☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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 office)
|
(Zip Code)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
|
(Do not check if a smaller reporting company)
|
Emerging growth company
|
☒
|
● |
The Company caused 1,038,000 shares of its outstanding common stock to be cancelled;
|
● |
Shawn Phillips was appointed a director and the Chief Executive Officer of the Company;
|
● |
Erin Phillips was appointed a director and the President, and Principal Financial and Accounting Officer of the Company;
|
● |
David Modica was appointed a director and Manager of Quality Control of the Company;
|
● |
Shane Thueson, Nicholl Doolin and John Winchester, resigned as officers and directors of the Company; and
|
● |
The Company sold its motion picture film business and related assets to Shane Thueson.
|
● |
the Company issued 1,112,350 Series A warrants to former Strainwise Colorado shareholders in exchange for a like number of warrants held by the former Strainwise Colorado shareholders. The Series A warrants the Company issued have the same terms as the warrants exchanged by the former Strainwise Colorado shareholders (exercise price: $5.00 per share/expiration date: January 31, 2019).
|
● |
the Company issued 500,000 warrants to one non-affiliated person in exchange for a like number of warrants held by the former Strainwise Colorado warrant holder. The warrants the Company issued have the same terms as the warrants exchanged by the former Strainwise Colorado warrant holder (exercise price: $0.10 per share/expiration date: January 31, 2019).
|
● |
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 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. 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.
|
Time Period
|
Rate
|
Monthly Payment
|
||
November 1, 2016 – October 31, 2017
|
$13.25/SF FSG
|
$4,416.67
|
||
November 1, 2017 – October 31, 2018
|
$13.50/SF FSG
|
$4,500.00
|
||
November 1, 2018 – October 31, 2019
|
$13.75/SF FSG
|
$4,583.33
|
||
November 1, 2019 – October 31, 2020
|
$14.00/SF FSG
|
$4,666.67
|
||
November 1, 2020 – October 31, 2021
|
$14.25/SF FSG
|
$4,750.00
|
|
High
|
Low
|
||||||
Year ended January 31, 2019
|
||||||||
Second Quarter
|
$
|
0.51
|
$
|
0.08
|
||||
First Quarter
|
$
|
0.12
|
$
|
0.08
|
||||
Year ended January 31, 2018
|
||||||||
Fourth Quarter
|
$
|
0.25
|
$
|
0.08
|
||||
Third Quarter
|
$
|
0.25
|
$
|
0.17
|
||||
Second Quarter
|
$
|
0.35
|
$
|
0.17
|
||||
First Quarter
|
$
|
0.44
|
$
|
0.35
|
||||
Year ended January 31, 2017
|
||||||||
Fourth Quarter
|
$
|
0.44
|
$
|
0.37
|
||||
Third Quarter
|
$
|
0.38
|
$
|
0.37
|
||||
Second Quarter
|
$
|
0.47
|
$
|
0.37
|
||||
First Quarter
|
$
|
0.47
|
$
|
0.43
|
● |
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 Years Ended
January 31,
|
Change
|
|||||||||||||||
2017
|
2016
|
$ |
|
%
|
||||||||||||
Consulting services
|
$
|
25,000
|
$
|
37,000
|
$
|
(12,000
|
)
|
(32
|
)
|
|||||||
Cost of consulting services
|
(1,750
|
)
|
—
|
(1,750
|
)
|
100
|
||||||||||
Gross profit
|
23,250
|
37,000
|
(13,750
|
)
|
(37
|
)
|
||||||||||
Operating costs and expenses
|
||||||||||||||||
Rents and other occupancy
|
64,230
|
67,421
|
(3,218
|
)
|
(5
|
)
|
||||||||||
Compensation
|
732,219
|
594,796
|
137,423
|
23
|
||||||||||||
Professional, legal and consulting
|
182,581
|
381,844
|
(199,263
|
)
|
(52
|
)
|
||||||||||
Depreciation and amortization
|
8,575
|
9,001
|
(426
|
)
|
(5
|
)
|
||||||||||
General and administrative
|
299,789
|
74,507
|
2,25,282
|
302
|
||||||||||||
Total operating costs and expenses
|
1,287,367
|
1,120,902
|
166,465
|
15
|
||||||||||||
Loss from continuing operations
|
(1,264,117
|
)
|
(1,083,902
|
)
|
(180,215
|
)
|
17
|
|||||||||
Other costs and expenses
|
3,213
|
(13,341
|
)
|
16,554
|
(124
|
)
|
||||||||||
Loss from continuing operations, before provision for taxes on income
|
(1,260,904
|
(1,097,243
|
)
|
(163,661
|
)
|
15
|
||||||||||
Provision for taxes on income
|
—
|
—
|
—
|
—
|
||||||||||||
Loss from continuing operations, net of tax
|
(1,260,904
|
)
|
(1,097,243
|
)
|
(163,661
|
)
|
15
|
|||||||||
Income (loss) from discontinued operations, net of tax
|
285,682
|
(2,396,608
|
)
|
2,682,290
|
(112
|
)
|
||||||||||
Net loss
|
$
|
(975,222
|
)
|
$
|
(3,493,851
|
)
|
$
|
2,518,629
|
(72
|
)
|
● |
Rent and other occupancy – Rent decreased 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 decreased due to reduced regulatory compliance and the Company not having reduced accounting fees 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 Years
Ended January 31,
|
||||||||
2017
|
2016
|
|||||||
Consolidated Statements of Cash Flows Data:
|
||||||||
Net cash used in operating activities
|
$
|
(1,003,498
|
)
|
$
|
(2,100,455
|
)
|
||
Net cash used in investing activities
|
980,000
|
70,000
|
||||||
Net cash used in/provided by financing activities
|
5,376
|
1,647,271
|
||||||
Net change in cash
|
$
|
(18,122
|
)
|
$
|
(523,184
|
)
|
● |
Our ability to find new sources of revenue;
|
● |
Government regulation of the marijuana industry;
|
● |
Revision of Federal banking regulations for the marijuana industry;
|
● |
Legalization of recreational marijuana in more states; and
|
● |
revenues or expenses;
|
● |
any material increase or decrease in liquidity; or
|
● |
expected sources and uses of cash.
|
Name
|
Age
|
Position
|
||
Erin Phillips
|
39
|
President, Chief Financial and Accounting Officer and a Director
|
All Other
|
||||||||||||||||||||||||||
Fiscal
|
Annual
|
|||||||||||||||||||||||||
Year
|
Stock
|
Option
|
Compen-
|
|||||||||||||||||||||||
Name and Principal
|
Ending
|
Salary
|
Bonus
|
Awards
|
Awards
|
sation
|
||||||||||||||||||||
Position
|
January 31,
|
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
|
Total
|
||||||||||||||
Erin Phillips
|
2017
|
$
|
180,000
|
—
|
—
|
—
|
—
|
$
|
180,000
|
|||||||||||||||||
President, Chief
|
2016
|
$
|
167,189
|
—
|
--
|
--
|
--
|
$
|
167,189
|
|||||||||||||||||
Financial and
|
||||||||||||||||||||||||||
Accounting Officer
|
||||||||||||||||||||||||||
Shawn Phillips
|
2017
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Former Chief
|
2016
|
$
|
79,266
|
—
|
—
|
—
|
—
|
$
|
79,266
|
1.
|
The dollar value of base salary (cash and non-cash) earned during the year. During the two years ended January 31, 2017 no non-cash compensation was earned by any of the persons listed in the table.
|
2.
|
The dollar value of bonus (cash and non-cash) earned during the year. During the two years ended January 31, 2017 no non-cash compensation was earned by any of the persons listed in the table.
|
3.
|
During the periods covered by the table, the value of our shares issued as compensation for services to the persons listed in the table.
|
4.
|
The value of all stock options granted during the periods covered by the table.
|
5.
|
All other compensation received that we could not properly report in any other column of the table.
|
6.
|
This person resigned his position with us on June 30, 2015.
|
Name
|
Projected Compensation
|
% of time to be devoted to our business
|
||
Erin Phillips
|
$ 180,000
|
90%
|
Name
|
Shares Owned
|
% of Outstanding Shares
|
||
Erin Phillips
|
23,124,184
|
86%
|
||
All officers and directors as
a group (one person)
|
23,124,184
|
86%
|
Year ended January 31,
|
||||||||
2017
|
2016
|
|||||||
Audit Fees
|
$
|
—
|
$
|
55,246
|
||||
Audit-Related Fees
|
—
|
—
|
||||||
Tax Fees
|
—
|
—
|
||||||
All Other Fees
|
—
|
—
|
||||||
Total Fees
|
$
|
—
|
$
|
55,246
|
January 31,
|
||||||||
2017
|
2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
133,189
|
$
|
151,311
|
||||
Assets of discontinued operations, net
|
663,280
|
1,417,719
|
||||||
Total current assets
|
796,469
|
1,569,030
|
||||||
Tenant improvements and office equipment, net of accumulated amortization and depreciation of $23,126 and $15,284 at January 31, 2017 and 2016, respectively
|
1,325
|
9,167
|
||||||
Equity method investment in unconsolidated subsidiary
|
39,159
|
11,659
|
||||||
Trademark, net of accumulated amortization of $2,257 and $1,525 at January 31, 2017 and 2016, respectively
|
8,753
|
9,485
|
||||||
Total assets
|
$
|
845,706
|
$
|
1,599,341
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
190,958
|
$
|
306,128
|
||||
Due to related party
|
298,731
|
—
|
||||||
Liabilities of discontinued operations
|
3,757,471
|
3,719,247
|
||||||
Total current liabilities
|
4,247,160
|
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 January 31, 2017 and 2016, respectively
|
—
|
—
|
||||||
Additional Paid in Capital
|
3,152,658
|
3,152,658
|
||||||
Retained deficit
|
(6,554,112
|
)
|
(5,578,692
|
)
|
||||
Total stockholders' deficit
|
(3,401,454
|
)
|
(2,426,034
|
)
|
||||
Total liabilities and stockholders' deficit
|
$
|
845,706
|
$
|
1,599,341
|
STWC HOLDINGS, INC.
|
||||||||
CONDENSED STATEMENTS OF OPERATIONS
|
||||||||
Year Ended January 31,
|
||||||||
2017
|
2016
|
|||||||
Consulting services
|
$
|
23,250
|
$
|
37,000
|
||||
Gross profit
|
23,250
|
37,000
|
||||||
Operating costs and expenses
|
||||||||
Rents and other occupancy
|
64,203
|
67,421
|
||||||
Compensation
|
732,219
|
594,796
|
||||||
Professional, legal and consulting
|
182,581
|
381,844
|
||||||
Stock-based compensation
|
—
|
(6,667
|
)
|
|||||
Depreciation and amortization
|
8,575
|
9,001
|
||||||
General and administrative
|
299,789
|
74,507
|
||||||
Total operating costs and expenses
|
1,287,351
|
1,120,902
|
||||||
Loss from continuing operations
|
(1,264,101
|
)
|
(1,083,902
|
)
|
||||
Other costs and expenses
|
||||||||
Loss on equity investment in unconsolidated subsidiary
|
7,500
|
(13,341
|
)
|
|||||
Interest and financing costs
|
(4,287
|
)
|
—
|
|||||
Loss from continuing operations, before provision for taxes on income
|
(1,261,102
|
)
|
(1,097,243
|
)
|
||||
Provision for taxes on income
|
—
|
—
|
||||||
Loss from continuing operations, net of tax
|
(1,261,102
|
)
|
(1,097,243
|
)
|
||||
Gain/(Loss) from discontinued operations, net of tax
|
285,682
|
(2,396,608
|
)
|
|||||
Net loss
|
$
|
(975,420
|
)
|
$
|
(3,493,851
|
)
|
||
Basic earnings and fully diluted loss per common share
|
||||||||
Continuing operations
|
$
|
(0.05
|
)
|
$
|
(0.04
|
)
|
||
Discontinued operations
|
$
|
0.01
|
$
|
(0.09
|
)
|
|||
Basic and fully diluted weighted average number of shares outstanding
|
27,140,550
|
27,140,550
|
January 31,
|
||||||||
2017
|
2016
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(975,420
|
)
|
$
|
(3,493,851
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
7,843
|
8,269
|
||||||
Decrease in trademark
|
732
|
732
|
||||||
Stock-based compensation
|
—
|
(6,667
|
)
|
|||||
Increase in inventory
|
—
|
—
|
||||||
Increase in accounts payable and accrued expenses
|
(115,170
|
)
|
244,714
|
|||||
Increase in advances
|
—
|
—
|
||||||
Loss on equity investment in unconsolidated subsidiary
|
(7,500
|
)
|
13,341
|
|||||
Net cash flow used in operating activities from continuing operations
|
(736,540
|
)
|
(3,233,462
|
)
|
||||
Net cash flow (used in)/provided by operating activities from discontinued operations
|
(266,958
|
)
|
1,133,007
|
|||||
Net cash flow used in operating activities
|
(1,003,498
|
)
|
(2,100,455
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Investment in unconsolidated subsidiary
|
(20,000
|
)
|
(25,000
|
)
|
||||
Net cash flow used in investing activities from continuing operations
|
(20,000
|
)
|
(25,000
|
)
|
||||
Net cash flow provided by/(used in) investing activities from discontinued activities
|
1,000,000
|
(45,000
|
)
|
|||||
Net cash flow provided by/used in investing activities
|
980,000
|
(70,000
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Cash advances from related parties
|
298,731
|
—
|
||||||
Net cash flows from financing activities from continuing operations
|
298,731
|
—
|
||||||
Net cash flow from financing activities from discontinued activities
|
(293,355
|
)
|
1,647,271
|
|||||
Net cash flows from financing activities
|
5,376
|
1,647,271
|
||||||
Net cash flows
|
(18,122
|
)
|
(523,184
|
)
|
||||
Cash and equivalent, beginning of period
|
151,311
|
674,495
|
||||||
Cash and equivalent, end of period
|
$
|
133,189
|
$
|
151,311
|
||||
Supplemental cash flow disclosures:
|
||||||||
Cash paid for interest
|
$
|
759,526
|
$
|
635,997
|
||||
Cash paid for income taxes
|
$
|
—
|
$
|
—
|
Common Stock
|
Additional
Capital In
Excess of Par
|
Deficit | ||||||||||||||||||
Shares
|
Amount
|
Value
|
Accumulated
|
Total
|
||||||||||||||||
Balance, January 31, 2015
|
27,147,217
|
—
|
$
|
2,509,325
|
$
|
(2,084,841
|
)
|
$
|
424,484
|
|||||||||||
Beneficial conversion feature of the convertible notes
|
—
|
—
|
650,000
|
—
|
650,000
|
|||||||||||||||
Stock-based compensation
|
(6,667
|
)
|
—
|
(6,667
|
)
|
—
|
(6,667
|
)
|
||||||||||||
Net loss
|
—
|
—
|
—
|
(3,493,851
|
)
|
(3,493,851
|
)
|
|||||||||||||
Balance, January 31, 2016
|
27,140,550
|
—
|
3,152,658
|
(5,578,692
|
)
|
(2,426,034
|
)
|
|||||||||||||
Net loss
|
—
|
—
|
—
|
(975,420
|
)
|
(975,420
|
)
|
|||||||||||||
Balance, January 31, 2017
|
27,140,550
|
—
|
$
|
3,152,658
|
$
|
(6,554,112
|
)
|
$
|
(3,401,454
|
)
|
● |
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.
|
January 31,
|
||||||||
2017
|
2016
|
|||||||
Leasehold improvements
|
$
|
2,200
|
$
|
2,200
|
||||
Office equipment, furniture and fixtures
|
22,251
|
22,251
|
||||||
24,451
|
24,451
|
|||||||
Accumulated amortization and depreciation
|
(23,126
|
)
|
(15,284
|
)
|
||||
$
|
1,325
|
$
|
9,167
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net
|
||||||||||
Trademarks
|
$
|
11,010
|
$
|
2,257
|
$
|
8,753
|
Discontinued Operations Income Statement
|
||||||||
Year Ended January 31,
|
||||||||
2017
|
2016
|
|||||||
Rental income from the Regulated Entities (Affiliates)
|
$
|
3,895,191
|
$
|
4,260,917
|
||||
Total revenues
|
3,895,191
|
4,260,917
|
||||||
Operating costs and expenses
|
||||||||
Reserve for amounts due from Regulated Entities (Affiliates)
|
(698,854
|
)
|
928,002
|
|||||
Rents and other occupancy
|
3,271,179
|
3,877,336
|
||||||
Depreciation and amortization
|
183,105
|
218,559
|
||||||
General and administrative
|
12,471
|
—
|
||||||
Total operating costs and expenses
|
2,767,901
|
5,023,897
|
||||||
Income (loss) from continuing operations
|
1,127,290
|
(762,980
|
)
|
|||||
Other income and (expenses)
|
||||||||
Interest expense
|
(1,044,590
|
)
|
(1,088,338
|
)
|
||||
Loss on cancellation of lease and related tenant improvement loan
|
—
|
(62,503
|
)
|
|||||
Loss on settlement and cancellation of leases
|
—
|
(100,100
|
)
|
|||||
Gain on sale of assets
|
376,935
|
—
|
||||||
Income (loss) from discontinued operations, net o
|
$
|
459,635
|
$
|
(2,013,921
|
)
|
Discontinued Operations Balance Sheet
|
||||||||
January 31,
|
||||||||
2017
|
2016
|
|||||||
ASSETS
|
||||||||
|
||||||||
Due from Regulated Entities (Affiliates), net of collection allowance reserve of $2,523,681 and $3,222,535 at January 31, 2017 and 2016, respectively
|
$
|
—
|
$
|
—
|
||||
Tenant improvements and office equipment, net of accumulated amortization and depreciation of $147,271 and $62,024 at January 31, 2017 and 2016, respectively
|
353,940
|
630,386
|
||||||
Commercial operating property, net of accumulated amortization of $5,641 and $22,667 at January 31, 2017 and 2016, respectively
|
109,340
|
637,333
|
||||||
Prepaid expenses and other assets
|
200,000
|
150,000
|
||||||
Total assets
|
$
|
663,280
|
$
|
1,417,719
|
||||
LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
55,102
|
$
|
34,477
|
||||
Settlement of equipment advance payable
|
—
|
150,100
|
||||||
Accrued interest payable
|
423,522
|
138,458
|
||||||
Deferred rent and discount on mortgage payable
|
1,102,857
|
965,319
|
||||||
Mortgage payable
|
—
|
357,010
|
||||||
Convertible notes payable
|
—
|
2,073,883
|
||||||
Notes payable
|
2,000,000
|
—
|
||||||
Total liabilities
|
$
|
3,581,499
|
$
|
3,719,247
|
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.
|
Fair value of 50% interest at January 31, 2016
|
$
|
11,659
|
||
Investment during current period
|
20,000
|
|||
Recognition of operating income of the current period
|
7,500
|
|||
Fair value at January 31, 2017
|
$
|
39,159
|
Year Ended January 31,
|
||||||||
2017
|
2016
|
|||||||
Income tax expense (benefit):
|
||||||||
Current:
|
||||||||
Federal
|
$
|
(345,893
|
)
|
$
|
(1,316,263
|
)
|
||
State
|
(41,911
|
)
|
(161,765
|
)
|
||||
Deferred income tax expense (benefit):
|
(387,804
|
)
|
(1,478,028
|
)
|
||||
Valuation allowance
|
387,804
|
1,478,028
|
||||||
Provision
|
$
|
—
|
$
|
—
|
For the Fiscal Year Ending January 31,
|
||||
2018
|
$
|
53,250
|
||
2019
|
54,250
|
|||
2020
|
55,250
|
|||
2021
|
56,250
|
|||
2022
|
42,750
|
|||
Thereafter
|
—
|
|||
Total minimum lease payments
|
$
|
261,750
|
Exhibit No.
|
Description of Exhibit
|
|
2.1
|
Agreement to Exchange Securities (2)
|
|
2.2
|
Plan of Merger (3)
|
|
3.1(a)
|
Articles of Incorporation (1)
|
|
3.1(b)
|
Articles of Amendment dated July 21, 2004 (1)
|
|
3.1 (c)
|
Amendment to Articles of Incorporation dated September 5, 2014 (3)
|
|
3.3
|
Bylaws (1)
|
|
10.1
|
Exchange Option (3)
|
|
10.2
|
Custer Lease (2)
|
|
10.3
|
51st Ave. Lease (2)
|
|
10.4
|
Nome Lease (2)
|
|
10.5
|
32nd Ave. Lease (2)
|
|
10.6
|
Form of Master Service Agreement, together with schedule required by Instruction 2 to Item 601(a) of Regulation S-K (2)
|
|
10.7
|
Lock-Up/Leak-Out Agreements, together with schedule required by Instruction 2 to Item 601(a) of Regulation S-K (3)
|
|
10.8
|
Non-Disclosure/Non-Compete Agreements (3)
|
|
10.9
|
Bryant Street Lease (4)
|
|
10.10
|
Loan Agreement/Randall Taylor (4)
|
|
10.11
|
Promissory Note, Deed of Trust and Security Agreements 5110 Race Street Property (4)
|
|
10.12
|
Lease – 5110 Race Street (6)
|
|
10.13
|
Federal Heights Lease (6)
|
|
10.14
|
Form of Amended and Restated Senior Loan Agreement, 25% Convertible Promissory Note, Personal Guaranty Agreement and Subsidiary Guaranty Agreement, together with schedule required by instruction 2 to the Item 601 (a) of regulation S-K. (6)
|
|
21
|
Subsidiaries (3)
|
|
(1)
|
Incorporated by reference to the same exhibit filed with the Company's amended registration statement on Form 10-SB filed on October 29, 2007.
|
(2)
|
Incorporated by reference to the same exhibit filed with the Company's 8-K report filed on August 21, 2014.
|
(3)
|
Incorporated by reference to the same exhibit filed with the Company's registration statement on Form S-1 (File No. 333-52825).
|
(4)
|
Incorporated by reference to the same exhibit filed with Amendment No. 1 to the Company's registration statement on Form S-1 (File #333-198797).
|
(5)
|
Incorporated by reference to the same exhibit filed with Amendment No. 2 to the Company's registration statement on Form S-1 (File #333-198797).
|
(6)
|
Incorporated by reference to the same exhibit filed with Amendment No. 3 to the Company's registration statement on Form S-1 (File .#333-198797).
|
STWC HOLDINGS, INC. | |||
October 5, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, Principal Executive Officer |
Signature
|
Title
|
Date
|
||
/s/ Erin Phillips
|
President, Principal Financial
|
October 5, 2018
|
||
Erin Phillips
|
and Accounting Officer | |||
and a Director |
October 5, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, | |||
Principal Executive Officer |
October 5, 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 5, 2018
|
By:
|
/s/ Erin Phillips | |
Erin Phillips, Principal Executive and Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | |
---|---|---|
Jan. 31, 2017 |
Jul. 31, 2016 |
|
Document and Entity Information: | ||
Entity Registrant Name | STWC. Holdings, Inc. | |
Document Type | 10-K | |
Document Period End Date | Jan. 31, 2017 | |
Trading Symbol | stwc | |
Amendment Flag | false | |
Entity Central Index Key | 0001400683 | |
Current Fiscal Year End Date | --01-31 | |
Entity Common Stock, Shares Outstanding | 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 | FY |
CONDENSED BALANCE SHEETS - USD ($) |
Jan. 31, 2017 |
Jan. 31, 2016 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current assets: | ||||||||||||||
Cash | $ 133,189 | $ 151,311 | ||||||||||||
Assets of discontinued operations, net | 663,280 | 1,417,719 | ||||||||||||
Total current assets | 796,469 | 1,569,030 | ||||||||||||
Tenant improvements and office equipment | 1,325 | [1] | 9,167 | [2] | ||||||||||
Equity method investment in unconsolidated subsidiary | 39,159 | 11,659 | ||||||||||||
Trademark | 8,753 | [3] | 9,485 | [4] | ||||||||||
Total assets | 845,706 | 1,599,341 | ||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | 190,958 | 306,128 | ||||||||||||
Due to related party | 298,731 | |||||||||||||
Liabilities of discontinued operations | 3,757,471 | 3,719,247 | ||||||||||||
Total current liabilities | 4,247,160 | 4,025,375 | ||||||||||||
Stockholders' deficit | ||||||||||||||
Common stock | [5] | 0 | 0 | |||||||||||
Additional Paid in Capital | 3,152,658 | 3,152,658 | ||||||||||||
Retained deficit | (6,554,112) | (5,578,692) | ||||||||||||
Total stockholders' deficit | (3,401,454) | (2,426,034) | ||||||||||||
Total liabilities and stockholders' deficit | $ 845,706 | $ 1,599,341 | ||||||||||||
|
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICT) For the Years ending January 31, 2016 and January 31, 2017 - USD ($) |
Total |
Common Stock |
Additional Capital In Excess of Par Value |
Deficit Accumulated |
---|---|---|---|---|
Balance, Value at Jan. 31, 2015 | $ 424,484 | $ 2,509,325 | $ (2,084,841) | |
Balance, Shares at Jan. 31, 2015 | 27,147,217 | |||
Beneficial conversion feature of the convertible notes | 650,000 | 650,000 | ||
Stock-Based Compensation, Value | (6,667) | (6,667) | ||
Stock-Based Compensation, Shares | (6,667) | |||
Profit (loss) | (3,493,851) | (3,493,851) | ||
Balance, Value at Jan. 31, 2016 | (2,426,034) | 3,152,658 | (5,578,692) | |
Balance, Shares at Jan. 31, 2016 | 27,140,550 | |||
Profit (loss) | (975,420) | (975,420) | ||
Balance, Value at Jan. 31, 2017 | $ (3,401,454) | $ 3,152,658 | $ (6,554,112) | |
Balance, Shares at Jan. 31, 2017 | 27,140,550 |
Note 1 - Organization |
12 Months Ended |
---|---|
Jan. 31, 2017 | |
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 |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, we consider 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, we have 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. The Company reviews 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 the fiscal years ended January 31, 2017 and 2016 was $1,576 and $7,843, 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, we 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 of $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 $2,257 and $1,525 at January 31, 2017 and 2016, respectively, and consisted of the following at January 31, 2017:
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 January 31, 2017 and 2016. The summarized discontinued operating results for the years ended January 31, 2017 and 2016, 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 - We have 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 August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of ASU 2016-15.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition- Construction-Type and Production-Type Contracts. ASU 2014-09's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today's guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"), which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. As such, the updated standard will be effective for the Company in the first quarter of 2018. The Company may adopt the new standard under the full retrospective approach or the modified retrospective approach. The Company intends to apply the modified retrospective approach upon adoption in the first quarter of 2018. The new standard will not impact the Company's revenue. The new standard will not have a material impact on the timing or classification of the Company's cash flows as reported in the Consolidated Statement of Cash Flows and is not expected to have a significant impact on the Company's Consolidated Statement of Operations. The Company does not anticipate any adjustments as a result of implementing the new standard.
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 |
12 Months Ended |
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Jan. 31, 2017 | |
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, we have not achieved profitable operations, and have cumulative losses through January 31, 2017 of $6.6 million. the Company's losses to date raise substantial doubt about our ability to continue as a going concern. the Company's ability to continue as a going concern is dependent upon the Company 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 the Company's 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 |
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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 we 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 - Investment in Unconsolidated Subsidiary |
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Note 5 - Investment in Unconsolidated Subsidiary: | Note 5 Investment in Unconsolidated Subsidiary:
Effective June 12, 2015, we purchased a 50% interest in SentinelStainwise, LLC ("SSL"), which was recorded at the Company's cost of $25,000 using the equity method of accounting. SSL is 50% owned by Sentinel, Inc. and the Company. It was formed for the purpose of providing consulting services to Native American entities that are considering participating in the marijuana industry. In accordance with Accounting Standard Codification 810-10, Consolidation Overall, we remeasured the Company's held equity interest at the acquisition-date fair value, reduced by any operating income of $7,500 for the period on the Company's investment in SSL.
SSL recently began operations during the year ended 2016, and since there is little or no market data for SSL, our investment has been deemed a level 3 investment for valuation purposes. Thus, we used unobservable inputs to determine the fair market value of our investment in SSL at January 31, 2017, and it is management's belief that the fair market value of our investment in SSL is $39,159, which is the amount of the Company's original investment, less operating losses incurred through January 31, 2017. |
Note 6 - Income Taxes |
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Note 6 - Income Taxes: | Note 6 Income Taxes:
The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company's assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
The Company adopted the provisions of ASC 740, "Income Taxes" on July 1, 2007. FASB ASC 740 provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a "more-likely-than-not" recognition threshold at the effective date to be recognized upon the adoption of FASB ASC 740 and in subsequent periods. The components of the income tax provision are as follows:
We have a net operating loss carryforward for financial statement reporting purposes of $6,554,112 and $5,578,692 from the years ended January 31, 2017 and 2016, respectively. |
Note 7 - Stock-Based Compensation |
12 Months Ended |
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Jan. 31, 2017 | |
Notes | |
Note 7 - Stock-Based Compensation: | Note 7 Stock-Based Compensation:
The Company issued 198,333 shares of common stock as compensation to employees during the year ended January 31, 2015, and recognized $198,333 of expense. The shares were fully vested upon issuance and were valued at $1.00 per share, the value on the grant date of January 31, 2015. Approximately $6,667 previously recognized as stock-based compensation was not distributed in the form of compensation, and thus, a reduction of additional paid in capital in the like amount of $6,667 recognized during the year ended January 31, 2016. |
Note 8 - Operating Leases |
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Note 8 - Operating Leases | Note 8 - 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 years ended January 31, 2017 and 2016, rent expense for each period was $64,203 and $67,421, respectively.
As of January 31, 2017, future minimum lease payments are as follows:
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Note 9 - Due To Related Party |
12 Months Ended |
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Jan. 31, 2017 | |
Notes | |
Note 9 - Due To Related Party | Note 9 Due to Related Party
The Company borrowed $298,731 from related parties to fund operations during the year ended January 31, 2017. The loans do not carry an interest rate and do not have a maturity date. As of January 31, 2017, the Company owed related parties $298,731. The Company did not owe any money to related parties as of January 31, 2016. |
Note 10 - Contingencies |
12 Months Ended |
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Jan. 31, 2017 | |
Notes | |
Note 10 - Contingencies | Note 10 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 11 - Subsequent Events |
12 Months Ended |
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Jan. 31, 2017 | |
Notes | |
Note 11 - Subsequent Events | Note 11 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) |
12 Months Ended |
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Jan. 31, 2017 | |
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) |
12 Months Ended |
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Jan. 31, 2017 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and cash equivalents For purposes of the statement of cash flows, we consider 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, we have 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) |
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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. The Company reviews 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 the fiscal years ended January 31, 2017 and 2016 was $1,576 and $7,843, respectively. |
Note 2 - Summary of Significant Accounting Policies: Income Tax, Policy (Policies) |
12 Months Ended |
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Jan. 31, 2017 | |
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) |
12 Months Ended |
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Jan. 31, 2017 | |
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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, we 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 of $7,500 for the period. |
Note 2 - Summary of Significant Accounting Policies: Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy (Policies) |
12 Months Ended |
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Jan. 31, 2017 | |
Policies | |
Impairment or Disposal of Long-Lived Assets, Including Intangible 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: Goodwill and Intangible Assets, Policy (Policies) |
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Goodwill and Intangible Assets, 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 $2,257 and $1,525 at January 31, 2017 and 2016, respectively, and consisted of the following at January 31, 2017:
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Note 2 - Summary of Significant Accounting Policies: Discontinued Operations, Policy (Policies) |
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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 January 31, 2017 and 2016. The summarized discontinued operating results for the years ended January 31, 2017 and 2016, respectively, are, as follows: |
Note 2 - Summary of Significant Accounting Policies: Comprehensive Income, Policy (Policies) |
12 Months Ended |
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Jan. 31, 2017 | |
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) |
12 Months Ended |
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Jan. 31, 2017 | |
Policies | |
Earnings Per Share, Policy | Net income per share of common stock - We have 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, Policy (Policies) |
12 Months Ended |
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Jan. 31, 2017 | |
Policies | |
Recently Issued Accounting Pronouncements, Policy | 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 August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of ASU 2016-15.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition- Construction-Type and Production-Type Contracts. ASU 2014-09's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today's guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"), which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. As such, the updated standard will be effective for the Company in the first quarter of 2018. The Company may adopt the new standard under the full retrospective approach or the modified retrospective approach. The Company intends to apply the modified retrospective approach upon adoption in the first quarter of 2018. The new standard will not impact the Company's revenue. The new standard will not have a material impact on the timing or classification of the Company's cash flows as reported in the Consolidated Statement of Cash Flows and is not expected to have a significant impact on the Company's Consolidated Statement of Operations. The Company does not anticipate any adjustments as a result of implementing the new standard.
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) |
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Note 2 - Summary of Significant Accounting Policies: Goodwill and Intangible Assets, Policy: Schedule of Intangible Assets and Goodwill (Tables) |
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Schedule of Intangible Assets and Goodwill |
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Note 2 - Summary of Significant Accounting Policies: Discontinued Operations, Policy: Disposal Groups, Including Discontinued Operations (Tables) |
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Disposal Groups, Including Discontinued Operations |
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Note 2 - Summary of Significant Accounting Policies: Discontinued Operations, Policy: Schedule of Other Assets and Other Liabilities (Tables) |
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Schedule of Other Assets and Other Liabilities |
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Note 5 - Investment in Unconsolidated Subsidiary: Equity Method Investments (Tables) |
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Equity Method Investments |
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Note 6 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables) |
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Schedule of Components of Income Tax Expense (Benefit) |
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Note 8 - Operating Leases: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) |
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Schedule of Future Minimum Rental Payments for Operating Leases |
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Note 2 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy: Property, Plant and Equipment (Details) - USD ($) |
Jan. 31, 2017 |
Jan. 31, 2016 |
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Details | ||
Leasehold Improvements, Gross | $ 2,200 | $ 2,200 |
Furniture and Fixtures, Gross | $ 22,251 | $ 22,251 |
Note 2 - Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Details) - USD ($) |
12 Months Ended | |
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Jan. 31, 2017 |
Jan. 31, 2016 |
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Details | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant and Equipment, Period Increase (Decrease) | $ 1,576 | $ 7,843 |
Note 2 - Summary of Significant Accounting Policies: Goodwill and Intangible Assets, Policy (Details) - USD ($) |
Jan. 31, 2017 |
Jan. 31, 2016 |
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Details | ||
Finite-Lived Intangible Assets, Accumulated Amortization | $ 2,257 | $ 1,525 |
Note 5 - Investment in Unconsolidated Subsidiary (Details) - USD ($) |
Jan. 31, 2017 |
Jan. 31, 2016 |
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Details | ||
Equity method investment in unconsolidated subsidiary | $ 39,159 | $ 11,659 |
Note 6 - Income Taxes (Details) - USD ($) |
Jan. 31, 2017 |
Jan. 31, 2016 |
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Details | ||
Retained deficit | $ 6,554,112 | $ 5,578,692 |
Note 7 - Stock-Based Compensation (Details) |
12 Months Ended |
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Jan. 31, 2016
USD ($)
| |
Details | |
Stock-based compensation | $ 6,667 |
Note 8 - Operating Leases (Details) - USD ($) |
12 Months Ended | |
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Jan. 31, 2017 |
Jan. 31, 2016 |
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Details | ||
Rents and other occupancy | $ 64,203 | $ 67,421 |
Note 9 - Due To Related Party (Details) |
12 Months Ended |
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Jan. 31, 2017
USD ($)
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Details | |
Cash advances from related parties | $ 298,731 |
Due to related party | $ 298,731 |
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