to its rental activities with regulated entities. As a consequence of the disposition, the operating results and the assets and liabilities of the discontinued operations, which formerly comprised the rental operations, are presented separately in the Company's financial statements. Summarized financial information for the discontinued rental business is shown below. Prior period balances have been reclassified to present the operations of the rental business as a discontinued operation.
The Company anticipates continued expenses through the end of calendar 2017 related to the discontinued operations.
The individual assets and liabilities of the discontinued agricultural business are combined in the captions "Assets of discontinued operation" and "Liabilities of discontinued operation" in the consolidated Balance Sheet. The carrying amounts of the major classes of assets and liabilities included part of the discontinued business are presented in the following table:
In addition to discontinuing rental activities, the Company discontinued providing services under the Master Service agreements to the Regulated Entities on June 30, 2015. There were no components of major assets and liabilities associated with the discontinued operations at July 31, 2016 and 2015 and at January 31, 2016. The summarized discontinued operating results for the three six months ended July 31, 2015, respectively, are, as follows:
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Note 2 - Summary of Significant Accounting Policies: Comprehensive Income, Policy (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Comprehensive Income, Policy | Comprehensive Income (Loss) - Comprehensive income is defined as all changes in stockholders' equity (deficit), exclusive of transactions with owners, such as capital investments. Comprehensive income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. Since the Company's inception there have been no differences between the Company's comprehensive loss and net loss. |
Note 2 - Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Earnings Per Share, Policy | Net income per share of common stock The Company has adopted applicable FASB Codification regarding Earnings per Share, which require presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. |
Note 2 - Summary of Significant Accounting Policies: Recently Issued Accounting Pronouncements (Policies) |
6 Months Ended |
---|---|
Jul. 31, 2016 | |
Policies | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and ensure that there are proper controls in place to ascertain that the Company's financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below:
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases ("ASU 2016-02"). The guidance in this new standard requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to the current accounting and eliminates the current real estate-specific provisions for all entities. The guidance also modifies the classification criteria and the accounting for sales-type and direct financing leases for lessors. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02.
In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which among other things, these amendments require the measurement of all expected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company is in the process of evaluating the impact of the pronouncement. |
Note 2 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy: Property, Plant and Equipment (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
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Note 2 - Summary of Significant Accounting Policies: Trademarks, Policy: Schedule of Intangible Assets and Goodwill (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill |
|
Note 5 - Operating Leases: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases |
|
Note 2 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2016 |
Jul. 31, 2015 |
|
Details | |||
Depreciation and Amortization | $ 2,067 | $ 4,134 | $ 3,768 |
Note 5 - Operating Leases (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
Jul. 31, 2016 |
Jul. 31, 2015 |
|
Details | ||||
Rents and other occupancy | $ 16,984 | $ 16,984 | $ 33,969 | $ 33,453 |
Note 6 - Due To Related Party (Details) |
6 Months Ended |
---|---|
Jul. 31, 2016
USD ($)
| |
Details | |
Cash advances from related parties | $ 156,100 |
Due to related party | $ 156,100 |
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