0001662252-19-000031.txt : 20190409 0001662252-19-000031.hdr.sgml : 20190409 20190408173813 ACCESSION NUMBER: 0001662252-19-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 71 CONFORMED PERIOD OF REPORT: 20190131 FILED AS OF DATE: 20190409 DATE AS OF CHANGE: 20190408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: mCig, Inc. CENTRAL INDEX KEY: 0001525852 STANDARD INDUSTRIAL CLASSIFICATION: CIGARETTES [2111] IRS NUMBER: 274439285 STATE OF INCORPORATION: NV FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55986 FILM NUMBER: 19738103 BUSINESS ADDRESS: STREET 1: 4720 SALISBURY ROAD, STE 100 CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 570-778-6459 MAIL ADDRESS: STREET 1: 4720 SALISBURY ROAD, STE 100 CITY: JACKSONVILLE STATE: FL ZIP: 32256 FORMER COMPANY: FORMER CONFORMED NAME: Lifetech Industries Inc. DATE OF NAME CHANGE: 20110804 FORMER COMPANY: FORMER CONFORMED NAME: Liftech Industries Inc. DATE OF NAME CHANGE: 20110714 10-Q 1 q19mcig10q.htm 10-Q q19mcig10q.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

  

Form 10-Q

  

(Mark One)

  

[]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2019

  

[   ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the transition period from _______________ to _______________.

  

Commission file number:  000-55986

  

mCig, Inc.

(Exact name of registrant as specified in its charter)

  

Nevada

27-4439285

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

  

  

4720 Salisbury Road  Jacksonville, FL

32256

(Address of principal executive offices)

(Zip Code)

  

  

Registrant’s telephone number, including area code

(570) 778-6459

  

  

  

  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [√] No [  ]

  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [√] No [  ]

  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

  

Large accelerated filer                    [  ]

Accelerated filer                     [  ]

Non-accelerated filer                      [  ]

Smaller reporting company   [√]

(Do not check if smaller reporting company)

  

  

  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [√]

As of February 15, 2019, the Company had 516,974,596 shares of common stock, $0.0001 par value outstanding.

Transitional Small Business Disclosure Format Yes [  ] No [√]


 

mCig, Inc.

  

TABLE OF CONTENTS

  

  

PART I. FINANCIAL INFORMATION 

 

Item 1. Financial Statements

  3

Condensed Consolidated Balance Sheets as of January 31, 2019 (unaudited) and April 30, 2018

  4

Condensed Consolidated Statements of Operations for the three and nine months ended January 31, 2019 and 2018 (unaudited)

  5

Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2019 and 2018 (unaudited)

  6

Notes to Condensed Consolidated Financial Statements (unaudited)

  7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  19

Item 3. Quantitative and Qualitative Disclosures about Market Risk

  29

Item 4. Controls and Procedures

  29

  

PART II. OTHER INFORMATION 

 

Item 1. Legal Proceedings

  30

Item 1A. Risk Factors

  30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

  30

Item 3. Defaults Upon Senior Securities

  30

Item 4. Mine Safety Disclosures

  30

Item 5. Other Information

  30

Item 6. Exhibits

  31

SIGNATURES 

  32

 

2

 


 

PART I – FINANCIAL INFORMATION

 

Item 1.   Financial Statements

 

Interim Condensed Financial Statements and Notes to Interim Financial Statements

 

General

 

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Company’s annual report on Form 10-K for the year ended April 30, 2018. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and nine months ended January 31, 2019 are not necessarily indicative of the results that can be expected for the year ending April 30, 2019.

 

3

 


 

mCig, Inc.

and SUBSIDIARIES

Consolidated Balance Sheets

ASSETS

     

January 31,

 

April 30,

     

2019

 

2018

Current Assets

     

 

Cash and cash equivalents

 $              380,297

 

 $             511,950

 

Accounts receivable, net

                 425,719

 

             2,159,267

 

Inventory

                 913,079

 

                  63,297

 

Work in Progress

                 471,891

 

                  64,245

 

Notes and other receivable

                 148,000

 

                    1,529

 

Prepaid expenses

                   20,189

 

                  90,141

 

 

Total current assets

              2,359,175

 

             2,890,429

Property, plant and equipment, net

              2,839,219

 

             3,138,019

Cost basis investment

              4,263,594

 

                967,608

Intangible assets, net

                 555,086

 

                835,320

Total assets

 $         10,017,074

 

 $          7,831,376

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

     

 

Accounts payable and accrued expenses

 $              578,355

 

 $             218,703

 

Due to shareholder

              1,217,565

 

                571,138

 

Other current liabilities

                   91,365

 

                          -  

 

Reserve for uncollected accounts

                          -  

 

                586,560

 

Reserve for legal settlements

                 750,580

 

                750,579

 

Deferred revenue

                   54,310

 

                    5,145

 

 

Total current liabilities

              2,692,175

 

             2,132,125

   

Total Liabilities

              2,692,175

 

             2,132,125

Stockholders' equity

     
 

Preferred stock, $0.0001 par value; 50,000,000 shares authorized;

                        435

 

                    1,185

   

4,350,000 and 11,850,000 shares issued and outstanding, as

   

of January 31, 2019 and April 30, 2018, respectively.

     

 

Common stock, $0.0001 par value; 560,000,000 shares authorized;

                   51,698

 

                  41,561

 

 

516,974,596 and 415,610,809 shares issued and outstanding,

     

 

 

as of January 31, 2019, and April 30, 2018, respectively.

     
 

Treasury stock

               (680,330)

 

               (680,330)

 

Additional paid in capital

            16,853,943

 

           12,673,339

 

Accumulated deficit

            (7,750,392)

 

            (6,208,431)

 

 

Total stockholders' equity

              8,475,354

 

             5,827,324

 

Non-controlling interest

            (1,150,455)

 

               (128,073)

 

 

Total equity

              7,324,899

 

             5,699,251

   

Total liabilities and stockholders' equity

 $         10,017,074

 

 $          7,831,376

           

See accompanying notes to unaudited consolidated financial statements.

 

4

 


 

mCig, Inc.

and SUBSIDIARIES

Consolidated Statements of Operations

                       
 

(unaudited)

 

(unaudited)

 

 For the three months ended

January 31,

 

 For the nine months ended

January 31,

 

2019

 

2018

 

2019

 

2018

Sales

 

 

 $      763,084

 

 $      780,241

 

 $  1,941,478

 

 $     6,006,252

 

Construction costs

   

             6,586

 

           31,320

 

        186,686

 

        2,663,181

 

Merchandise

 

 

         322,328

 

         257,960

 

        884,147

 

           756,970

 

Commissions

   

           33,881

 

           18,893

 

          83,356

 

             56,307

 

Merchant fees, shipping, and other costs

 

 

           26,241

 

           44,658

 

        163,032

 

           397,394

 

Amortization and depreciation as a COG

   

         121,159

 

         115,495

 

        363,135

 

           199,455

Total Cost of Sales

 

 

         510,195

 

         468,326

 

     1,680,356

 

        4,073,307

Gross Profit

   

         252,889

 

         311,915

 

        261,122

 

        1,933,024

Selling, general, and administrative

 

 

         144,830

 

           84,033

 

        383,041

 

           241,786

Professional fees

   

           73,578

 

           65,043

 

        259,956

 

           106,056

Stock based compensation

 

 

                    -

 

         233,500

 

          28,990

 

           278,750

Marketing & advertising

   

           40,098

 

           13,345

 

          60,487

 

             25,503

Research and development

 

 

                    -

 

                513

 

                   -

 

               4,634

Consultant fees

   

         142,495

 

         430,092

 

        632,682

 

           962,209

Bad Debts

 

 

      1,250,000

 

                    -  

 

     1,250,000

 

                      -  

Amortization and depreciation

   

           69,176

 

           10,581

 

        219,063

 

             31,472

Total operating expenses

 

 

      1,720,177

 

         837,107

 

     2,834,219

 

        1,650,410

Income (Loss) from operations

   

     (1,467,288)

 

        (525,192)

 

    (2,573,097)

 

           282,614

Other income (expense)

 

 

             1,541

 

                     -  

 

          25,319

 

                      -  

Net income from operations

   

     (1,465,747)

 

        (525,192)

 

    (2,547,778)

 

           282,614

Loss on discontinued operations

 

 

          (16,568)

 

                     -  

 

         (16,568)

 

                      -  

Net income(loss) before minority interest

   

     (1,482,315)

 

        (525,192)

 

    (2,564,346)

 

           282,614

Gain attributable to non-controlling interest

 

 

          731,671

 

           70,422

 

        1,022,382

 

             70,422

Net income (loss) attributable to controlling interest

 $     (750,644)

 

 $    (454,770)

 

 $ (1,637,086)

 

 $        353,036

Basic and diluted (Loss) per share:

                 

Income(Loss) per share from continuing operations

          (0.0015)

 

          (0.0012)

 

         (0.0032)

 

             0.0009

Income(Loss) per share

   

          (0.0015)

 

          (0.0012)

 

         (0.0032)

 

             0.0009

Weighted average shares outstanding - basic and diluted

480,262,805

 

    392,843,133

 

493,439,072

 

    392,843,133

                       

See accompanying notes to unaudited consolidated financial statements.

 

5

 


 

mCig, Inc.

and SUBSIDIARIES

Statements of Cash Flows (unaudited)

 

For the Nine Months Ended January 31,

       

2019

 

2018

Cash flows from operating activities:

     

Net (Loss)

             (2,564,358)

 

 $             282,614

Adjustments to reconcile net loss to net

     
 

Cash provided by (used in) operating activities:

     

 

 

Depreciation and amortization

                 570,739

 

                230,927

   

Common stock issued for services

                   28,990

 

                278,750

 

Decrease (Increase) in:

 

 

 

   

Accounts receivable, net

                (320,164)

 

           (2,002,287)

 

 

Other receivable

                (146,471)

 

                         -  

   

Inventories

             (1,342,837)

 

                    3,475

 

 

Prepaid expenses and other current assets

                   66,112

 

                105,300

   

Accounts payable, accrued expenses and taxes payable

                 359,653

 

              (783,176)

 

 

Deferred revenue

                   49,165

 

              (504,023)

   

Reserve for uncollectable accounts

              1,417,284

 

                420,379

 

Total adjustment to reconcile net income to net cash

                 682,471

 

           (2,250,655)

     

Net cash provided In operating activities

             (1,881,887)

 

           (1,968,041)

Cash flows from investing activities:

 

 

 

 

Increase (Decrease) in:

     

 

 

Cost basis investments

                 409,502

 

                (50,000)

   

Acquisition of property, plant and equipment

                (179,000)

 

              (388,897)

 

 

Acquisition of intangible assets

                   79,912

 

                  (5,054)

     

Net cash received in investing activities

                 310,414

 

              (443,951)

Cash Flows From Financing Activities:

 

 

 

   

Borrowing from related party, net

                 646,427

 

                313,354

 

 

Notes Payable

                   91,365

 

                         -

 

 

Proceeds from Issuance of Stock, Net

                 702,028

 

             1,143,927

     

Net Cash Provided By Financing Activities

              1,439,820

             1,457,281

Net Change in Cash

                (131,653)

 

              (954,711)

Cash at Beginning of Year

                 511,950

 

             1,634,662

Cash at End of Period

 $              380,297

 

 $             679,951

             

Supplemental Disclosure of Cash Flows Information:

   

 

 

Cash paid for interest

 $                        -  

 

 $                      -  

   

Cash paid for income taxes

 $                        -  

 

 $                      -  

Non-cash Investing and Financing Activities:

 

 

 

OBITX proceeds from issuance of stock

 $                          -

 

 $            275,650

Stock issued for cannabis licenses in California

 $              292,500

 

                           -

Stock issued for purchase of CBJ Distributing

 $           3,043,537

 

 $                        -

Stock issued for land acquisition in California

 $                67,500

 

 $                        -

 

See accompanying notes to unaudited consolidated financial statements.

 

6

 


 

 

mCig, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1. Organization and Basis of Presentation

 

The accompanying consolidated audited financial statements of mCig, Inc., (the “Company”, “we”, “our”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).

 

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany accounts and transactions have been eliminated.

 

The consolidated financial statements include the accounts of the Company and its subsidiaries:

 

·         Agri-Contractors, LLC (“AGRI”)

·         CAAcres, Inc., (“CAAcres”) – 80% ownership

·         CA Acres Foundation (FKA NewCo2, Inc.,) (“CALF”) – 80% ownership

·         Grow Contractors Inc., (“GROW”)

·         mCig Internet Sales, Inc., (“MINT”)

·         NYAcres, Inc., (“NYAcres”)

·         OBITX, Inc., (FKA GigeTech, Inc.) (“GIGE”) – 53% ownership and 95% voting control

·         Tuero Asset Management, Inc. (“TAMI”)

·         Vapolution, Inc., (“VAPO”)

·         VitaCig, Inc., (“VITA”)

·         CBJ Distributing (“CBJ”) – 80% ownership

 

Description of Business

 

The Company was incorporated in the State of Nevada on December 30, 2010 originally under the name Lifetech Industries, Inc. Effective August 2, 2013, the name was changed from "Lifetech Industries, Inc." to "mCig, Inc." reflecting the new business model.  All agreements related to the Lifetech business were terminated and closed as of April 30, 2014. It will not have any impact on the current and future operations because all of these agreements are related to the previous business directions of the Company.

 

The Company initially earned revenue through wholesale and retail sales of electronic cigarettes, vaporizers, and accessories in the United States. It offered electronic cigarettes and related products through its online store at www.mcig.org, as well as through the company’s wholesale, distributor, and retail programs. We expanded operations to include the VitaCig brand in 2014.

 

The Company has been involved in the marijuana and cannabinoid (CBD), and electronic cigarette industries.  It currently markets, sales, services, and distributes cannabis wholesale supplies, CBD products, software, and electronic cigarettes, vaporizers, and accessories internationally and in the United States.

 

In FY2015 we began offering hemp based cannabinoid (“CBD”) products through various websites and wholesale distribution.  In 2016 the Company expanded its products and services to include construction.  In 2017 we added consulting services in the cannabis industry.  In addition, we launched a social media platform, 420Cloud, in the cannabis markets.   The Company continues to look at strategic acquisitions and product and service developments for future growth.  We are currently incubating a cannabis supply company.

 

In 2018 we added agriculture by planting a 40 acres lot in New York state to grow Hemp.  In addition, we acquired approximately two acres of land in California City, California and obtained three cannabis licenses (cultivating, manufacturing, and distribution of cannabis products in California).

 

During this fiscal year, we operated approximately 15 different websites (which are not incorporated as part of this Form 10K report).  The corporate website is located at www.mciggroup.com.

 

7

 


 

Subsidiaries of the Company

 

The Company currently operates, in addition to mCig, Inc., the following subsidiaries which are consolidated:

 

Agri-Contractors, LLC

 

On November 18, 2016 we acquired, through a Purchase Agreement, Agri-Contractors, LLC.  We combined the operations of Agri-Contractors with Grow Contractors Corp and expanded the services to include consulting.  We merged the operations of Agri-Contractors, LLC with Grow Contractors in December 2016.  Agri-Contractors, LLC provides consulting services to grow facilities, production companies, and dispensaries servicing the cannabis medical and recreational markets.

 

CAAcres, Inc.

 

CAAcres, Inc., (“CAAcres”) was incorporated on May 10, 2018 under the laws of the state of California.  CAAcres was created to participate in the Joint Venture with Cal Foundation for the cultivation, manufacturing, and distribution of cannabis products within the state of California.  CAAcres is an agriculture venture for the cultivation, manufacturing and distribution of cannabis products. We are currently assessing the requirements for the build out of the land acquired in California City, California for this project.

 

CAL Foundation (FKA Newco2, Inc)

 

NewCo2, Inc., was created on January 19, 2018 as a California not-for-profit company.  We own 80% of the not-for-profit business.  NewCo2, Inc., maintains three cannabis licenses in the State of California. On August 6, 2018 the name was changed to Cal Acres Foundation, Inc.

 

CBJ Distributing, LLC

 

On June 30, 2018 the company elected to exercise its option to acquired Cannabiz Supply with an effective date of May 1, 2018.  The purchase price was $3,457,796.

 

Grow Contractors Inc

 

The Company incorporated Grow Contractors Inc., on December 5, 2016.  Grow Contractors Inc, operates the construction and consulting segment.  On November 18, 2016, the Company purchased Agri-Contractors, LLC and assigned the Grow Contractors name and website to Grow Contractors Inc.  Grow Contractors Inc., is a wholly owned subsidiary of the Company.

 

mCig Internet Sales, Inc.

 

On June 1, 2016, the Company incorporated mCig Internet Sales, Inc., (“mCig Internet”) in the state of Florida in order to operate our CBD business and to consolidate all wholesale and online retail sales from various websites.  mCig Internet is a wholly owned subsidiary of the Company.  

 

mCig Limited

 

We incorporated in May 2017 to provide corporate oversight to MCIG, and its subsidiaries, operations within the European theatre. mCig Limited., was incorporated in the United Kingdom. mCig Limited, is a wholly owned subsidiary of the Company.

 

NYAcres, Inc.

 

NYAcres, Inc., (“NYAcres”) was incorporated on November 20, 2017 under the laws of the state of New York.  NYAcres was created to participate in the Joint Venture NYAcres with FarmOn! Foundation.  The joint venture is an agriculture venture for the planting and growing of industrial hemp.

 

OBITX, Inc.

 

We incorporated GigETech, Inc., in the state of Delaware on April 3, 2017.  We then assigned our newly acquired social media platform software to GigETech.  We launched the social media platform on April 20, 2017. GigETech, Inc., subsequently changed its name to OBITX, Inc. Currently we have approximately 95% voting control and 53% ownership on a fully diluted basis of OBITX.  OBITX has an effective registration statement filed with the SEC and intends to begin trading its common stock in the open market.

 

8

 


 

Omni Health, Inc., (FKA - VitaCig, Inc.)

 

On February 24, 2014, the Company entered into a Contribution Agreement with Omni Health, Inc (“OMHE”). In accordance with this agreement, OMHE accepted the contribution by mCig, Inc. of specific assets consisting solely of pending trademarks for the term “VitaCig” filed with the USPTO and $500 in cash as contribution in exchange for 500,135,000 shares of common capital stock representing 100% of the shares outstanding of OMHE. 

 

On November 28, 2014, mCig completed the spin-off of OMHE (the “Spin-off”). Effective as of 11:59 p.m., New York City time, on November 28, 2014 (the “Distribution Date”), the Company distributed 270,135,000 shares of common stock of OMHE, par value $0.0001 per share (“OMHE Common Stock”), to holders of mCig’s stockholders of record as a pro rata dividend.  The record date for the dividend was November 28, 2014. The Ex-Dividend Date was set for November 25, 2014. mCig stockholders received one share of OMHE Common Stock for everyone share of common stock, par value $0.0001 per share, of mCig.  The Spin-off was completed for the purpose of legally and structurally separating OMHE from mCig. MCig retained 230,000,000 shares of common stock and remains a shareholder. The shares of common stock to be received by mCig shareholders were registered on a Form S-1 filed by OMHE and declared effective by the Securities and Exchange Commission on November 5, 2014.

 

On June 22, 2016, the Company and OMHE, entered into a Separation and Share Transfer Agreement whereby OMHE transferred the assets and operations of the e-Cig business to the Company in exchange for the return of 172,500,000 shares of OMHE Common Stock to the treasury of OMHE, and for a reduction of the amount owed to the Company in excess of $95,000.

 

Omni Health, Inc., a Nevada Corporation, is a public company trading under OMHE.

 

Tuero Asset Management, Inc.

 

We incorporated Tuero Asset Management, Inc., in which to manage all our intellectual and intangible assets.

 

Tuero Capital, Inc.

 

We incorporated in May 2017 to provide financial services to our clients.  Tuero Capital provides financial services and consulting to cannabis and cryptocurrency markets. On August 15, 2018 the Company became a minority owner of Tuero Capital when Tuero Capital issued 10,500,000 common shares of stock to 59 investors.  Tuero Capital, Inc., became Redfern BioSystems, Inc (“Redfern”). The Company currently owns 15.3% of Redfern. See Related Party Transactions for further information.

 

Vapolution, Inc.

 

On January 23, 2014, the Company entered into a Stock Purchase Agreement acquiring 100% ownership in Vapolution, Inc., which manufactures and retails home-use vaporizers. As part of this transaction, .mCig, Inc. issued 5,000,000 common shares to shareholders of Vapolution, Inc. in two separate payments of 2,500,000 common shares. The shareholders of Vapolution, Inc. retained the right to rescind the transaction, which expired on January 23, 2015 but was extended to May 23, 2015. Subsequently, on August 25, 2015, the final payment to the shareholders of Vapolution as extended to September 30, 2015 and the right to rescind the transaction was extended to June 30, 2017.  On April 30, 2015 the Company impaired the $625,000 initial investment into Vapolution, Inc., but maintains the $67,500 investment on its balance sheet for the second payment.

 

On January 23, 2014, Paul Rosenberg, CEO of mCig, Inc. cancelled an equal amount (2,500,000 shares) of common shares owned by him resulting in a net non-dilutive transaction to existing mCig, Inc. shareholders. The remaining 2,500,000 of common shares owned by Paul Rosenberg were cancelled to offset the 2,500,000 new shares issued from the treasury to complete the purchase of Vapolution, Inc.

 

On January 17, 2017 the Company entered into a settlement agreement with the previous owners of Vapolution, Inc., whereby they returned to the Company 1,700,000 shares of MCIG common stock, $961 in cash, and $40,541 in inventory. Prior to this, Vapolution was not incorporated in to the consolidated financial statements of the Company.  Effective January 17, 2017 we began consolidating Vapolution with the Company’s financial reports.  Vapolution, Inc., is wholly owned by mCig, Inc.

 

VitaCig, Inc.

 

On May 26, 2016 we incorporated VitaCig, Inc., (“VitaCig”) in the state of Florida.  VitaCig headquarters our global e-cig operations.  VitaCig, Inc., is a wholly owned subsidiary of the Company.

 

9

 


 

Note 2. Summary of Significant Accounting Policies

 

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the wholly owned subsidiaries of AGRI, GROW, MINT, MCIGL, NYACRES, TAMI,  VAPO, and VITA.  We have also consolidated our subsidiaries in which we have controlling interest.   The subsidiaries in which we have a controlling interest include CAACRES, CALF, CBJ, and GIGE. Significant intercompany balances and transactions have been eliminated.

 

Concentration of Credit Risk and Significant Customers

Financial instruments which potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.  The Company places its temporary cash investments with financial institutions insured by the FDIC.

 

Concentrations of credit risk with respect to trade receivables are limited due to the diverse group of customers to whom the Company sells. The Company establishes an allowance for doubtful accounts when events and circumstances regarding the collectability of its receivables warrant based upon factors such as the credit risk of specific customers, historical trends, other information and past bad debt history. The outstanding balances are stated net of an allowance for doubtful accounts.

 

For the 3 months ended January 31, 2019, the Company had no significant customer that represented more than 5% of its sales.

 

On May 1, 2018, we adopted Topic 606, using the modified retrospective transition method applied to those contracts which were not completed as of February 1, 2018. Results for reporting periods beginning after February 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on February 1, 2018.

 

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

·         identification of the contract, or contracts, with a customer;

·         identification of the performance obligations in the contract;

·         determination of the transaction price;

·         allocation of the transaction price to the performance obligations in the contract; and

·         recognition of revenue when, or as, we satisfy a performance obligation.

 

Segment Information

In accordance with the provisions of SFAS No. 131Disclosures about Segments of an Enterprise and Related Information, the Company is required to report financial and descriptive information about its reportable operating segments. The Company identifies its operating segments as divisions based on how management internally evaluates separate financial information, business activities and management responsibility. In addition to the corporate segment, the Company segments and the subsidiaries associated with each segment are as follows:

 

 

Business Segments by Company/Subsidiary

Segment

Subsidiary

Cultivation, Manufacturing, and Distribution

Agri-Contractors, LLC

Grow Contractors, Inc.

Retail Sales

CBJ Distributing, LLC

mCig Internet Sales, Inc

Vapolution, Inc.

VitaCig, Inc.

Media and Technologies

OBITX, Inc.

 

Haute Job, LLC

 

Campaign Pigeon, LLC

Agriculture

CAL Foundation

CAAcres, Inc.

NYAcres, Inc.

Corporate

mCig, Inc.

mCig Limited

Tuero Asset Management, Inc.

 

 

10

 


 

We record segments as i) cultivation, manufacturing, and distribution (CMD), ii) retail sales, iii) media and technologies, iv) agriculture, and v) corporate.  We report our financial performance based on our segments described in Note 8 – Segment Information.

 

Business Segments

 

Total Revenue

 

Percentage of Total Revenue

 

Three months ended January 31,

 

The three months ended January 31,

 

2019

2018

2017

 

2019

2018

2017

CMD

 $                      -

             118,195

 $       1,090,982

 

0.0%

15.1%

80.1%

Retail Sales

             754,114

             586,140

             271,707

 

98.8%

75.1%

19.9%

Media and Technologies

                 8,970

               75,906

                         -

 

1.2%

9.7%

0.0%

Agriculture

                         -

                         -

                         -

 

0.0%

0.0%

0.0%

Corporate

                         -

                         -

                         -

 

0.0%

0.0%

0.0%

Total

 $          763,084

             780,241

 $       1,362,689

 

100.0%

100.0%

100.0%

               
               

Business Segments

 

Total Revenue

 

Percentage of Total Revenue

 

Nine months ended January 31,

 

The nine months ended January 31,

 

2019

2018

2017

 

2019

2018

2017

CMD

 $            70,000

          3,112,545

 $       1,340,844

 

3.6%

51.8%

59.9%

Retail Sales

          1,816,188

          1,551,651

             896,561

 

93.5%

25.8%

40.1%

Media and Technologies

               55,290

          1,342,056

                         -

 

2.9%

22.3%

0.0%

Agriculture

                         -

                         -

                         -

 

0.0%

0.0%

0.0%

Corporate

                         -

                         -

                         -

 

0.0%

0.0%

0.0%

Total

 $       1,941,478

          6,006,252

 $       2,237,405

 

100.0%

100.0%

100.0%

 

Inventory

In accordance with ASU 2015-11 – Inventory (Topic 330) – Simplifying the Measurement of Inventory, the Company’s inventory consists of finished product, mCig products valued at the lower of cost or market valuation under the first-in, first-out method of costing.

 

As of January 31, 2019, the Company had no allowance for obsolescence.  The level of inventory maintained by the Company is insignificant and is typically ordered on an as needed basis, or just-in-time. 

 

Property, Plant, and Equipment

Property, plant and equipment (“PPE”) are stated at cost less accumulated depreciation and amortization.  Expenditures for maintenance and repairs are charged to expense as incurred.  Additions, improvements and major replacements that extend the life of the asset are capitalized.

 

Depreciation and amortization is recorded using the straight-line method over the estimated useful lives of depreciable assets, which are generally three to five years.

 

11

 


 

Accounts Receivable

The Company’s accounts receivable in its construction and retail segments. As the retail division is either paid through credit card processing and prepaid wholesale purchases, the Company projects insignificant amounts of outstanding accounts receivable for its retail division. The Company recognizes receipt of payment at the time the funds are deposited with the merchant services account of the Company. When the merchant services vendor determines to maintain a reserve for potential refunds and chargebacks, the Company reviews the reserve, to i) determine if the reserve is probably uncollectible, and ii) if a loss is probable, a reasonable estimate of the amount of the loss.  We then allocate a portion of the reserve for bad debt, in accordance with FASB ASC 450-20-25-2.  Once the vendor releases the funds, the bad debt reserve is appropriately reversed. The Company recognized $2,003,844 and $0 as an uncollectable reserve for the three months ending January 31, 2019 and January 31, 2018, respectively.

 

Intangible Assets

The Company’s intangible assets consist of certain website development costs that is amortized over their useful life in accordance with the guidelines of ASC 350-30 General Intangible Other than Goodwill and ASC 350-50 Website Development Costs

 

Basic and Diluted Net Loss Per Share

The Company follows ASC Topic 260 – Earnings Per Share, and FASB 2015-06, Earnings Per Share to account for earnings per share.  Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.  During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. 

 

Basic net earnings (loss) per common share are computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares consist of Series A convertible preferred stock, convertible debentures, stock options and warrant common stock equivalent shares.

 

Concentration of Credit Risk 

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and trade receivables.  Concentrations of credit risk with respect to trade receivables are limited due to the clients that comprise our customer base and their dispersion across different business and geographic areas.  We estimate and maintain an allowance for potentially uncollectible accounts and such estimates have historically been within management's expectations.  

 

We rely almost exclusively on one Chinese factory as our principle supplier for our e-cig products. Therefore, our ability to maintain operations is dependent on this third-party manufacturer.

 

Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States.  The Company may occasionally maintain amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000.  The risk is managed by maintaining all deposits in high quality financial institutions. The Company had $2,003,844 and $0 in excess of federally insured limits at January 31, 2019 and 2018.

 

Note 3. Going Concern

 

The Company's financial statements are prepared using generally accepted accounting principles, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because the business is new and has a limited history and relatively few sales, no certainty of continuation can be stated. The accompanying financial statements for the three months and nine months ended January 31, 2019 and 2018 have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

The Company has suffered losses from operations and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern.

 

Management is taking steps to raise additional funds to address its operating and financial cash requirements to continue operations in the next twelve months. Management has devoted a significant amount of time in the raising of capital from additional debt and equity financing. However, the Company’s ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations. The financial statements contain no adjustments for the outcome of this uncertainty.

 

Note 4. Property, Plant and Equipment

 

The following is a detail of equipment at January 31, 2019 and April 30, 2018:

 

12

 


 

Property, Plant, and Equipment

   

 

As of

 

 

As of

     

January 31, 2019

   

April 30, 2018

Office furniture

 

$

                  29,090

 

$

                  29,090

Rollies machine

   

                    5,066

   

                    5,066

Computer equipment

 

 

                    1,544

 

 

                    1,544

420 Cloud

   

             3,129,412

   

             3,127,251

ATM Machines

 

 

                            -

 

 

                299,970

Farm equipment

   

                  30,765

   

                            -

Warehouse equipment

 

 

                  57,622

 

 

                            -

Land

 

 

                292,500

 

 

                            -

Total acquisition cost

 

$

             3,545,999

 

$

             3,462,921

Accumulated depreciation

 

 

                706,780

 

 

                324,902

Total property, plant, and equipment

$

             2,839,219

 

$

             3,138,019

 

Depreciation expense on property, plant and equipment was $381,876 and $199,725 for the nine months ended January 31, 2019 and 2018, respectively.

 

Note 5: Work in Progress

 

The Company reports its agriculture crop growth as work-in-progress until such time as the crop has been harvested and either sold or utilized by the Company.

 

Work in Progress Overview

   

As of

   

As of

   

January 31, 2019

   

April 30, 2018

 

Agriculture

 Product (seeds)

$

            60,000

 

$

                       -

 Labor

 

          272,139

   

              30,000

 Materials and supplies

 

            118,147

 

 

              34,865

 Site Development

 

            21,605

 

 

                       -

 Total work in progress

$

          471,891

 

$

              64,865

 

Note 6: Inventory

 

Inventory is primarily held in retail sales.  We maintain a small inventory of seeds in our agriculture segment.  In addition, we currently hold 62 ATM machines held for sale within the next 12 months.

 

Inventory

   

As of

   

As of

 

 

January 31, 2019

 

 

April 30, 2018

Retail Sales

$

          480,463

 

$

              38,714

Agriculture

 

            24,450

   

              23,963

Assets held for sale

 

          408,166

 

 

                       -

Total inventory

$

          913,079

 

$

              62,677

 

Note 7:  Accounts Receivable

 

The Company’s accounts receivable is primarily from its direct customers.  From its direct customers, we have $559,145 in cultivation, manufacturing, and distribution in revenue; $1,250,000 from its tech and media segment, with the remaining amount from its retail sales not through credit card processing.  

 

In addition to cash receipts, we utilize high risks credit card processing companies.  Vendors tasked with accepting all credit card payments for purchases from its customers, are typically held in escrow for potential chargebacks.  As traditional credit card processing is unavailable in the cannabis markets, we utilize services that require greater holding periods and higher retention requirements. 

 

13

 


 

While the Company expects these receivables to be fully collectible it has created an allowance for doubtful accounts for the period. As of January 31, 2019, we have $416,746 in accounts receivable from our retail customers, of which $27,462 is currently due from our high-risk merchant services provider.

 

The Company maintains subscription receivables of $42,500 for the exercise of warrants and options.  The funds were not received prior to the filing of this report and as such are not incorporated in the balance sheet statement.  A complete breakdown of the accounts receivable and subscriptions receivable is as follows:

 

Accounts Receivable

   
   

As of

   

As of

 

 

January 31, 2018

 

 

April 30, 2018

A/R from credit card reserve

$

              27,462

 

$

                 28,431

A/R from direct customers

 

         2,402,101

   

            2,061,352

Subscription receivables

 

              42,500

 

 

               186,784

Allowance for bad debt

 

        (2,003,844)

   

                          -

Subscription receivable not received by time of filing

 

             (42,500)

 

 

            (117,300)

Total Accounts Receivable

$

           425,719

 

$

            2,159,267

 

We have created a reserve for uncollectable accounts in the amount of $2,003,844.

 

Note 8. Intangible Assets:

 

Prior fiscal years we tracked finite lived Intangible Assets and infinite lived Intangible Assets.  Effective May 1, 2018 we have elected to track all intangible assets as finite lived Intangible Assets and amortize according to a three years life cycle.  The following reflects our intangible assets:

 

Intangible Assets

     
     

As of

   

As of

     

January 31, 2019

   

April 30, 2018

Domains

 

$

               365,847

 

                363,348

Trademarks

   

               455,860

   

                455,637

Website

 

 

                 30,491

 

 

                  41,760

VitaCBD

   

               200,000

   

                200,000

Total acquisition cost

 

$

            1,052,198

 

$

             1,060,745

Less: Amortization

   

              (423,572)

   

              (225,649)

Adjustment for sale of asset

 

 

                (73,540)

 

 

                  -  

Current Intangible Assets

 

$

               555,086

 

$

                835,096

 

Note 9. Cost Basis Investments

 

The Company has invested $4,263,594 through January 31, 2019.  A breakdown of these investments include:

 

14

 


 

Cost Basis Investments

     

As of

   

As of

 

   

 

January 31, 2019

 

 

April 30, 2018

 

Stony Hill Corp

 

$

700,000

   

$  

700,000

 

Omni Health, Inc

   

152,023

   

152,023

 

CBJ Distributing Option

 

  

                       -

   

   

50,000

 

New York Hemp Pilot Program

   

                 50,000

   

50,000

 

California City Cannabis Licenses

 

  

225,585

   

   

15,585

 

CBJ Distributing

   

2,966,029

   

                 -

 

Agri-Contractors, LLC

 

 

160,008

 

 

                 -

 

Redfern BioSystems, Inc.

 

 

9,949

 

 

 

 

Total acquisition cost

 

$

4,263,594

 

  $

967,608

 

 

Note 10. Business Segments:

 

The Company operates primarily in five segments; i) cultivation, manufacturing, and distribution, ii) retail sales, iii) technology, iv) agriculture, and v) corporate. This summary reflects the Company's current segments, as described below.  

 

Information concerning the revenues and operating income (loss) for the three and nine months ended January 31, 2019 and 2018, and the identifiable assets for the segments in which the Company operates are shown in the following table:

 

Business Segments

For the three months ended January 31, 2019

CMD

Retail

Technology

Agriculture

Corporate

Total

Revenue

 $                   -

 $       754,114

 $           8,970

 $                   -

 $                   -

 $       763,084

Segment Income (Loss) from Operations

          (54,407)

          208,617

        (1,436,719)

          (44,261)

        (140,518)

        (1,467,288)

Total Assets

          641,294

          978,299

       4,113,713

          (79,385)

       4,363,153

     10,017,074

Capital Expenditures

                      -

            72,636

                 312

                     -

                     -

            72,948

Depreciation and Amortization

              2,070

            21,316

          121,805

              2,067

            43,077

          190,335

             

For the three months ended January 31, 2018

CMD

Retail

Technology

Agriculture

Corporate

Total

Revenue

 $       118,195

 $       586,140

 $         75,906

 $                   -

 $                   -

 $       780,241

Segment Income from Operations

          (10,593)

            29,532

          (78,462)

          (28,876)

        (366,166)

        (454,565)

Total Assets

          785,985

          410,491

       4,717,014

          (28,886)

       2,245,486

       8,130,090

Capital Expenditures

            15,714

                 225

              5,689

            55,408

     (3,076,467)

     (2,999,431)

Depreciation and Amortization

                 130

                 271

          115,495

                      -

            10,180

         126,076

             

Business Segments

For the  nine months ended January 31, 2019

CMD

Retail

Technology

Agriculture

Corporate

Total

Revenue

 $        70,000

 $    1,816,188

            46,320

 $                   -

 $                   -

 $    1,941,478

Segment Income (Loss) from Operations

        (286,002)

          341,126

        (1,929,462)

        (243,902)

        (454,857)

     (2,564,346)

Total Assets

         641,294

          978,299

      4,113,713

        (79,385)

       4,363,153

     10,017,074

Capital Expenditures

                    -

            72,636

         277,966

       (503,554)

        (232,470)

        (385,422)

Depreciation and Amortization

             6,211

         75,243

         365,312

              6,201

         129,231

          582,198

             

For the nine months ended January 31, 2018

CMD

Retail

Technology

Agriculture

Corporate

Total

Revenue

 $    3,112,545

 $    1,551,651

 $    1,342,056

 $                   -

 $                   -

 $    6,006,252

Segment Income from Operations

          180,186

          138,303

          766,473

          (28,876)

        (694,752)

          361,334

Total Assets

          785,335

          414,939

       4,670,214

                      -

      2,241,464

      8,111,952

Capital Expenditures

            15,714

                 225

          256,089

             55,408

     (3,076,467)

     (2,749,031)

Depreciation and Amortization

                 389

                 813

          199,455

                      -

           30,270

         230,927

 

15


 

Note 11. Non-GAAP Accounting and GAAP Reconciliation – Net Income and EBITDA

 

The Company reports all financial information required in accordance with generally accepted accounting principles (GAAP). The Company believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information because it is useful to understand MCIG’s performance that many investors believe may obscure MCIG’s ongoing operational results.

For example, MCIG uses non-GAAP net income (Adjusted Net Income), which excludes stock-based compensation, amortization of acquired intangible assets, impairment of intangible assets, costs from acquisitions, restructurings and other infrequently occurring  items, non-cash deferred tax provision and litigation and related settlement costs. MCIG uses EBITDA and Adjusted Net Income, which adjusts net income (loss) for amortization of intangible assets, impairment of intangible assets, stock-based compensation, costs related to acquisitions, restructuring and other infrequently occurring items, settlement of litigation, gains or losses on dispositions, pro forma adjustments to exclude lines of business that have been acquired during the periods presented, current cash tax provision, depreciation, and interest expense (income), net.

The company believes that excluding certain costs from Adjusted Net Income and EBITDA provides a meaningful indication to investors of the expected on-going operating performance of the company. Whenever MCIG uses such historical non-GAAP financial measures, it provides a reconciliation of historical non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measure.

The following tables reflect the non-GAAP Consolidated Statements of Operations for the three and nine months ended January 31, 2019 and January 31, 2018, respectively.

The following table is a reconciliation of the EBITDA and Adjusted Net Income (non-GAAP measures) to the Net Income with the GAAP Consolidated Statements of Operation for the three and nine months ended January 31, 2019 and 2018, respectively.

 

mCig, Inc.

and SUBSIDIARIES

Adjusted Consolidated Statements of Operations

(unaudited)

 

 For the three months Ending January 31,

 

 For the nine months Ending January 31,

 

2019

 

2018

 

2019

 

2018

               

Sales

 $      763,084

 

 $     780,241

 

 $  1,941,478

 

 $     6,006,252

Total Cost of Sales

         389,036

 

        468,326

 

     1,317,221

 

        4,073,307

Gross Profit

         374,048

 

        311,915

 

        624,257

 

         1,932,945

Selling, general, and administrative

         144,830

 

          84,033

 

        383,041

 

            241,786

Professional Fees

           27,635

 

          65,043

 

        114,984

 

            106,056

Marketing & Advertising

           40,098

 

          13,345

 

          60,487

 

              25,503

Consultant Fees

         142,495

 

        430,092

 

        632,682

 

            962,209

Total Operating Expenses

         355,058

 

        592,513

 

     1,191,194

 

            1,335,554

Income (Loss) From Operations

           18,990

 

       (280,598)

 

       (566,937)

 

         597,391

Other Income (Expense)

                     -

 

                     -  

 

                 17

 

                      -  

Net Loss Before Non-Controlling Interest

           18,990

 

       (280,598)

 

       (566,920)

 

         597,391

Loss Attributable to Non-Controlling Interest

            (6,282)

 

                    -  

 

       (121,300)

 

                      -  

Net Income (Loss) Attributable to Controlling Interest

 $        25,272

 

 $    (280,598)

 

 $    (445,620)

 

 $        597,391

Basic and Diluted (Loss) Per Share:

             

Income(Loss) per share from Continuing Operations

 $             0.00

 

 $          (0.00)

 

 $          (0.00)

 

 $              0.00

Income(Loss) Per Share

 $             0.00

 

 $          (0.00)

 

 $          (0.00)

 

 $              0.00

Weighted Average Shares Outstanding - Basic and Diluted

480,262,805

 

  392,843,133

 

493,439,072

 

    392,843,133

               

See accompanying notes to unaudited consolidated financial statements.

 

16

 


 

Adjusted Net Income Reconciliation

 

 For the 3 months ended

January 31,

 

 For the nine months ended

January 31,

 

2019

 

2018

 

2019

 

2018

CONSOLIDATED STATEMENT of OPERATIONS:

             

Net Income (Loss)

 $     (728,436)

 

 $    (457,770)

 

$  (1,591,652)

 

 $      356,036

Interest

                 -

 

                  -

 

                     17

 

                     -

Depreciation and Amortization

        190,335

 

         126,076

 

            582,198

 

         230,923

EBITDA

 $     (538,101)

 

 $    (328,694)

 

 $  (1,003,797)

 

 $      583,962

               

Stock Based Compensation

                       -

 

         233,500

 

              28,990

 

         278,750

Gains not in ordinary course of business

        562,731

 

                    -

 

            413,527

 

                    -

Gains attributable to non-controlling interest

6,282

 

 

 

            121,300

 

 

Adjusted net income

 $          25,272

 

 $      (95,194)

 

 $     (445,620)

 

 $      862,712

 

Note 12. Acquisition

 

On May 1, 2018, the Company exercised its option to acquire CBJ Distributing, LLC.  The Company acquired all cash, inventory, prepaid expenses, inventory, fixed assets, and intellectual property for a total of $3,578,861.  The Company issued $3,388,078 in MCIG stock at the rate of $0.29 per share and paid $190,783 in cash a\through reduction of loans, option price, and accounts receivable owed by CBJ Distributing to the Company. As a condition to this acquisition, the Company entered into Employment Agreements with Charlie Fox and Alex Levitsky.

 

In accordance to rule, the following table reflects the determination of the purchase price of the CBJ Distributing, LLC business:

 

Acquisition of CBJ Distributing

Cash

 

$

         112,557

Accounts Receivable

   

         158,064

Prepaid Expenses

 

 

             3,840

Inventory

   

         385,379

Fixed Assets

 

 

           47,758

Total assets acquired

 

$

         707,598

       

Current Liabilities

 

$

           94,226

Total liabilities assumed

 

$

           94,226

       

Total Purchase Price

Stock issued as part of acquisition (11,293,593)

 

$

      3,388,078

Reduction of Loan Receivable

   

             1,529

Reduction of Accounts Receivable

 

 

         139,254

Conversion of stock option

 

 

           50,000

Total Purchase Price

 

$

      3,578,861

Total assets acquired

   

       (707,598)

Total liabilities assumed

 

 

           94,226

Gains in assets

 

 

                540

Investment into CBJ Distributing

 

$

      2,966,029

 

17


 

Note 13.  Sale of Asset

 

On September 15, 2018 the Company sold the domain name www.cbd.biz to Redfern BioSystems, Inc., for $90,000.  The following chart represents that sale transaction.

 

Sale of CBD.BIZ

Notes receivable

   

         100,000

Income for financing

 

 

          (10,000)

Total sales price

 

$

           90,000

Domain name acquisition cost

   

           82,500

Accumulated amortization

   

         (11,458)

Total reductions from sales price

 

 

           71,042

Gain on asset

 

$

           18,958

 

The Company entered into a secured convertible promissory note with Redfern.  The note is due on September 14, 2019.  Should Redfern default the Company may convert the secured promissory note into 40 million common shares of the Redfern representing approximately 75% of the business.  Should the Company not elect to convert in the event of nonpayment by Redfern, the Company may take possession of the domain www.cbd.biz and its business operations.

 

Note 14. Related Parties and Related Party Transactions

 

The Company entered a Line of Credit with Paul Rosenberg (see Subsequent Events) for up to $100,000 in funding on May 1, 2016.  Throughout the years we have increased the line of credit multiple times.  As of January 31, 2019, the Company owed Mr. Rosenberg $1,157,271.

 

Note 15. Stockholders’ Equity

 

Common Stock

 

As of January 31, 2019, the Company was authorized to issue 560,000,000 common shares at a par value of $0.0001.  As of January 31, 2019, the Company had issued and outstanding 516,974,596 common shares.   

 

Preferred Stock

 

The Company has authorized 50,000,000 shares of preferred stock, of which it has designated 23,000,000 as Series A Preferred, at $0.0001 par value.   The Company has 4,350,000 issued and outstanding as of January 31, 2019.  During the three months ended the Company issued 1,000,000 shares of Series A Preferred stock in exchange for $200,000.  Each share of the Preferred Stock has 10 votes on all matters presented to be voted by the holders of the Company’s common stock.

 

Note 16. Subsequent Events

 

There are no reportable subsequent events.

 

18

 


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on  Form 10-Q and the consolidated financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended April 30, 2018.

 

Certain statements in this section contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements contained in this report and not clearly historical in nature are forward-looking, and the words “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “intends,” “potential,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) generally are intended to identify forward-looking statements.  Any statements in this report that are not historical facts are forward-looking statements. Actual results may differ materially from those discussed from time to time in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made except as required by law.

 

HISTORY AND BACKGROUND

 

We were incorporated in the State of Nevada on December 30, 2010 originally under the name Lifetech Industries, Inc. All agreements related to the Lifetech business were terminated and closed as of April 30, 2014.  Effective August 2, 2013, the name was changed from "Lifetech Industries, Inc." to "mCig, Inc."  The Company’s common stock is traded under the symbol “MCIG.”  The Company is based in Jacksonville, Florida.

 

mCig acts as a holding company that operates 10 subsidiaries.  In FY2017 we began tracking income through segments.  In FY2018 the company tracks its services and products through four segments and corporate.  We will track our financial records going forward by the following segments: 

 

·         Cultivation, Manufacturing and Distribution ("CMD")

·         Retail Sales

·         Media and Technologies

·         Agriculture

·      Corporate

 

GENERAL

 

Originally, we were formed to open and operate a full-service day spa in Montrose, California.  In October 2013 we repositioned ourselves as a technology company focused on two long-term secular trends sweeping the globe: (1) The decriminalization and legalization of marijuana for medicinal or recreational purposes; and, (2) the adoption of electronic vaporizing cigarettes (commonly known as “eCigs”).

  

The Company initially earned revenue through wholesale and retail sales of electronic cigarettes, vaporizers, and accessories in the United States. It offered electronic cigarettes and related products through its online store at www.mcig.org, as well as through the company’s wholesale, distributor, and retail programs. We expanded operations to include the VitaCig brand in 2014.

 

In FY2015 we began offering hemp-based cannabinoid (“CBD”) products through various websites. 

  

In 2016 the Company expanded its products and services to include construction. 

  

In 2017 we added consulting services in the cannabis industry.  In addition, we launched a social media platform, 420Cloud, in the cannabis markets.

 

In 2018 we added agriculture by planting a 40-acre lot in New York state to grow Hemp.  In addition, we acquired approximately two acres of land in California City, California and obtained three cannabis licenses (cultivating, manufacturing, and distribution of cannabis products in California).

 

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In addition, the Company continues to look at strategic acquisitions in product and service developments for future growth.  Subsequent to this reporting date, but prior to the filing of this annual report, we acquired a cannabis supply company in Nevada.

 

During this fiscal year, we operated multiple websites (which are not incorporated as part of this Form 10K report). The Company’s primary website is www.mciggroup.com

 

MARIJUANA INDUSTRY OVERVIEW

As of April 2017, there are a total of 29 states, plus the District of Columbia, with legislation passed as it relates to the legalization of medicinal and/or recreational cannabis. These state laws are in direct conflict with the United States Federal Controlled Substances Act (21 U.S.C. § 811) (“CSA”), which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug, which is viewed as having a high potential for abuse, has no currently-accepted use for medical treatment in the U.S., and lacks acceptable safety for use under medical supervision.

 

These 29 states, plus the District of Columbia, have adopted laws that either legalize cannabis for adult recreational use or legalize cannabis for adult patients under a physician’s supervision. These are collectively referred to as the states that have de-criminalized recreational and/or medicinal cannabis, although there is a subtle difference between de-criminalization and legalization, and each state’s laws are different.

Medical cannabis decriminalization is generally referred to as the removal of all criminal penalties for the private possession and use of cannabis by adults, including cultivation for personal use and casual, nonprofit transfers of small amounts. Legalization is generally referred to as the development of a legally controlled market for cannabis, where consumers purchase from a safe, legal, and regulated source.

The dichotomy between federal and state laws has also limited the access to banking and other financial services by marijuana businesses. The U.S. Department of Justice and the U.S. Department of Treasury issued guidance for banks considering conducting business with marijuana dispensaries in states where those businesses are legal, pursuant to which banks must now file a Marijuana Limited Suspicious Activity Report that states the marijuana business is following the government’s guidelines with regard to revenue that is generated exclusively from legal sales. However, since the same guidance noted that banks could still face prosecution if they provide financial services to marijuana businesses, it has led to the widespread refusal of the banking industry to offer banking services to marijuana businesses operating within state and local laws.

 

In November 2016, California and Nevada voters both approved cannabis use for adults over the age of 21 without a doctor’s prescription or recommendation, so called recreational marijuana, and permitted the cultivation and sale of marijuana, in each case subject to certain limitations. We intend to seek to obtain the necessary permits and licenses to expand our existing business to cultivate and distribute marijuana in compliance with these laws, although there is no guarantee that we will be successful in doing so. Despite the changes in state laws, marijuana remains illegal under federal law.

 

E-CIG INDUSTRY OVERVIEW

The global e-cigarette market is poised to grow over $47 billion by 2025 at a double digit CAGR from 2015 to 2025. 

United States

In the United States, in 2016, the Food and Drug Administration (“FDA”) finalized a rule extending the regulatory authority to cover all tobacco  products, including vaporizers, vape pens, hookah pens, electronic cigarettes (E-Cigarettes), e-pipes, and all other Electronic Nicotine Delivery Systems (“ENDS”). FDA now regulates the manufacture, import, packaging, labeling, advertising, promotion, sale, and distribution of ENDS. This includes components and parts of ENDS, but excludes accessories.

 

Under the new guidance, all companies that make, modify, mix, manufacture, fabricate, assemble, process, label, repack, relabel, or import any tobacco product are considered  tobacco product manufacturers.  Importers of finished tobacco products may be distributors and manufacturers of tobacco products.  Importers who do not own or operate a domestic establishment engaged in the manufacture, preparation, compounding or processing of a tobacco product are not required to register their establishment or provide product listing. However, they must comply with all other applicable tobacco product manufacturer requirements.

  

Recent statements by FDA have begun to clear up the U.S. federal agency’s position on nicotine free e-liquids and synthetic nicotine.  According to court statements made by the FDA, some devices that truly contain no nicotine (or only synthetic nicotine) may not be subject to the deeming regulations, depending on the circumstances in which they are likely to be used.  Some disposable, closed-system devices with zero-nicotine or synthetic nicotine e-liquids may also escape regulation as tobacco products if they meet certain further criteria. However, even if products currently fall outside the scope of the deeming rule, the FDA could choose to regulate them later.

 

A majority of our products fall into this category and we believe are exempt from FDA guidelines on electronic nicotine delivery systems.

 

20


 

International

 

The international markets have been largely driven by a flurry of activities including Mergers and Acquisitions, Patent Warfare, and increasing customization in products among others. Moreover, the emergence of Vape shops is increasingly engaging more users through their wide variety of products and better assistance while shopping the desired products. However, various governments’/ proposals to levy hefty taxes on vaporizer products are emerging as a key challenge for the market. Also, compatibility issues and the unregulated manufacturing process in China are yet other restraining factors in the e-cigarette market.

 

While North America, with U.S. leading the way will dominate the market throughout the forecast period, APAC will be growing at the fastest CAGR, accounting for more than 27% of the global e-cigarette market value by 2025. Significant revenue flow will be observed in China and India. 

 

More than 95% of our e-cig sales are international sales. 

 

CANNABIDIOL (CBD) INDUSTRY OVERVIEW

 

Cannabidiol (CBD) is one of of over 100 cannabinoids, including tetrahydrocannibidol (THC), found in the cannabis plant. Unlike THC, CBD does not produce a euphoric psychoactive effect. CBD is used for a variety of health and wellness purposes, and .  is present in both marijuana and industrial hemp..  It is estimated that the CBD market will grow to  $2.1 billion  in consumer sales by 2020, with $450 million of those sales coming from hemp-derived CBD. -  a 700% increase from 2016.  In 2015, the market for consumer sales of hemp-derived CBD products was $90 million, plus another $112 million in marijuana-derived CBD products which were sold through dispensaries – bringing a total CBD market to $202 million last year.  In addition to the 29 states plus the District of Columbia that have legalized cannabis, 15 additional states have legalized CBD products. 

 

Currently, the DEA classifies CBD as a Schedule I drug under the Controlled Substances Act. However, the release of a new CBD-based pharmaceutical known as Epidiolex in June of 2018, means that the DEA has until September 2018 to reclassify cannabis as either Schedule 2, 3, 4, or 5.

It is believed that the DEA’s actions violate the clear Congressional intent of not only of the Farm Bill, which defines industrial hemp as distinct from ‘marijuana’ and legalizes its cultivation and processing under licensing programs in place in 31 states; but also further violate the Consolidated Appropriations Act of 2016, which specifically prohibited federal authorities from using funds to obstruct the “transportation, processing, sale, or use of industrial hemp within or outside the State in which the industrial hemp is grown or cultivated.” Hence, the DEA may not require lawfully licensed hemp farmers or manufacturers in the U.S. to register for a permit to engage in interstate commerce of industrial hemp products.  

To further cloud the market, the FDA has placed restrictions on claims made by CBD manufacturers and issued staunch warning for those who claim to provide product with health cures without proper documentation and clinical studies.  As such, CBD products are intentionally light on details which make it difficult for consumers to know what to buy.

 

HEMP AGRICULTURE INDUSTRY OVERVIEW

 

There are an estimated 25,000 products derived from hemp, that fall into nine submarkets: agriculture, textiles, recycling, automotive, furniture, food and beverages, paper, construction materials, and personal care. 

 

The estimated total retail value of hemp products sold in the U.S. in 2016 was $688 million, a 20% increase from the previous year.  There is an average of 15% annual growth in U.S. retail sales from 2010-2105.  China is the largest importer of raw and processed hemp fiber in the U.S.  Canada is the predominant importer of hemp seed and oil cake.

 

DESCRIPTION OF SEGMENTS

CMD Segment

We provide consulting services dealing with the cultivation, manufacturing, and distribution of hemp and cannabis products.  Our services include:

 

21

 


 

Creation

Development

Operations

Application Assistance

Application Support

Grow Training

Business Structure & Registration

Facility Layout & Design

Cultivation Methods

Business Plan

Equipment Selection

Retail Training

Market Research

Construction Management

Vendor Relations

Financial Modeling & Forecasting

Merchandising

Compliance Audits

Branding

Process Creation

Staffing Services

Investor Relations

Policies & Procedures

 

Team Development

 

 

 

Retail Sales

 

Our retail sales include all products through distribution and online.  We offer products for resale in the following categories:

 

·         E-Cig

·         CBD products

·         Supplies for cannabis distributors, growers, and dispensaries

·         Vaporizers

 

Media and Technologies Segment

 

In 2017 we acquired 420Cloud and began operations under GigeTech, which later was changed to OBITX.  We are currently in the process of an S-1 registration for the spinoff of this business.  MCIG will retain control of the business after the effective spinoff.  For purposes of this report, the Company has determined that OBITX is a variable interest entity (VIE).

 

We provide advertising services in the cannabis and cryptocurrency markets.  In addition, we provide software solutions, website development, and other social media services.

 

Agriculture

 

We have planted our first 40-acres of industrial hemp under NYAcres, Inc. through a joint venture with FarmOn! Foundation.  Through our partnership with FarmOn! Foundation we are participants in the New York state sanctioned agricultural pilot program.

 

In addition, we have recently acquired approximately 2 acres of land in California City, California where we have obtained three licenses in the cultivation, manufacturing, and distribution of cannabis through the CAL Foundation (formerly NEWCO2, Inc., a California not-for-profit).  We have entered into a joint venture between CAL Foundation and CAAcres, Inc. for the development of the California City project.

 

DESCRIPTION OF SUBSIDIARIES

 

mCig Internet Sales, Inc.

  

On June 1, 2016, the Company incorporated mCig Internet Sales, Inc., (“mCig Internet”) in the state of Florida in order to operate our CBD business and to consolidate all wholesale and online retail sales from various websites.  mCig Internet is a wholly owned subsidiary of the Company.  

  

VitaCig, Inc.

  

On May 26, 2016 we incorporated VitaCig, Inc., (“VitaCig”) in the state of Florida.  VitaCig headquarters our global e-cig operations.  VitaCig, Inc., is a wholly owned subsidiary of the Company.

 

Grow Contractors Inc

  

The Company incorporated Grow Contractors Inc., on December 5, 2016.  Grow Contractors Inc, operates the construction and consulting segment.  On November 18, 2016, the Company purchased Agri-Contractors, LLC and assigned the Grow Contractors name and website to Grow Contractors Inc.  Grow Contractors Inc., is a wholly owned subsidiary of the Company.

 

22


 

 

mCig Limited

  

We incorporated in May 2017 to provide corporate oversight to MCIG, and its subsidiaries, operations within the European theatre. mCig Limited., was incorporated in the United Kingdom. mCig Limited, is a wholly owned subsidiary of the Company. 

 

Tuero Asset Management, Inc.

  

We incorporated Tuero Asset Management, Inc., in which to manage all our intellectual and intangible assets.

  

OBITX, Inc.

  

We incorporated GigETech, Inc., in the state of Delaware on April 3, 2017.  We then assigned our newly acquired social media platform software to GigETech.  We launched the social media platform on April 20, 2017. GigETech, Inc., subsequently changed its name to OBITX, Inc. Currently we have approximately 95% voting control and 53% ownership on a fully diluted basis of OBITX.  OBITX is currently filing an S-1 Registration statement to become an independent publicly traded company. 

 

NYAcres, Inc.

  

NYAcres, Inc., (“NYAcres”) was incorporated on November 20, 2017 under the laws of the state of New York.  NYAcres was created to participate in the Joint Venture NYAcres with FarmOn! Foundation.  The joint venture is an agriculture venture for the planting and growing of industrial hemp.

  

CAL Acres  Foundation (FKA Newco2, Inc)

  

Cal Foundation was created on January 19, 2018 as a California not-for-profit company.  We own 80% of the not-for-profit business.  Cal Foundation maintains three cannabis licenses in the State of California.

  

CAAcres, Inc.

  

CAAcres, Inc., (“CAAcres”) was incorporated on May 10, 2018 under the laws of the state of California.  CAAcres was created to participate in the Joint Venture with Cal Foundation for the cultivation, manufacturing, and distribution of cannabis products within the state of California.  CAAcres is an agriculture venture for the cultivation, manufacturing and distribution of cannabis products. We are currently assessing the requirements for the build out of the land acquired in California City, California for this project. 

 

Vapolution, Inc.

  

On January 23, 2014, the Company entered into a Stock Purchase Agreement acquiring 100% ownership in Vapolution, Inc., which manufactures and retails home-use vaporizers. As part of this transaction, .mCig, Inc. issued 5,000,000 common shares to shareholders of Vapolution, Inc. in two separate payments of 2,500,000 common shares. The shareholders of Vapolution, Inc. retained the right to rescind the transaction, which expired on January 23, 2015 but was extended to May 23, 2015. Subsequently, on August 25, 2015, the final payment to the shareholders of Vapolution as extended to September 30, 2015 and the right to rescind the transaction was extended to June 30, 2017.  On April 30, 2015 the Company impaired the $625,000 initial investment into Vapolution, Inc., but maintains the $67,500 investment on its balance sheet for the second payment.

On January 23, 2014, Paul Rosenberg, CEO of mCig, Inc. cancelled an equal amount (2,500,000 shares) of common shares owned by him resulting in a net non-dilutive transaction to existing mCig, Inc. shareholders. The remaining 2,500,000 of common shares owned by Paul Rosenberg were cancelled to offset the 2,500,000 new shares issued from the treasury to complete the purchase of Vapolution, Inc.

  

On January 17, 2017 the Company entered into a settlement agreement with the previous owners of Vapolution, Inc., whereby they returned to the Company 1,700,000 shares of MCIG common stock, $961 in cash, and $40,541 in inventory. Prior to this, Vapolution was not incorporated in to the consolidated financial statements of the Company.  Effective January 17, 2017 we began consolidating Vapolution with the Company’s financial reports.  Vapolution, Inc., is wholly owned by mCig, Inc. 

  

Agri-Contractors, LLC

  

On November 18, 2016 we acquired, through a Purchase Agreement, Agri-Contractors, LLC.  We combined the operations of Agri-Contractors with Grow Contractors Corp and expanded the services to include consulting.  We merged the operations of Agri-Contractors, LLC with Grow Contractors in December 2016.  Agri-Contractors, LLC provides consulting services to grow facilities, production companies, and dispensaries servicing the cannabis medical and recreational markets.

 

23

 


 

Cannabiz Supply, LLC

  

On June 30, 2018 the company elected to exercise its option to acquired Cannabiz Supply with an effective date of May 1, 2018.  The purchase price was $3,457,796.

 

Critical Accounting Policies and Estimates

 

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.  On an ongoing basis, we evaluate our estimates, including those related to uncollectible receivables, inventory valuation, deferred compensation and contingencies.  

 

We base our estimates on historical performance and on various other assumptions that we believe to be reasonable under the circumstances.  These estimates allow us to make judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

We believe the following accounting policies are our critical accounting policies because they are important to the portrayal of our financial condition and results of operations and they require critical management judgments and estimates about matters that may be uncertain.  If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected.

 

Results of Operations for the three months ended January 31, 2019

 

Our operating results for the three months ended January 31, 2019 and 2018 are summarized as follows:

 

         

 Three months ended January 31,  

         

2019

 

2018

               

Sales

   

 $              763,084

 

 $               780,241

Cost of Sales

   

                 510,195

 

                  468,326

Gross Profit (Loss)

   

                 252,889

 

                  311,915

Total Operating Expenses

   

              1,720,177

 

                  837,107

Other Income

 

 

                     1,541

 

                         -

Net Income (Loss) from Continuing Operations

   

             (1,465,747)

 

                (525,192)

 

Revenue

 

Our revenue from operations for the three months ended January 31, 2019 was $763,084 compared to $780,241, a decrease of $17,157 from the three months ended January 31, 2018.  This decrease is a result of a decrease in the construction segment of $118,195 and the technology segment of $66,936, with an increase in the retail segment of $167,974 for the three months ended January 31, 2018.

 

Cost of Goods Sold

 

Our cost of goods sold for the three months ended January 31, 2019 was $510,195 compared to $468,326 for the three months ended January 31, 2018. The increase is primarily due to the increase in amortization of assets used as a cost of good.

 

Gross Profit

 

Our gross income for the three months ended January 31, 2019 was $252,889 compared to a gross profit of $311,915 for the three months ended January 31, 2018. The gross profit of $252,889 for the three months ended January 31, 2019 represents approximately 33% as a percentage of total revenue. The gross profit of $311,915 for the three months ended January 31, 2018 represents approximately 40% as a percentage of total revenue. This decrease in the gross profit is primarily attributed to the inclusion of amortization of assets directly associated with sales. 

 

Operating Expenses

 

Our operating expenses increased by $883,070 to $1,720,177 for the three months ended January 31, 2019, from $837,107 for the three months ended January 31, 2018.

 

24


 

The increase was primarily due to the increases in bad debt of $1,250,000, professional fees of $8,535, selling, general, and administrative fees of $60,797, marketing fees of $26,753 and amortization and depreciation of $58,595 offset by decreases in stock-based compensation of $233,500, research and development of $513, and consulting fees of $287,597.

 

Our total operating expenses for the three months ended January 31, 2019 of $1,720,177 consisted of $144,830 of selling, general and administrative expenses, $73,578 of professional fees, consulting expense of $142,495, marketing fee of $40,098, bad debt of $1,250,000 and $69,176 of amortization and depreciation expenses. Our general and administrative expenses consist of bank charges, telephone expenses, meals and entertainments, computer and internet expenses, postage and delivery, office supplies and other expenses.

 

Net Income (Loss)

 

Our net loss of $1,465,747 from operations for the three months ended January 31, 2019 from $525,192 for the three months ending January 31, 2018 represents a deficit of $940,555. The increase in net loss compared to the prior period is primarily a result of the gross profit decrease of $59,026, and a increase in operating expenses of $883,070 with an increase in other income of $1,541.

 

Results of Operations for the nine months ended January 31, 2019

 

Our operating results for the nine months ended January 31, 2019 and 2018 are summarized as follows:

 

         

 Nine months ended January 31,  

         

2019

 

2018

               

Sales

   

$             1,914,478

 

 $            6,006,252

Cost of Sales

   

               1,680,356

 

               4,073,307

Gross Profit

   

                  261,122

 

               1,933,024

Total Operating Expenses

   

               2,834,219

 

               1,650,410

Other Income

 

 

                    25,319

 

                         -

Net Income (Loss) from Continuing Operations

   

             (2,547,778)

 

                  282,614

 

Revenue

 

Our revenue from operations for the nine months ended January 31, 2019 was $1,914,478 compared to $6,006,252, a decrease of $4,064,774 from the nine months ended January 31, 2018.  This decrease is a result of the construction segment, which has terminated its business operations with $70,000 income for the nine months ended January 31, 2019 from $3,112,545 for the nine months ended January 31, 2018. In addition, we had a $1,286,766 decrease in revenue in media and technology for the nine months ended January 31, 2019 to $55,290.  Our retail sales increased to $1,816,188 for the nine months ended January 31, 2019 from $1,551,651 for the nine months ended January 31, 2018.    

 

Cost of Goods Sold

 

Our cost of goods sold for the nine months ended January 31, 2019 was $1,680,356 compared to $4,073,307 for the nine months ended January 31, 2018. The decrease is primarily due to the decrease in construction projects.

 

Gross Profit

 

Our gross profit for the nine months ended January 31, 2019 was $261,122 compared to $1,933,024 for the nine months ended January 31, 2018. The gross profit of $261,122 for the nine months ended January 31, 2019 represents 13% as a percentage of total revenue. The gross profit of $1,933,024 for the nine months ended January 31, 2018 represents approximately 32% as a percentage of total revenue. This decrease in the gross profit is primarily attributed to the inclusion of amortization of assets directly associated with sales and the reduction of construction projects. 

 

Operating Expenses

 

Our operating expenses increased by $1,183,809 to $2,834,219 for the nine months ended January 31, 2019, from $1,650,410 for the nine months ended January 31, 2018.

 

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The increase was primarily due to the increases in professional fees of $153,900, selling, general, and administrative fees of $141,255, marketing fees of $34,984, bad debt of $1,250,000 and amortization and depreciation of $187,591, offset by decreases in stock based compensation of $249,760 and consulting fees of $329,527.

 

Our total operating expenses for the nine months ended January 31, 2019 of $2,834,219 consisted of $383,041 of selling, general and administrative expenses, $259,956 of professional fees, consulting expense of $632,682, marketing fees of $60,487, bad debt of $1,250,000, and $363,135 of amortization and depreciation expenses. Our general and administrative expenses consist of bank charges, telephone expenses, meals and entertainments, computer and internet expenses, postage and delivery, office supplies and other expenses.

 

Net Income (Loss)

 

Our net loss of $2,547,778 for the nine months ended January 31, 2019 from a net income of $282,614 for the nine months ended January 31, 2018 represents a deficit of $2,830,392. The increase in net loss compared to the prior period net income is primarily a result of the gross profit decrease of $1,671,902, and an increase in operating expenses of $1,183,809 with an increase in other income of $25,319.

 

Liquidity and Capital Resources

 

Introduction

 

During the nine months ended January 31, 2019 we utilized $131,653 in cash. Our cash on hand as of January 31, 2019 was $380,297.

 

Cash Requirements

 

We had cash available of 380,297 as of January 31, 2019.  Based on our revenues, cash on hand and current monthly burn rate, we believe that our operations are sufficient to fund operations through April 2019.

 

Sources and Uses of Cash

 

Operations

 

We used $1,881,887 in cash by operating activities for the nine months ended January 31, 2019, as compared to $1,968,041 for the nine months ended January 31, 2018.

 

Net cash used by operations consisted primarily of the net loss of $2,564,358 offset by non-cash expenses of $599,729 consisting of $570,739 in depreciation and amortization of intangible assets and $28,990 in stock-based compensation. Additionally, changes in assets and liabilities consisted of increases of $320,164 in accounts receivable, accounts payable of $359,653, prepaid expenses of $66,112, deferred revenue of $49,165, and reserve for uncollectable accounts of $1,417,284, with offsets of other receivables of $146,471, and inventory of $1,342,837.

 

Investments

 

We received $310,414 in investing activities for the nine months ended January 31, 2019 compared to using $443,951 for the nine months ended January 31, 2017. Our investing activities consisted primarily of investing in property, plant, and equipment of $179,000, offset by $409,502 in the sale of cost base investments and $79,912 in the sale of intangible assets. 

 

Financing

 

We had net cash provided in financing activities of $1,439,820 and $1,457,281 for the nine months ended January 31, 2019 and 2018 respectively.  Our financing activities consisted of increases in net proceeds from the issuance of stock of $702,028, an increase of $646,427 of advances made by a related party, and an increase is notes payable of $91,365.

 

Adjusted Results of Operations for the three months ended January 31, 2019

 

Our adjusted operating results for the three months ended January 31, 2019 and 2018 are summarized as follows:

 

 

26

 


 

 
         

 Three months ended January 31,  

         

2019

 

2018

               

Sales

   

 $              763,084

 

 $            780,241

Cost of Sales

   

                 389,036

 

                  468,326

Gross Profit (Loss)

   

                374,048

 

               84,033

Total Operating Expenses

   

                 355,058

 

                592,513

Net Income (Loss) from Continuing Operations

   

               25,272

 

                (280,598)

 

Adjusted Revenue

 

Our adjusted revenue from operations for the three months ended January 31, 2019 was $763,084 compared to $780,241, a decrease of $17,157 from the three months ended January 31, 2018.  This decrease is a result of a decrease in the construction segment of $118,195 and the technology segment of $66,936, with an increase in the retail segment of $167,974 for the three months ended January 31, 2018.

 

Adjusted Cost of Goods Sold

 

Our adjusted cost of goods sold for the three months ended January 31, 2019 was $389,036 compared to $468,326 for the three months ended January 31, 2018. The decrease is primarily due to the increase in retail sales.

 

Adjusted Gross Profit

 

Our adjusted gross income for the three months ended January 31, 2019 was $374,048 compared to a gross profit of $311,915 for the three months ended January 31, 2018. The adjusted gross profit of $374,048 for the three months ended January 31, 2019 represents approximately 49% as a percentage of total revenue. The gross profit of $311,915 for the three months ended January 31, 2018 represents approximately 40% as a percentage of total revenue. This increase in the adjusted gross profit is primarily attributed to the increase in retail sales which demonstrates a higher percentage of profitability. 

 

Adjusted Operating Expenses

 

Our adjusted operating expenses decreased by $237,455 to $355,058 for the three months ended January 31, 2019, from $592,513 for the three months ended January 31, 2018.

 

The decrease was primarily due to decreases in professional fees of $37,408, and consulting fees of $287,597 offset by the increases in selling, general, and administrative fees of $60,797, and marketing fees of $26,753.

 

Our total operating expenses for the three months ended January 31, 2019 of $355,058 consisted of $144,830 of selling, general and administrative expenses, $27,635 of professional fees, consulting expense of $142,495, and marketing fee of $40,098. Our general and administrative expenses consist of bank charges, telephone expenses, meals and entertainments, computer and internet expenses, postage and delivery, office supplies and other expenses.

 

Adjusted Net Income (Loss)

 

Our adjusted net income of $25,272 from operations for the three months ended January 31, 2019 from an adjusted net loss of $280,598 for the three months ending January 31, 2018 represents an increase of $305,870. The increase compared to the prior period is primarily a result of the gross profit increase of $62,133, and a decrease in operating expenses of $237,455.

 

Adjusted Results of Operations for the nine months ended January 31, 2019

 

Our adjusted operating results for the nine months ended January 31, 2019 and 2018 are summarized as follows:

 

27

 


 

 
         

 Nine months ended

January 31,  

         

2019

 

2018

               

Sales

   

$             1,941,478

 

 $            6,006,252

Cost of Sales

   

             1,317,221

 

               4,073,307

Gross Profit

   

                  624,257

 

               1,932,945

Total Operating Expenses

   

            1,191,194

 

                  731,296

Other Income

 

 

                    17

 

                         -

Net Income (Loss) from Continuing Operations

   

             (566,920)

 

               1,201,649

 

Adjusted Revenue

 

Our adjusted revenue from operations for the nine months ended January 31, 2019 was $1,914,478 compared to $6,006,252, a decrease of $4,064,774 from the nine months ended January 31, 2018.  This decrease is a result of the construction segment, which has terminated its business operations with $70,000 income for the nine months ended January 31, 2019 from $3,112,545 for the nine months ended January 31, 2018. In addition, we had a $1,286,766 decrease in revenue in media and technology for the nine months ended January 31, 2019 to $55,290.  Our retail sales increased to $1,816,188 for the nine months ended January 31, 2019 from $1,551,651 for the nine months ended January 31, 2018.    

 

Adjusted Cost of Goods Sold

 

Our adjusted cost of goods sold for the nine months ended January 31, 2019 was $1,317,221 compared to $4,073,307 for the nine months ended January 31, 2018. The decrease is primarily due to the decrease in construction projects.

 

Adjusted Gross Profit

 

Our adjusted gross profit for the nine months ended January 31, 2019 was $624,257 compared to $1,933,024 for the nine months ended January 31, 2018. The adjusted gross profit of $624,257 for the nine months ended January 31, 2019 represents 32% as a percentage of total revenue. The adjusted gross profit of $1,933,024 for the nine months ended January 31, 2018 represents approximately 32% as a percentage of total revenue. This decrease in the adjusted gross profit is primarily attributed to the inclusion of amortization of assets directly associated with sales and the reduction of construction projects. 

 

Adjusted Operating Expenses

 

Our adjusted operating expenses increased by $459,898 to $1,191,194 for the nine months ended January 31, 2019, from $731,296 for the nine months ended January 31, 2018.

 

The increase was primarily due to the increases in professional fees of $8,928, selling, general, and administrative fees of $141,255, and marketing fees of $34,984, offset by decrease in consulting fees of $329,527.

 

Our total adjusted operating expenses for the nine months ended January 31, 2019 of $1,191,194 consisted of $383,041 of selling, general and administrative expenses, $114,984 of professional fees, consulting expense of $632,682, and marketing fees of $60,487. Our general and administrative expenses consist of bank charges, telephone expenses, meals and entertainments, computer and internet expenses, postage and delivery, office supplies and other expenses.

 

Adjusted Net Income (Loss)

 

Our net loss of $566,920 for the nine months ended January 31, 2019 from a net income of $1,201,649 for the nine months ended January 31, 2018 represents a deficit of $1,768,569. The increase in net loss compared to the prior period net income is primarily a result of the gross profit decrease of $1,308,688, and an increase in operating expenses of $459,898 with an increase in other income of $17.

 

Off-Balance Sheet Arrangements

 

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

 

28

 


 

 

Going Concern

 

Our financial statements are prepared using generally accepted accounting principles, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because the business is relatively new and has a short history and relatively few sales, no certainty of continuation can be stated. The accompanying financial statements for the three and nine months ended January 31, 2019 have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

The Company has suffered losses from operations and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

 

We carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of January 31, 2019. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

 

Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report because we did not document our Sarbanes-Oxley Act Section 404 internal controls and procedures.

 

As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures such as implementing and documenting our internal controls procedures.

 

Changes in internal controls over financial reporting

 

There have been no changes in our internal control over financial reporting during the quarter ended January 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the Effectiveness of Controls  

 

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.  The Company’s management, including its Principal Executive Officer and its Principal Financial Officer, do not expect that the Company’s disclosure controls will prevent or detect all errors and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.  The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

29

 


 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

 

The Company subsidiary, Grow Contractors, Inc., along with the Company and its officers were sued by APEX Management, LLC and Apex Operations, LLC (the “Solaris” project) for the return of approximately $600,000 in cash paid for services they allege were never provided.  We have countersued for the payment of approximately $425,000 in services provided that have not yet been paid for.  In addition, we have sued both Michael Sassano and Ronald Sassano individually for their roles in the alleged actions.  Currently the case is in discovery.

 

The Company subsidiary, Grow Contractors, Inc., was sued for alleged faulty services provided in the state of Oregon.  Grow Contractors alleges it has outstanding, unpaid invoices and services were stopped for lack of payment.

 

On March 7, 2019, the Company’s wholly-owned subsidiary, NYAcres, Inc. filed suit in New York State Supreme Court, Columbia County, New York against FarmOn! Foundation, NYAcre’s Joint Venture partner, Tessa Edick its former CEO and certain FarmOn! Board Members, including Ms. Edick. Prior to filing the suit, the Company engaged an independent forensic accounting firm to audit the books and records of the Joint Venture. FarmOn! Foundation refused to participate in this forensic audit. The lawsuit was filed to recover funds believed to have been misappropriated by FarmOn! Foundation and others, for an accounting and for lost profits from the sale of the hemp harvest, currently held illegally by FarmOn! Foundation. The suit also seeks damages of $2,000,000 from FarmOn! Foundation and its Board Members for breach of their fiduciary responsibilities to NYAcres, Inc. and the Joint Venture.

 

Item 1A. Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three months ended October 31, 2017 the Company issued 5,416,551 under a warrant and 80,000,000 in conversion from Series A Preferred

 

Item 3. Defaults Upon Senior Securities

 

There have been no events that are required to be reported under this Item.

 

Item 4. Mine Safety Disclosures

 

There have been no events that are required to be reported under this Item.

 

Item 5. Other Information

 

There have been no events that are required to be reported under this Item.

 

30

 


 

 

Item 6.   Exhibits

 

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

32.1 *

 

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

32.2 *

 

Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

101.INS 

 

XBRL Instance Document

 

 

 

101.SCH 

 

XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL 

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF 

 

XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB 

 

XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE 

 

XBRL Taxonomy Extension Presentation Linkbase Document

* Furnished herewith.

 

31

       

 


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

mCig, Inc.

 

 

 

 

 

 

Dated:  April 8, 2019

 

/s/ Paul Rosenberg

 

By:

Paul Rosenberg

 

Its:

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

 

 

Dated:  April 8, 2019

 

/s/ Michael W. Hawkins

 

By:

Michael W. Hawkins

 

Its:

Chief Financial Officer

(Principal Financial Officer)

 

EX-31.1 2 exhibit311.htm EX-31.1 exhibit311.htm - Generated by SEC Publisher for SEC Filing

 

EXHIBIT 31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

I, Paul Rosenberg, certify that:

1.                   I have reviewed this Quarterly Report on Form 10-Q of mCig, 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 this 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 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.

 

Dated: April 8, 2019

 

 

 

 

/s/ Paul Rosenberg

 

By:

Paul Rosenberg

 

Its:

Chief Executive Officer

(Principal Executive Officer)

 

EX-31.2 3 exhibit312.htm EX-31.2 exhibit312.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer


 

I, Michael Hawkins, certify that:

1.                   I have reviewed this Quarterly Report on Form 10-Q of mCig, 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 this 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 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.

 

Dated: April 8, 2019

 

 

 

 

/s/ Michael W. Hawkins

 

By:

Michael W. Hawkins

 

Its:

Chief Financial Officer

(Principal Financial Officer)

EX-32.1 4 exhibit321.htm EX-32.1 exhibit321.htm - Generated by SEC Publisher for SEC Filing

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 USC SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q for the quarter ended January 31, 2019 of mCig, Inc. (the “Company”), as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Paul Rosenberg, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

               (1)          The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

               (2)          Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: April 8, 2019

 

 

 

 

/s/ Paul Rosenberg

 

By:

Paul Rosenberg

 

Its:

Chief Executive Officer

 

 

  (Principal Executive Officer)

                                                                                                                                 

 

This certification accompanies this report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2 5 exhibit322.htm EX-32.2 exhibit322.htm - Generated by SEC Publisher for SEC Filing

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 USC SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q for the quarter ended January 31, 2019 of mCig, Inc. (the “Company”), as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Michael Hawkins, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

               (1)          The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

               (2)          Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: April 8, 2019

 

 

 

 

/s/ Michael W. Hawkins

 

By:

Michael W. Hawkins

 

Its:

Chief Financial Officer

 

 

(Principal Financial Officer)

                                                                                                                                  

This certification accompanies this report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended.

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Jan. 31, 2019
Feb. 15, 2019
Document And Entity Information    
Entity Registrant Name mCig, Inc.  
Entity Central Index Key 0001525852  
Document Type 10-Q  
Document Period End Date Jan. 31, 2019  
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Current Fiscal Year End Date --04-30  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Non-accelerated Filer  
Entity Common Stock, Shares Outstanding   516,974,596
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Document Fiscal Year Focus 2019  
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Small Business true  
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Consolidated Balance Sheets - USD ($)
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Apr. 30, 2018
Current Assets    
Cash and cash equivalents $ 380,297 $ 511,950
Accounts receivable, net 425,719 2,159,267
Inventory 913,079 63,297
Work in Progress 471,891 64,245
Notes and other receivable 148,000 1,529
Prepaid expenses 20,189 90,141
Total current assets 2,359,175 2,890,429
Property, plant and equipment, net 2,839,219 3,138,019
Cost basis investment 4,263,594 967,608
Intangible assets, net 555,086 835,320
Total assets 10,017,074 7,831,376
Current liabilities    
Accounts payable and accrued expenses 578,355 218,703
Due to shareholder 1,217,565 571,138
Other current liabilities 91,365
Reserve for uncollected accounts 586,560
Reserve for legal settlements 750,580 750,579
Deferred revenue 54,310 5,145
Total current liabilities 2,692,175 2,132,125
Total Liabilities 2,692,175 2,132,125
Stockholders equity    
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Treasury stock (680,330) (680,330)
Additional paid in capital 16,853,943 12,673,339
Accumulated deficit (7,750,392) (6,208,431)
Total stockholders equity 8,475,354 5,827,324
Non-controlling interest (1,150,455) (128,073)
Total equity 7,324,899 5,699,251
Total liabilities and stockholders equity $ 10,017,074 $ 7,831,376
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Apr. 30, 2018
Statement of Financial Position [Abstract]    
Common Stock, Par Value $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 560,000,000 560,000,000
Common Stock, Issued 516,974,596 415,610,809
Preferred Stock, Par Value $ 0.0001 $ 0.0001
Preferred Stock, Shares Authorized 50,000,000 50,000,000
Preferred Stock, Issued 4,350,000 11,850,000
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statements of Operations - USD ($)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2019
Jan. 31, 2018
Statement of Cash Flows [Abstract]        
Sales $ 763,084 $ 780,241 $ 1,941,478 $ 6,006,252
Construction costs 6,586 31,320 186,686 2,663,181
Merchandise 322,328 257,960 884,147 756,970
Commissions 33,881 18,893 83,356 56,307
Merchant fees, shipping, and other costs 26,241 44,658 163,032 397,394
Amortization and depreciation as a COG 121,159 115,495 363,135 199,455
Total Cost of Sales 510,195 468,326 1,680,356 4,073,307
Gross Profit 252,889 311,915 261,122 1,933,024
Selling, general, and administrative 144,830 84,033 383,041 241,786
Professional fees 73,578 65,043 259,956 106,056
Stock based compensation 233,500 28,990 278,750
Marketing & advertising 40,098 13,345 60,487 25,503
Research and development 513 4,634
Consultant fees 142,495 430,092 632,682 962,209
Bad Debts 1,250,000 1,250,000
Amortization and depreciation 69,176 10,581 219,063 31,472
Total operating expenses 1,720,177 837,107 2,834,219 1,650,410
Income (Loss) from operations (1,467,288) (525,192) (2,573,097) 282,614
Other income (expense) 1,541 25,319
Net income from operations (1,465,747) (525,192) (2,547,778) 282,614
Loss on discontinued operations (16,568) (16,568)
Net income (loss) before minority interest (1,482,315) (525,192) (2,564,358) 282,614
Gain attributable to non-controlling interest 731,671 70,422 1,022,382 70,422
Net income (loss) attributable to controlling interest $ (750,644) $ (454,770) $ (1,637,086) $ 353,036
Basic and diluted (Loss) per share:        
Income(Loss) per share from continuing operations $ (0.0015) $ (0.0012) $ (0.0032) $ 0.0009
Income(Loss) per share $ (0.0015) $ (0.0012) $ (0.0032) $ 0.0009
Weighted average shares outstanding basic and diluted 480,262,805 392,843,133 493,439,072 392,843,133
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statements of Cash Flows - USD ($)
9 Months Ended
Jan. 31, 2019
Jan. 31, 2018
Cash flows from operating activities:    
Net income (loss) before minority interest $ (2,564,358) $ 282,614
Adjustments to reconcile net loss to net Cash provided by (used in) operating activities:    
Depreciation and amortization 570,739 230,927
Common stock issued for services 28,990 278,750
Decrease (Increase) in:    
Accounts receivable, net (320,164) (2,002,287)
Other receivable (146,471)
Inventories (1,342,837) 3,475
Prepaid expenses and other current assets 66,112 105,300
Accounts payable, accrued expenses and taxes payable 359,653 (783,176)
Deferred revenue 49,165 (504,023)
Reserve for uncollectable accounts 1,417,284 420,379
Total adjustment to reconcile net income to net cash 682,471 (2,250,655)
Net cash provided In operating activities (1,881,887) (1,968,041)
Increase (Decrease) in:    
Cost basis investments 409,502 (50,000)
Acquisition of property, plant and equipment (179,000) (388,897)
Acquisition of intangible assets 79,912 (5,054)
Net cash received in investing activities 310,414 (443,951)
Cash Flows From Financing Activities:    
Borrowing from related party, net 646,427 313,354
Notes Payable 91,365
Proceeds from Issuance of Stock, Net 702,028 1,143,927
Net Cash Provided By Financing Activities 1,439,820 1,457,281
Net Change in Cash (131,653) (954,711)
Cash at Beginning of Year 511,950 1,634,662
Cash at End of Period 380,297 679,951
Supplemental Disclosure of Cash Flows Information:    
Cash paid for interest
Cash paid for income taxes
Non-cash Investing and Financing Activities:    
OBITX proceeds from issuance of stock 275,650
Stock issued for cannabis licenses in California 292,500
Stock issued for purchase of CBJ Distributing 3,043,537
Stock issued for land acquisition in California $ 67,500
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Basis of Presentation
9 Months Ended
Jan. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation

The accompanying consolidated audited financial statements of mCig, Inc., (the “Company”, “we”, “our”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).

 

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany accounts and transactions have been eliminated.

 

The consolidated financial statements include the accounts of the Company and its subsidiaries:

 

·         Agri-Contractors, LLC (“AGRI”)

·         CAAcres, Inc., (“CAAcres”) – 80% ownership

·         CA Acres Foundation (FKA NewCo2, Inc.,) (“CALF”) – 80% ownership

·         Grow Contractors Inc., (“GROW”)

·         mCig Internet Sales, Inc., (“MINT”)

·         NYAcres, Inc., (“NYAcres”)

·         OBITX, Inc., (FKA GigeTech, Inc.) (“GIGE”) – 53% ownership and 95% voting control

·         Tuero Asset Management, Inc. (“TAMI”)

·         Vapolution, Inc., (“VAPO”)

·         VitaCig, Inc., (“VITA”)

·         CBJ Distributing (“CBJ”) – 80% ownership

 

Description of Business

 

The Company was incorporated in the State of Nevada on December 30, 2010 originally under the name Lifetech Industries, Inc. Effective August 2, 2013, the name was changed from "Lifetech Industries, Inc." to "mCig, Inc." reflecting the new business model.  All agreements related to the Lifetech business were terminated and closed as of April 30, 2014. It will not have any impact on the current and future operations because all of these agreements are related to the previous business directions of the Company.

 

The Company initially earned revenue through wholesale and retail sales of electronic cigarettes, vaporizers, and accessories in the United States. It offered electronic cigarettes and related products through its online store at www.mcig.org, as well as through the company’s wholesale, distributor, and retail programs. We expanded operations to include the VitaCig brand in 2014.

 

The Company has been involved in the marijuana and cannabinoid (CBD), and electronic cigarette industries.  It currently markets, sales, services, and distributes cannabis wholesale supplies, CBD products, software, and electronic cigarettes, vaporizers, and accessories internationally and in the United States.

 

In FY2015 we began offering hemp based cannabinoid (“CBD”) products through various websites and wholesale distribution.  In 2016 the Company expanded its products and services to include construction.  In 2017 we added consulting services in the cannabis industry.  In addition, we launched a social media platform, 420Cloud, in the cannabis markets.   The Company continues to look at strategic acquisitions and product and service developments for future growth.  We are currently incubating a cannabis supply company.

 

In 2018 we added agriculture by planting a 40 acres lot in New York state to grow Hemp.  In addition, we acquired approximately two acres of land in California City, California and obtained three cannabis licenses (cultivating, manufacturing, and distribution of cannabis products in California).

 

During this fiscal year, we operated approximately 15 different websites (which are not incorporated as part of this Form 10K report).  The corporate website is located at www.mciggroup.com.

 

Subsidiaries of the Company

 

The Company currently operates, in addition to mCig, Inc., the following subsidiaries which are consolidated:

 

Agri-Contractors, LLC

 

On November 18, 2016 we acquired, through a Purchase Agreement, Agri-Contractors, LLC.  We combined the operations of Agri-Contractors with Grow Contractors Corp and expanded the services to include consulting.  We merged the operations of Agri-Contractors, LLC with Grow Contractors in December 2016.  Agri-Contractors, LLC provides consulting services to grow facilities, production companies, and dispensaries servicing the cannabis medical and recreational markets.

 

CAAcres, Inc.

 

CAAcres, Inc., (“CAAcres”) was incorporated on May 10, 2018 under the laws of the state of California.  CAAcres was created to participate in the Joint Venture with Cal Foundation for the cultivation, manufacturing, and distribution of cannabis products within the state of California.  CAAcres is an agriculture venture for the cultivation, manufacturing and distribution of cannabis products. We are currently assessing the requirements for the build out of the land acquired in California City, California for this project.

 

CAL Foundation (FKA Newco2, Inc)

 

NewCo2, Inc., was created on January 19, 2018 as a California not-for-profit company.  We own 80% of the not-for-profit business.  NewCo2, Inc., maintains three cannabis licenses in the State of California. On August 6, 2018 the name was changed to Cal Acres Foundation, Inc.

 

CBJ Distributing, LLC

 

On June 30, 2018 the company elected to exercise its option to acquired Cannabiz Supply with an effective date of May 1, 2018.  The purchase price was $3,457,796.

 

Grow Contractors Inc

 

The Company incorporated Grow Contractors Inc., on December 5, 2016.  Grow Contractors Inc, operates the construction and consulting segment.  On November 18, 2016, the Company purchased Agri-Contractors, LLC and assigned the Grow Contractors name and website to Grow Contractors Inc.  Grow Contractors Inc., is a wholly owned subsidiary of the Company.

 

mCig Internet Sales, Inc.

 

On June 1, 2016, the Company incorporated mCig Internet Sales, Inc., (“mCig Internet”) in the state of Florida in order to operate our CBD business and to consolidate all wholesale and online retail sales from various websites.  mCig Internet is a wholly owned subsidiary of the Company.  

 

mCig Limited

 

We incorporated in May 2017 to provide corporate oversight to MCIG, and its subsidiaries, operations within the European theatre. mCig Limited., was incorporated in the United Kingdom. mCig Limited, is a wholly owned subsidiary of the Company.

 

NYAcres, Inc.

 

NYAcres, Inc., (“NYAcres”) was incorporated on November 20, 2017 under the laws of the state of New York.  NYAcres was created to participate in the Joint Venture NYAcres with FarmOn! Foundation.  The joint venture is an agriculture venture for the planting and growing of industrial hemp.

 

OBITX, Inc.

 

We incorporated GigETech, Inc., in the state of Delaware on April 3, 2017.  We then assigned our newly acquired social media platform software to GigETech.  We launched the social media platform on April 20, 2017. GigETech, Inc., subsequently changed its name to OBITX, Inc. Currently we have approximately 95% voting control and 53% ownership on a fully diluted basis of OBITX.  OBITX has an effective registration statement filed with the SEC and intends to begin trading its common stock in the open market.

 

Omni Health, Inc., (FKA - VitaCig, Inc.)

 

On February 24, 2014, the Company entered into a Contribution Agreement with Omni Health, Inc (“OMHE”). In accordance with this agreement, OMHE accepted the contribution by mCig, Inc. of specific assets consisting solely of pending trademarks for the term “VitaCig” filed with the USPTO and $500 in cash as contribution in exchange for 500,135,000 shares of common capital stock representing 100% of the shares outstanding of OMHE. 

 

On November 28, 2014, mCig completed the spin-off of OMHE (the “Spin-off”). Effective as of 11:59 p.m., New York City time, on November 28, 2014 (the “Distribution Date”), the Company distributed 270,135,000 shares of common stock of OMHE, par value $0.0001 per share (“OMHE Common Stock”), to holders of mCig’s stockholders of record as a pro rata dividend.  The record date for the dividend was November 28, 2014. The Ex-Dividend Date was set for November 25, 2014. mCig stockholders received one share of OMHE Common Stock for everyone share of common stock, par value $0.0001 per share, of mCig.  The Spin-off was completed for the purpose of legally and structurally separating OMHE from mCig. MCig retained 230,000,000 shares of common stock and remains a shareholder. The shares of common stock to be received by mCig shareholders were registered on a Form S-1 filed by OMHE and declared effective by the Securities and Exchange Commission on November 5, 2014.

 

On June 22, 2016, the Company and OMHE, entered into a Separation and Share Transfer Agreement whereby OMHE transferred the assets and operations of the e-Cig business to the Company in exchange for the return of 172,500,000 shares of OMHE Common Stock to the treasury of OMHE, and for a reduction of the amount owed to the Company in excess of $95,000.

 

Omni Health, Inc., a Nevada Corporation, is a public company trading under OMHE.

 

Tuero Asset Management, Inc.

 

We incorporated Tuero Asset Management, Inc., in which to manage all our intellectual and intangible assets.

 

Tuero Capital, Inc.

 

We incorporated in May 2017 to provide financial services to our clients.  Tuero Capital provides financial services and consulting to cannabis and cryptocurrency markets. On August 15, 2018 the Company became a minority owner of Tuero Capital when Tuero Capital issued 10,500,000 common shares of stock to 59 investors.  Tuero Capital, Inc., became Redfern BioSystems, Inc (“Redfern”). The Company currently owns 15.3% of Redfern. See Related Party Transactions for further information.

 

Vapolution, Inc.

 

On January 23, 2014, the Company entered into a Stock Purchase Agreement acquiring 100% ownership in Vapolution, Inc., which manufactures and retails home-use vaporizers. As part of this transaction, .mCig, Inc. issued 5,000,000 common shares to shareholders of Vapolution, Inc. in two separate payments of 2,500,000 common shares. The shareholders of Vapolution, Inc. retained the right to rescind the transaction, which expired on January 23, 2015 but was extended to May 23, 2015. Subsequently, on August 25, 2015, the final payment to the shareholders of Vapolution as extended to September 30, 2015 and the right to rescind the transaction was extended to June 30, 2017.  On April 30, 2015 the Company impaired the $625,000 initial investment into Vapolution, Inc., but maintains the $67,500 investment on its balance sheet for the second payment.

 

On January 23, 2014, Paul Rosenberg, CEO of mCig, Inc. cancelled an equal amount (2,500,000 shares) of common shares owned by him resulting in a net non-dilutive transaction to existing mCig, Inc. shareholders. The remaining 2,500,000 of common shares owned by Paul Rosenberg were cancelled to offset the 2,500,000 new shares issued from the treasury to complete the purchase of Vapolution, Inc.

 

On January 17, 2017 the Company entered into a settlement agreement with the previous owners of Vapolution, Inc., whereby they returned to the Company 1,700,000 shares of MCIG common stock, $961 in cash, and $40,541 in inventory. Prior to this, Vapolution was not incorporated in to the consolidated financial statements of the Company.  Effective January 17, 2017 we began consolidating Vapolution with the Company’s financial reports.  Vapolution, Inc., is wholly owned by mCig, Inc.

 

VitaCig, Inc.

 

On May 26, 2016 we incorporated VitaCig, Inc., (“VitaCig”) in the state of Florida.  VitaCig headquarters our global e-cig operations.  VitaCig, Inc., is a wholly owned subsidiary of the Company.

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Summary of Significant Accounting Policies
9 Months Ended
Jan. 31, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the wholly owned subsidiaries of AGRI, GROW, MINT, MCIGL, NYACRES, TAMI,  VAPO, and VITA.  We have also consolidated our subsidiaries in which we have controlling interest.   The subsidiaries in which we have a controlling interest include CAACRES, CALF, CBJ, and GIGE. Significant intercompany balances and transactions have been eliminated.

 

Concentration of Credit Risk and Significant Customers

Financial instruments which potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.  The Company places its temporary cash investments with financial institutions insured by the FDIC.

 

Concentrations of credit risk with respect to trade receivables are limited due to the diverse group of customers to whom the Company sells. The Company establishes an allowance for doubtful accounts when events and circumstances regarding the collectability of its receivables warrant based upon factors such as the credit risk of specific customers, historical trends, other information and past bad debt history. The outstanding balances are stated net of an allowance for doubtful accounts.

 

For the 3 months ended January 31, 2019, the Company had no significant customer that represented more than 5% of its sales.

 

On May 1, 2018, we adopted Topic 606, using the modified retrospective transition method applied to those contracts which were not completed as of February 1, 2018. Results for reporting periods beginning after February 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on February 1, 2018.

 

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

·         identification of the contract, or contracts, with a customer;

·         identification of the performance obligations in the contract;

·         determination of the transaction price;

·         allocation of the transaction price to the performance obligations in the contract; and

·         recognition of revenue when, or as, we satisfy a performance obligation.

 

Segment Information

In accordance with the provisions of SFAS No. 131Disclosures about Segments of an Enterprise and Related Information, the Company is required to report financial and descriptive information about its reportable operating segments. The Company identifies its operating segments as divisions based on how management internally evaluates separate financial information, business activities and management responsibility. In addition to the corporate segment, the Company segments and the subsidiaries associated with each segment are as follows:

 

Business Segments by Company/Subsidiary
Segment Subsidiary
Cultivation, Manufacturing, and Distribution Agri-Contractors, LLC
Grow Contractors, Inc.
Retail Sales CBJ Distributing, LLC
mCig Internet Sales, Inc
Vapolution, Inc.
VitaCig, Inc.
Media and Technologies OBITX, Inc.
  Haute Job, LLC
  Campaign Pigeon, LLC
Agriculture CAL Foundation
CAAcres, Inc.
NYAcres, Inc.
Corporate mCig, Inc.
mCig Limited
Tuero Asset Management, Inc.
 

 

We record segments as i) cultivation, manufacturing, and distribution (CMD), ii) retail sales, iii) media and technologies, iv) agriculture, and v) corporate.  We report our financial performance based on our segments described in Note 8 – Segment Information. 

 

Business Segments
  Total Revenue   Percentage of Total Revenue
  Three months ended January 31,   The three months ended January 31,
  2019 2018 2017   2019 2018 2017
CMD  $                      -              118,195  $       1,090,982   0.0% 15.1% 80.1%
Retail Sales              754,114              586,140              271,707   98.8% 75.1% 19.9%
Media and Technologies                  8,970                75,906                          -   1.2% 9.7% 0.0%
Agriculture                          -                          -                          -   0.0% 0.0% 0.0%
Corporate                          -                          -                          -   0.0% 0.0% 0.0%
Total  $          763,084              780,241  $       1,362,689   100.0% 100.0% 100.0%
               
               
Business Segments
  Total Revenue   Percentage of Total Revenue
  Nine months ended January 31,   The nine months ended January 31,
  2019 2018 2017   2019 2018 2017
CMD  $            70,000           3,112,545  $       1,340,844   3.6% 51.8% 59.9%
Retail Sales           1,816,188           1,551,651              896,561   93.5% 25.8% 40.1%
Media and Technologies                55,290           1,342,056                          -   2.9% 22.3% 0.0%
Agriculture                          -                          -                          -   0.0% 0.0% 0.0%
Corporate                          -                          -                          -   0.0% 0.0% 0.0%
Total  $       1,941,478           6,006,252  $       2,237,405   100.0% 100.0% 100.0%

 

Inventory

In accordance with ASU 2015-11 – Inventory (Topic 330) – Simplifying the Measurement of Inventory, the Company’s inventory consists of finished product, mCig products valued at the lower of cost or market valuation under the first-in, first-out method of costing.

 

As of January 31, 2019, the Company had no allowance for obsolescence.  The level of inventory maintained by the Company is insignificant and is typically ordered on an as needed basis, or just-in-time. 

 

Property, Plant, and Equipment

Property, plant and equipment (“PPE”) are stated at cost less accumulated depreciation and amortization.  Expenditures for maintenance and repairs are charged to expense as incurred.  Additions, improvements and major replacements that extend the life of the asset are capitalized.

 

Depreciation and amortization is recorded using the straight-line method over the estimated useful lives of depreciable assets, which are generally three to five years.

 

Accounts Receivable

The Company’s accounts receivable in its construction and retail segments. As the retail division is either paid through credit card processing and prepaid wholesale purchases, the Company projects insignificant amounts of outstanding accounts receivable for its retail division. The Company recognizes receipt of payment at the time the funds are deposited with the merchant services account of the Company. When the merchant services vendor determines to maintain a reserve for potential refunds and chargebacks, the Company reviews the reserve, to i) determine if the reserve is probably uncollectible, and ii) if a loss is probable, a reasonable estimate of the amount of the loss.  We then allocate a portion of the reserve for bad debt, in accordance with FASB ASC 450-20-25-2.  Once the vendor releases the funds, the bad debt reserve is appropriately reversed. The Company recognized $2,003,844 and $0 as an uncollectable reserve for the three months ending January 31, 2019 and January 31, 2018, respectively.

 

Intangible Assets

The Company’s intangible assets consist of certain website development costs that is amortized over their useful life in accordance with the guidelines of ASC 350-30 General Intangible Other than Goodwill and ASC 350-50 Website Development Costs

 

Basic and Diluted Net Loss Per Share

The Company follows ASC Topic 260 – Earnings Per Share, and FASB 2015-06, Earnings Per Share to account for earnings per share.  Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.  During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. 

 

Basic net earnings (loss) per common share are computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares consist of Series A convertible preferred stock, convertible debentures, stock options and warrant common stock equivalent shares.

 

Concentration of Credit Risk 

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and trade receivables.  Concentrations of credit risk with respect to trade receivables are limited due to the clients that comprise our customer base and their dispersion across different business and geographic areas.  We estimate and maintain an allowance for potentially uncollectible accounts and such estimates have historically been within management's expectations.  

 

We rely almost exclusively on one Chinese factory as our principle supplier for our e-cig products. Therefore, our ability to maintain operations is dependent on this third-party manufacturer.

 

Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States.  The Company may occasionally maintain amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000.  The risk is managed by maintaining all deposits in high quality financial institutions. The Company had $2,003,844 and $0 in excess of federally insured limits at January 31, 2019 and 2018.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.19.1
Going Concern
9 Months Ended
Jan. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

The Company's financial statements are prepared using generally accepted accounting principles, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because the business is new and has a limited history and relatively few sales, no certainty of continuation can be stated. The accompanying financial statements for the three months and nine months ended January 31, 2019 and 2018 have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

The Company has suffered losses from operations and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern.

 

Management is taking steps to raise additional funds to address its operating and financial cash requirements to continue operations in the next twelve months. Management has devoted a significant amount of time in the raising of capital from additional debt and equity financing. However, the Company’s ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations. The financial statements contain no adjustments for the outcome of this uncertainty.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.19.1
Property, Plant and Equipment
9 Months Ended
Jan. 31, 2019
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment

The following is a detail of equipment at January 31, 2019 and April 30, 2018:

 

Property, Plant, and Equipment
      As of     As of
      January 31, 2019     April 30, 2018
Office furniture   $                   29,090   $                   29,090
Rollies machine                         5,066                         5,066
Computer equipment                         1,544                         1,544
420 Cloud                  3,129,412                  3,127,251
ATM Machines                                 -                     299,970
Farm equipment                       30,765                                 -
Warehouse equipment                       57,622                                 -
Land                     292,500                                 -
Total acquisition cost   $              3,545,999   $              3,462,921
Accumulated depreciation                     706,780                     324,902
Total property, plant, and equipment $              2,839,219   $              3,138,019

 

Depreciation expense on property, plant and equipment was $381,876 and $199,725 for the nine months ended January 31, 2019 and 2018, respectively.

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Work in Progress
9 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
Work in Progress

The Company reports its agriculture crop growth as work-in-progress until such time as the crop has been harvested and either sold or utilized by the Company. 

 

Work in Progress Overview
    As of     As of
    January 31, 2019     April 30, 2018
  Agriculture
 Product (seeds) $             60,000   $                        -
 Labor             272,139                   30,000
 Materials and supplies               118,147                   34,865
 Site Development               21,605                            -
 Total work in progress $           471,891   $               64,865
XML 22 R11.htm IDEA: XBRL DOCUMENT v3.19.1
Inventory
9 Months Ended
Jan. 31, 2019
Inventory Disclosure [Abstract]  
Inventory

Inventory is primarily held in retail sales.  We maintain a small inventory of seeds in our agriculture segment.  In addition, we currently hold 62 ATM machines held for sale within the next 12 months.

 

Inventory
    As of     As of
    January 31, 2019     April 30, 2018
Retail Sales $           480,463   $               38,714
Agriculture               24,450                   23,963
Assets held for sale             408,166                            -
Total inventory $           913,079   $               62,677

 

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.19.1
Accounts Receivable
9 Months Ended
Jan. 31, 2019
Accounts Receivable  
Accounts Receivable

The Company’s accounts receivable is primarily from its direct customers.  From its direct customers, we have $559,145 in cultivation, manufacturing, and distribution in revenue; $1,250,000 from its tech and media segment, with the remaining amount from its retail sales not through credit card processing.  

 

In addition to cash receipts, we utilize high risks credit card processing companies.  Vendors tasked with accepting all credit card payments for purchases from its customers, are typically held in escrow for potential chargebacks.  As traditional credit card processing is unavailable in the cannabis markets, we utilize services that require greater holding periods and higher retention requirements. 

 

While the Company expects these receivables to be fully collectible it has created an allowance for doubtful accounts for the period. As of January 31, 2019, we have $416,746 in accounts receivable from our retail customers, of which $27,462 is currently due from our high-risk merchant services provider.

 

The Company maintains subscription receivables of $42,500 for the exercise of warrants and options.  The funds were not received prior to the filing of this report and as such are not incorporated in the balance sheet statement.  A complete breakdown of the accounts receivable and subscriptions receivable is as follows:

 

Accounts Receivable
   
    As of     As of
    January 31, 2018     April 30, 2018
A/R from credit card reserve $               27,462   $                  28,431
A/R from direct customers            2,402,101                 2,061,352
Subscription receivables                 42,500                    186,784
Allowance for bad debt           (2,003,844)                               -
Subscription receivable not received by time of filing                (42,500)                 (117,300)
Total Accounts Receivable $            425,719   $             2,159,267

 

We have created a reserve for uncollectable accounts in the amount of $2,003,844.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets
9 Months Ended
Jan. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

Prior fiscal years we tracked finite lived Intangible Assets and infinite lived Intangible Assets.  Effective May 1, 2018 we have elected to track all intangible assets as finite lived Intangible Assets and amortize according to a three years life cycle.  The following reflects our intangible assets: 

 

Intangible Assets
     
      As of     As of
      January 31, 2019     April 30, 2018
Domains   $                365,847                   363,348
Trademarks                    455,860                     455,637
Website                      30,491                       41,760
VitaCBD                    200,000                     200,000
Total acquisition cost   $             1,052,198   $              1,060,745
Less: Amortization                   (423,572)                   (225,649)
Adjustment for sale of asset                     (73,540)                       -  
Current Intangible Assets   $                555,086   $                 835,096
XML 25 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Cost Basis Investments
9 Months Ended
Jan. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Cost Basis Investments

The Company has invested $4,263,594 through January 31, 2019.  A breakdown of these investments include:

 

Cost Basis Investments
      As of     As of  
      January 31, 2019     April 30, 2018  
Stony Hill Corp   $ 700,000   $   700,000  
Omni Health, Inc     152,023     152,023  
CBJ Distributing Option                            -     50,000  
New York Hemp Pilot Program                      50,000     50,000  
California City Cannabis Licenses     225,585     15,585  
CBJ Distributing     2,966,029                      -  
Agri-Contractors, LLC     160,008                      -  
Redfern BioSystems, Inc.     9,949        
Total acquisition cost   $ 4,263,594     $ 967,608  
XML 26 R15.htm IDEA: XBRL DOCUMENT v3.19.1
Business Segments
9 Months Ended
Jan. 31, 2019
Segment Reporting [Abstract]  
Business Segments

The Company operates primarily in five segments; i) cultivation, manufacturing, and distribution, ii) retail sales, iii) technology, iv) agriculture, and v) corporate.

 

This summary reflects the Company's current segments, as described below.  

 

Information concerning the revenues and operating income (loss) for the three and nine months ended January 31, 2019 and 2018, and the identifiable assets for the segments in which the Company operates are shown in the following table:

 

Business Segments
For the three months ended January 31, 2019 CMD Retail Technology Agriculture Corporate Total
Revenue  $                   -  $       754,114  $           8,970  $                   -  $                   -  $       763,084
Segment Income (Loss) from Operations           (54,407)           208,617         (1,436,719)           (44,261)         (140,518)         (1,467,288)
Total Assets           641,294           978,299        4,113,713           (79,385)        4,363,153      10,017,074
Capital Expenditures                       -             72,636                  312                      -                      -             72,948
Depreciation and Amortization               2,070             21,316           121,805               2,067             43,077           190,335
             
For the three months ended January 31, 2018 CMD Retail Technology Agriculture Corporate Total
Revenue  $       118,195  $       586,140  $         75,906  $                   -  $                   -  $       780,241
Segment Income from Operations           (10,593)             29,532           (78,462)           (28,876)         (366,166)         (454,565)
Total Assets           785,985           410,491        4,717,014           (28,886)        2,245,486        8,130,090
Capital Expenditures             15,714                  225               5,689             55,408      (3,076,467)      (2,999,431)
Depreciation and Amortization                  130                  271           115,495                       -             10,180          126,076
             
Business Segments
For the  nine months ended January 31, 2019 CMD Retail Technology Agriculture Corporate Total
Revenue  $        70,000  $    1,816,188             46,320  $                   -  $                   -  $    1,941,478
Segment Income (Loss) from Operations         (286,002)           341,126         (1,929,462)         (243,902)         (454,857)      (2,564,346)
Total Assets          641,294           978,299       4,113,713         (79,385)        4,363,153      10,017,074
Capital Expenditures                     -             72,636          277,966        (503,554)         (232,470)         (385,422)
Depreciation and Amortization              6,211          75,243          365,312               6,201          129,231           582,198
             
For the nine months ended January 31, 2018 CMD Retail Technology Agriculture Corporate Total
Revenue  $    3,112,545  $    1,551,651  $    1,342,056  $                   -  $                   -  $    6,006,252
Segment Income from Operations           180,186           138,303           766,473           (28,876)         (694,752)           361,334
Total Assets           785,335           414,939        4,670,214                       -       2,241,464       8,111,952
Capital Expenditures             15,714                  225           256,089              55,408      (3,076,467)      (2,749,031)
Depreciation and Amortization                  389                  813           199,455                       -            30,270          230,927

 

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.1
NonGAAP Accounting and GAAP Reconciliation Net Income and EBITDA
9 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
NonGAAP Accounting and GAAP Reconciliation Net Income and EBITDA

The Company reports all financial information required in accordance with generally accepted accounting principles (GAAP). The Company believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information because it is useful to understand MCIG’s performance that many investors believe may obscure MCIG’s ongoing operational results.

For example, MCIG uses non-GAAP net income (Adjusted Net Income), which excludes stock-based compensation, amortization of acquired intangible assets, impairment of intangible assets, costs from acquisitions, restructurings and other infrequently occurring  items, non-cash deferred tax provision and litigation and related settlement costs. MCIG uses EBITDA and Adjusted Net Income, which adjusts net income (loss) for amortization of intangible assets, impairment of intangible assets, stock-based compensation, costs related to acquisitions, restructuring and other infrequently occurring items, settlement of litigation, gains or losses on dispositions, pro forma adjustments to exclude lines of business that have been acquired during the periods presented, current cash tax provision, depreciation, and interest expense (income), net.

The company believes that excluding certain costs from Adjusted Net Income and EBITDA provides a meaningful indication to investors of the expected on-going operating performance of the company. Whenever MCIG uses such historical non-GAAP financial measures, it provides a reconciliation of historical non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measure.

The following tables reflect the non-GAAP Consolidated Statements of Operations for the three and nine months ended January 31, 2019 and January 31, 2018, respectively.

The following table is a reconciliation of the EBITDA and Adjusted Net Income (non-GAAP measures) to the Net Income with the GAAP Consolidated Statements of Operation for the three and nine months ended January 31, 2019 and 2018, respectively.

 

mCig, Inc.
and SUBSIDIARIES
Adjusted Consolidated Statements of Operations
(unaudited)
   For the three months Ending January 31,    For the nine months Ending January 31,
  2019   2018   2019   2018
               
Sales  $      763,084    $     780,241    $  1,941,478    $     6,006,252
Total Cost of Sales          389,036           468,326        1,317,221           4,073,307
Gross Profit          374,048           311,915           624,257            1,932,945
Selling, general, and administrative          144,830             84,033           383,041               241,786
Professional Fees            27,635             65,043           114,984               106,056
Marketing & Advertising            40,098             13,345             60,487                 25,503
Consultant Fees          142,495           430,092           632,682               962,209
Total Operating Expenses          355,058           592,513        1,191,194               1,335,554
Income (Loss) From Operations            18,990          (280,598)          (566,937)            597,391
Other Income (Expense)                      -                        -                      17                         -  
Net Loss Before Non-Controlling Interest            18,990          (280,598)          (566,920)            597,391
Loss Attributable to Non-Controlling Interest             (6,282)                       -            (121,300)                         -  
Net Income (Loss) Attributable to Controlling Interest  $        25,272    $    (280,598)    $    (445,620)    $        597,391
Basic and Diluted (Loss) Per Share:              
Income(Loss) per share from Continuing Operations  $             0.00    $          (0.00)    $          (0.00)    $              0.00
Income(Loss) Per Share  $             0.00    $          (0.00)    $          (0.00)    $              0.00
Weighted Average Shares Outstanding - Basic and Diluted 480,262,805     392,843,133   493,439,072       392,843,133

 

See accompanying notes to unaudited consolidated financial statements.

 

Adjusted Net Income Reconciliation
 

 For the 3 months ended

January 31,

 

 For the nine months ended

January 31,

  2019   2018   2019   2018
CONSOLIDATED STATEMENT of OPERATIONS:              
Net Income (Loss)  $     (728,436)    $    (457,770)   $  (1,591,652)    $      356,036
Interest                  -                     -                        17                        -
Depreciation and Amortization         190,335            126,076               582,198            230,923
EBITDA  $     (538,101)    $    (328,694)    $  (1,003,797)    $      583,962
               
Stock Based Compensation                        -            233,500                 28,990            278,750
Gains not in ordinary course of business         562,731                       -               413,527                       -
Gains attributable to non-controlling interest 6,282                   121,300    
Adjusted net income  $          25,272    $      (95,194)    $     (445,620)    $      862,712
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.19.1
Acquisitions
9 Months Ended
Jan. 31, 2019
Business Combinations [Abstract]  
Acquisitions

On May 1, 2018, the Company exercised its option to acquire CBJ Distributing, LLC.  The Company acquired all cash, inventory, prepaid expenses, inventory, fixed assets, and intellectual property for a total of $3,578,861.  The Company issued $3,388,078 in MCIG stock at the rate of $0.29 per share and paid $190,783 in cash a\through reduction of loans, option price, and accounts receivable owed by CBJ Distributing to the Company. As a condition to this acquisition, the Company entered into Employment Agreements with Charlie Fox and Alex Levitsky.

 

In accordance to rule, the following table reflects the determination of the purchase price of the CBJ Distributing, LLC business:

 

Acquisition of CBJ Distributing
Cash   $          112,557
Accounts Receivable              158,064
Prepaid Expenses                  3,840
Inventory              385,379
Fixed Assets                47,758
Total assets acquired   $          707,598
       
Current Liabilities   $            94,226
Total liabilities assumed   $            94,226
       
Total Purchase Price
Stock issued as part of acquisition (11,293,593)   $       3,388,078
Reduction of Loan Receivable                  1,529
Reduction of Accounts Receivable              139,254
Conversion of stock option                50,000
Total Purchase Price   $       3,578,861
Total assets acquired            (707,598)
Total liabilities assumed                94,226
Gains in assets                     540
Investment into CBJ Distributing   $       2,966,029
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.19.1
Sale of Asset
9 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
Sale of Asset

On September 15, 2018 the Company sold the domain name www.cbd.biz to Redfern BioSystems, Inc., for $90,000.  The following chart represents that sale transaction.

 

Sale of CBD.BIZ
Notes receivable              100,000
Income for financing               (10,000)
Total sales price   $            90,000
Domain name acquisition cost                82,500
Accumulated amortization              (11,458)
Total reductions from sales price                71,042
Gain on asset   $            18,958

 

The Company entered into a secured convertible promissory note with Redfern.  The note is due on September 14, 2019.  Should Redfern default the Company may convert the secured promissory note into 40 million common shares of the Redfern representing approximately 75% of the business.  Should the Company not elect to convert in the event of nonpayment by Redfern, the Company may take possession of the domain www.cbd.biz and its business operations.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Related Parties and Related Party Transactions
9 Months Ended
Jan. 31, 2019
Related Party Transactions [Abstract]  
Related Parties and Related Party Transactions

The Company entered a Line of Credit with Paul Rosenberg (see Subsequent Events) for up to $100,000 in funding on May 1, 2016.  Throughout the years we have increased the line of credit multiple times.  As of January 31, 2019, the Company owed Mr. Rosenberg $1,157,271.

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Stockholders Equity
9 Months Ended
Jan. 31, 2019
Stockholders equity  
Stockholders Equity

Common Stock

 

As of January 31, 2019, the Company was authorized to issue 560,000,000 common shares at a par value of $0.0001.  As of January 31, 2019, the Company had issued and outstanding 516,974,596 common shares.   

 

Preferred Stock

 

The Company has authorized 50,000,000 shares of preferred stock, of which it has designated 23,000,000 as Series A Preferred, at $0.0001 par value.   The Company has 4,350,000 issued and outstanding as of January 31, 2019.  During the three months ended the Company issued 1,000,000 shares of Series A Preferred stock in exchange for $200,000.  Each share of the Preferred Stock has 10 votes on all matters presented to be voted by the holders of the Company’s common stock.

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Subsequent Events
9 Months Ended
Jan. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

There are no reportable subsequent events.

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Summary of Significant Accounting Policies (Policies)
9 Months Ended
Jan. 31, 2019
Accounting Policies [Abstract]  
Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the wholly owned subsidiaries of AGRI, GROW, MINT, MCIGL, NYACRES, TAMI,  VAPO, and VITA.  We have also consolidated our subsidiaries in which we have controlling interest.   The subsidiaries in which we have a controlling interest include CAACRES, CALF, CBJ, and GIGE. Significant intercompany balances and transactions have been eliminated.

Concentration of Credit Risk and Significant Customers

Financial instruments which potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.  The Company places its temporary cash investments with financial institutions insured by the FDIC.

 

Concentrations of credit risk with respect to trade receivables are limited due to the diverse group of customers to whom the Company sells. The Company establishes an allowance for doubtful accounts when events and circumstances regarding the collectability of its receivables warrant based upon factors such as the credit risk of specific customers, historical trends, other information and past bad debt history. The outstanding balances are stated net of an allowance for doubtful accounts.

 

For the 3 months ended January 31, 2019, the Company had no significant customer that represented more than 5% of its sales.

 

On May 1, 2018, we adopted Topic 606, using the modified retrospective transition method applied to those contracts which were not completed as of February 1, 2018. Results for reporting periods beginning after February 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on February 1, 2018.

 

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

We determine revenue recognition through the following steps:

 

·         identification of the contract, or contracts, with a customer;

·         identification of the performance obligations in the contract;

·         determination of the transaction price;

·         allocation of the transaction price to the performance obligations in the contract; and

·         recognition of revenue when, or as, we satisfy a performance obligation.

Segment Information

In accordance with the provisions of SFAS No. 131Disclosures about Segments of an Enterprise and Related Information, the Company is required to report financial and descriptive information about its reportable operating segments. The Company identifies its operating segments as divisions based on how management internally evaluates separate financial information, business activities and management responsibility. In addition to the corporate segment, the Company segments and the subsidiaries associated with each segment are as follows:

 

Business Segments by Company/Subsidiary
Segment Subsidiary
Cultivation, Manufacturing, and Distribution Agri-Contractors, LLC
Grow Contractors, Inc.
Retail Sales CBJ Distributing, LLC
mCig Internet Sales, Inc
Vapolution, Inc.
VitaCig, Inc.
Media and Technologies OBITX, Inc.
  Haute Job, LLC
  Campaign Pigeon, LLC
Agriculture CAL Foundation
CAAcres, Inc.
NYAcres, Inc.
Corporate mCig, Inc.
mCig Limited
Tuero Asset Management, Inc.
 

 

We record segments as i) cultivation, manufacturing, and distribution (CMD), ii) retail sales, iii) media and technologies, iv) agriculture, and v) corporate.  We report our financial performance based on our segments described in Note 8 – Segment Information. 

 

Business Segments
  Total Revenue   Percentage of Total Revenue
  Three months ended January 31,   The three months ended January 31,
  2019 2018 2017   2019 2018 2017
CMD  $                      -              118,195  $       1,090,982   0.0% 15.1% 80.1%
Retail Sales              754,114              586,140              271,707   98.8% 75.1% 19.9%
Media and Technologies                  8,970                75,906                          -   1.2% 9.7% 0.0%
Agriculture                          -                          -                          -   0.0% 0.0% 0.0%
Corporate                          -                          -                          -   0.0% 0.0% 0.0%
Total  $          763,084              780,241  $       1,362,689   100.0% 100.0% 100.0%
               
               
Business Segments
  Total Revenue   Percentage of Total Revenue
  Nine months ended January 31,   The nine months ended January 31,
  2019 2018 2017   2019 2018 2017
CMD  $            70,000           3,112,545  $       1,340,844   3.6% 51.8% 59.9%
Retail Sales           1,816,188           1,551,651              896,561   93.5% 25.8% 40.1%
Media and Technologies                55,290           1,342,056                          -   2.9% 22.3% 0.0%
Agriculture                          -                          -                          -   0.0% 0.0% 0.0%
Corporate                          -                          -                          -   0.0% 0.0% 0.0%
Total  $       1,941,478           6,006,252  $       2,237,405   100.0% 100.0% 100.0%
Inventory

In accordance with ASU 2015-11 – Inventory (Topic 330) – Simplifying the Measurement of Inventory, the Company’s inventory consists of finished product, mCig products valued at the lower of cost or market valuation under the first-in, first-out method of costing.

 

As of January 31, 2019, the Company had no allowance for obsolescence.  The level of inventory maintained by the Company is insignificant and is typically ordered on an as needed basis, or just-in-time.

Property, Plant and Equipment

Property, plant and equipment (“PPE”) are stated at cost less accumulated depreciation and amortization.  Expenditures for maintenance and repairs are charged to expense as incurred.  Additions, improvements and major replacements that extend the life of the asset are capitalized.

 

Depreciation and amortization is recorded using the straight-line method over the estimated useful lives of depreciable assets, which are generally three to five years.

Accounts Receivable

The Company’s accounts receivable in its construction and retail segments. As the retail division is either paid through credit card processing and prepaid wholesale purchases, the Company projects insignificant amounts of outstanding accounts receivable for its retail division. The Company recognizes receipt of payment at the time the funds are deposited with the merchant services account of the Company. When the merchant services vendor determines to maintain a reserve for potential refunds and chargebacks, the Company reviews the reserve, to i) determine if the reserve is probably uncollectible, and ii) if a loss is probable, a reasonable estimate of the amount of the loss.  We then allocate a portion of the reserve for bad debt, in accordance with FASB ASC 450-20-25-2.  Once the vendor releases the funds, the bad debt reserve is appropriately reversed. The Company recognized $2,003,844 and $0 as an uncollectable reserve for the three months ending January 31, 2019 and January 31, 2018, respectively.

Intangible Assets The Company’s intangible assets consist of certain website development costs that is amortized over their useful life in accordance with the guidelines of ASC 350-30 General Intangible Other than Goodwill and ASC 350-50 Website Development Costs
Basic and Diluted Net Loss Per Share

The Company follows ASC Topic 260 – Earnings Per Share, and FASB 2015-06, Earnings Per Share to account for earnings per share.  Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.  During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. 

 

Basic net earnings (loss) per common share are computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares consist of Series A convertible preferred stock, convertible debentures, stock options and warrant common stock equivalent shares.

Concentration of Credit Risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and trade receivables.  Concentrations of credit risk with respect to trade receivables are limited due to the clients that comprise our customer base and their dispersion across different business and geographic areas.  We estimate and maintain an allowance for potentially uncollectible accounts and such estimates have historically been within management's expectations.  

 

We rely almost exclusively on one Chinese factory as our principle supplier for our e-cig products. Therefore, our ability to maintain operations is dependent on this third-party manufacturer.

 

Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States.  The Company may occasionally maintain amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000.  The risk is managed by maintaining all deposits in high quality financial institutions. The Company had $2,003,844 and $0 in excess of federally insured limits at January 31, 2019 and 2018.

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Summary of Significant Accounting Policies (Tables)
9 Months Ended
Jan. 31, 2019
Accounting Policies [Abstract]  
Schedule of Business Segments
Business Segments
  Total Revenue   Percentage of Total Revenue
  Three months ended January 31,   The three months ended January 31,
  2019 2018 2017   2019 2018 2017
CMD  $                      -              118,195  $       1,090,982   0.0% 15.1% 80.1%
Retail Sales              754,114              586,140              271,707   98.8% 75.1% 19.9%
Media and Technologies                  8,970                75,906                          -   1.2% 9.7% 0.0%
Agriculture                          -                          -                          -   0.0% 0.0% 0.0%
Corporate                          -                          -                          -   0.0% 0.0% 0.0%
Total  $          763,084              780,241  $       1,362,689   100.0% 100.0% 100.0%
               
               
Business Segments
  Total Revenue   Percentage of Total Revenue
  Nine months ended January 31,   The nine months ended January 31,
  2019 2018 2017   2019 2018 2017
CMD  $            70,000           3,112,545  $       1,340,844   3.6% 51.8% 59.9%
Retail Sales           1,816,188           1,551,651              896,561   93.5% 25.8% 40.1%
Media and Technologies                55,290           1,342,056                          -   2.9% 22.3% 0.0%
Agriculture                          -                          -                          -   0.0% 0.0% 0.0%
Corporate                          -                          -                          -   0.0% 0.0% 0.0%
Total  $       1,941,478           6,006,252  $       2,237,405   100.0% 100.0% 100.0%
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.19.1
Property, Plant and Equipment (Tables)
9 Months Ended
Jan. 31, 2019
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment
Property, Plant, and Equipment
      As of     As of
      January 31, 2019     April 30, 2018
Office furniture   $                   29,090   $                   29,090
Rollies machine                         5,066                         5,066
Computer equipment                         1,544                         1,544
420 Cloud                  3,129,412                  3,127,251
ATM Machines                                 -                     299,970
Farm equipment                       30,765                                 -
Warehouse equipment                       57,622                                 -
Land                     292,500                                 -
Total acquisition cost   $              3,545,999   $              3,462,921
Accumulated depreciation                     706,780                     324,902
Total property, plant, and equipment $              2,839,219   $              3,138,019
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.19.1
Work in Progress (Tables)
9 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
Schedule Of Work In Progress
Work in Progress Overview
    As of     As of
    January 31, 2019     April 30, 2018
  Agriculture
 Product (seeds) $             60,000   $                        -
 Labor             272,139                   30,000
 Materials and supplies               118,147                   34,865
 Site Development               21,605                            -
 Total work in progress $           471,891   $               64,865
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.19.1
Inventory (Tables)
9 Months Ended
Jan. 31, 2019
Inventory Disclosure [Abstract]  
Schedule of Inventory
Inventory
    As of     As of
    January 31, 2019     April 30, 2018
Retail Sales $           480,463   $               38,714
Agriculture               24,450                   23,963
Assets held for sale             408,166                            -
Total inventory $           913,079   $               62,677
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.19.1
Accounts Receivable (Tables)
9 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
Schedule of Accounts Receivable
Accounts Receivable
   
    As of     As of
    January 31, 2018     April 30, 2018
A/R from credit card reserve $               27,462   $                  28,431
A/R from direct customers            2,402,101                 2,061,352
Subscription receivables                 42,500                    186,784
Allowance for bad debt           (2,003,844)                               -
Subscription receivable not received by time of filing                (42,500)                 (117,300)
Total Accounts Receivable $            425,719   $             2,159,267
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets (Tables)
9 Months Ended
Jan. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets
Intangible Assets
     
      As of     As of
      January 31, 2019     April 30, 2018
Domains   $                365,847                   363,348
Trademarks                    455,860                     455,637
Website                      30,491                       41,760
VitaCBD                    200,000                     200,000
Total acquisition cost   $             1,052,198   $              1,060,745
Less: Amortization                   (423,572)                   (225,649)
Adjustment for sale of asset                     (73,540)                       -  
Current Intangible Assets   $                555,086   $                 835,096
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.19.1
Cost Basis Investments (Tables)
9 Months Ended
Jan. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Schedule of Cost Basis Investments
Cost Basis Investments
      As of     As of  
      January 31, 2019     April 30, 2018  
Stony Hill Corp   $ 700,000   $   700,000  
Omni Health, Inc     152,023     152,023  
CBJ Distributing Option                            -     50,000  
New York Hemp Pilot Program                      50,000     50,000  
California City Cannabis Licenses     225,585     15,585  
CBJ Distributing     2,966,029                      -  
Agri-Contractors, LLC     160,008                      -  
Redfern BioSystems, Inc.     9,949        
Total acquisition cost   $ 4,263,594     $ 967,608  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.19.1
Business Segments (Tables)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Jan. 31, 2019
Segment Reporting [Abstract]    
Schedule of Segment Reporting
Business Segments
For the three months ended January 31, 2019 CMD Retail Technology Agriculture Corporate Total
Revenue  $                   -  $       754,114  $           8,970  $                   -  $                   -  $       763,084
Segment Income (Loss) from Operations           (54,407)           208,617         (1,436,719)           (44,261)         (140,518)         (1,467,288)
Total Assets           641,294           978,299        4,113,713           (79,385)        4,363,153      10,017,074
Capital Expenditures                       -             72,636                  312                      -                      -             72,948
Depreciation and Amortization               2,070             21,316           121,805               2,067             43,077           190,335
             
For the three months ended January 31, 2018 CMD Retail Technology Agriculture Corporate Total
Revenue  $       118,195  $       586,140  $         75,906  $                   -  $                   -  $       780,241
Segment Income from Operations           (10,593)             29,532           (78,462)           (28,876)         (366,166)         (454,565)
Total Assets           785,985           410,491        4,717,014           (28,886)        2,245,486        8,130,090
Capital Expenditures             15,714                  225               5,689             55,408      (3,076,467)      (2,999,431)
Depreciation and Amortization                  130                  271           115,495                       -             10,180          126,076

Business Segments
For the  nine months ended January 31, 2019 CMD Retail Technology Agriculture Corporate Total
Revenue  $        70,000  $    1,816,188             46,320  $                   -  $                   -  $    1,941,478
Segment Income (Loss) from Operations         (286,002)           341,126         (1,929,462)         (243,902)         (454,857)      (2,564,346)
Total Assets          641,294           978,299       4,113,713         (79,385)        4,363,153      10,017,074
Capital Expenditures                     -             72,636          277,966        (503,554)         (232,470)         (385,422)
Depreciation and Amortization              6,211          75,243          365,312               6,201          129,231           582,198
             
For the nine months ended January 31, 2018 CMD Retail Technology Agriculture Corporate Total
Revenue  $    3,112,545  $    1,551,651  $    1,342,056  $                   -  $                   -  $    6,006,252
Segment Income from Operations           180,186           138,303           766,473           (28,876)         (694,752)           361,334
Total Assets           785,335           414,939        4,670,214                       -       2,241,464       8,111,952
Capital Expenditures             15,714                  225           256,089              55,408      (3,076,467)      (2,749,031)
Depreciation and Amortization                  389                  813           199,455                       -            30,270          230,927
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.19.1
NonGAAP Accounting and GAAP Reconciliation Net Income and EBITDA (Tables)
9 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
Schedule of NonGAAP Consolidated Statements of Operations
mCig, Inc.
and SUBSIDIARIES
Adjusted Consolidated Statements of Operations
(unaudited)
   For the three months Ending January 31,    For the nine months Ending January 31,
  2019   2018   2019   2018
               
Sales  $      763,084    $     780,241    $  1,941,478    $     6,006,252
Total Cost of Sales          389,036           468,326        1,317,221           4,073,307
Gross Profit          374,048           311,915           624,257            1,932,945
Selling, general, and administrative          144,830             84,033           383,041               241,786
Professional Fees            27,635             65,043           114,984               106,056
Marketing & Advertising            40,098             13,345             60,487                 25,503
Consultant Fees          142,495           430,092           632,682               962,209
Total Operating Expenses          355,058           592,513        1,191,194               1,335,554
Income (Loss) From Operations            18,990          (280,598)          (566,937)            597,391
Other Income (Expense)                      -                        -                      17                         -  
Net Loss Before Non-Controlling Interest            18,990          (280,598)          (566,920)            597,391
Loss Attributable to Non-Controlling Interest             (6,282)                       -            (121,300)                         -  
Net Income (Loss) Attributable to Controlling Interest  $        25,272    $    (280,598)    $    (445,620)    $        597,391
Basic and Diluted (Loss) Per Share:              
Income(Loss) per share from Continuing Operations  $             0.00    $          (0.00)    $          (0.00)    $              0.00
Income(Loss) Per Share  $             0.00    $          (0.00)    $          (0.00)    $              0.00
Weighted Average Shares Outstanding - Basic and Diluted 480,262,805     392,843,133   493,439,072       392,843,133
Schedule of Reconciliation
Adjusted Net Income Reconciliation
 

 For the 3 months ended

January 31,

 

 For the nine months ended

January 31,

  2019   2018   2019   2018
CONSOLIDATED STATEMENT of OPERATIONS:              
Net Income (Loss)  $     (728,436)    $    (457,770)   $  (1,591,652)    $      356,036
Interest                  -                     -                        17                        -
Depreciation and Amortization         190,335            126,076               582,198            230,923
EBITDA  $     (538,101)    $    (328,694)    $  (1,003,797)    $      583,962
               
Stock Based Compensation                        -            233,500                 28,990            278,750
Gains not in ordinary course of business         562,731                       -               413,527                       -
Gains attributable to non-controlling interest 6,282                   121,300    
Adjusted net income  $          25,272    $      (95,194)    $     (445,620)    $      862,712
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.19.1
Acquisitions (Tables)
9 Months Ended
Jan. 31, 2019
Business Combinations [Abstract]  
Schedule of Acquisition #12
Acquisition of CBJ Distributing
Cash   $          112,557
Accounts Receivable              158,064
Prepaid Expenses                  3,840
Inventory              385,379
Fixed Assets                47,758
Total assets acquired   $          707,598
       
Current Liabilities   $            94,226
Total liabilities assumed   $            94,226
       
Total Purchase Price
Stock issued as part of acquisition (11,293,593)   $       3,388,078
Reduction of Loan Receivable                  1,529
Reduction of Accounts Receivable              139,254
Conversion of stock option                50,000
Total Purchase Price   $       3,578,861
Total assets acquired            (707,598)
Total liabilities assumed                94,226
Gains in assets                     540
Investment into CBJ Distributing   $       2,966,029
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.19.1
Sale of Asset (Tables)
9 Months Ended
Jan. 31, 2019
Sale Of Asset  
Schedule of Sale Transaction
Sale of CBD.BIZ
Notes receivable              100,000
Income for financing               (10,000)
Total sales price   $            90,000
Domain name acquisition cost                82,500
Accumulated amortization              (11,458)
Total reductions from sales price                71,042
Gain on asset   $            18,958
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Basis of Presentation (Details Narrative)
9 Months Ended
Jan. 31, 2019
USD ($)
Date of Incorporation Dec. 30, 2010
Current Fiscal Year End Date --04-30
Subsidiary #1  
Date of Agreement May 26, 2016
Percentage of Ownership 100.00%
Subsidiary #2  
Date of Agreement Jan. 23, 2014
Percentage of Ownership 100.00%
Subsidiary #4  
Date of Incorporation Jun. 01, 2016
Percentage of Ownership 100.00%
Subsidiary #5  
Date of Incorporation Dec. 05, 2016
Percentage of Ownership 100.00%
Subsidiary #6  
Date of Incorporation Apr. 03, 2017
Percentage of Ownership 53.00%
Subsidiary #7  
Date of Incorporation Nov. 18, 2016
Percentage of Ownership 100.00%
Subsidiary #8  
Date of Incorporation May 31, 2017
Percentage of Ownership 100.00%
Subsidiary #9  
Date of Incorporation May 31, 2017
Percentage of Ownership 100.00%
Subsidiary #10  
Date of Incorporation Nov. 20, 2017
Subsidiary #11  
Date of Incorporation Apr. 03, 2017
Subsidiary #12  
Date of Incorporation May 01, 2018
Percentage of Ownership 100.00%
Subsidiary #13  
Date of Incorporation Jan. 19, 2018
Percentage of Ownership 80.00%
Subsidiary #14  
Date of Incorporation May 01, 2018
Total Purchase Price $ 3,578,861
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies - Schedule of Business Segments (Details) - USD ($)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Oct. 31, 2018
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2017
Revenue $ 763,084   $ 780,241   $ 1,941,478 $ 6,006,252  
CMD Segment              
Revenue   $ 118,195 $ 1,090,982 $ 70,000 $ 3,112,545 $ 1,340,844
Percentage of Total Revenue   15.10% 80.10% 3.60% 51.80% 59.90%
Retail Segment              
Revenue $ 754,114   $ 586,140 $ 271,707 $ 1,816,188 $ 1,551,651 $ 896,561
Percentage of Total Revenue 98.80%   75.10% 19.90% 93.50% 25.80% 40.10%
Media Segment              
Revenue $ 8,970   $ 75,906 $ 46,320 $ 1,342,056
Percentage of Total Revenue 1.20%   9.70% 2.90% 22.30%
Ag Segment              
Revenue  
Percentage of Total Revenue  
Corporate Segment              
Revenue  
Percentage of Total Revenue  
Total              
Revenue $ 763,084 $ 763,084 $ 780,241 $ 1,362,689 $ 1,941,478 $ 6,006,252 $ 2,237,405
Percentage of Total Revenue 100.00%   100.00% 100.00% 100.00% 100.00% 100.00%
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2019
Bad Debt, Uncollectable Reserve $ 2,003,844  
Federally insured limit 250,000   $ 250,000
Federally insured limit, excess $ 2,003,844 $ 0 $ 2,003,844
Significant Customers      
Percentage of Revenue     85.20%
Percentage of Accounts Receivable     92.80%
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.19.1
Property, Plant and Equipment - Schedule of Property and Equipment (Details) - USD ($)
Jan. 31, 2019
Apr. 30, 2018
Jul. 31, 2017
Total Property and Equipment $ 2,839,219 $ 3,138,019 $ 3,138,019
Office Equipment      
Equipment Expense 29,090 29,090  
Other Machinery      
Equipment Expense 5,066 5,066  
Computer Equipment      
Equipment Expense 1,544 1,544  
ATM Machines      
Equipment Expense 299,970  
Ag Equipment      
Equipment Expense 30,765  
420 Cloud      
Equipment Expense 3,129,412 3,127,251  
Land      
Equipment Expense 292,500  
Warehouse Equipment      
Equipment Expense 57,622  
Total      
Depreciation $ 706,780 $ 324,902  
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.19.1
Property, Plant and Equipment (Details Narrative) - USD ($)
Jan. 31, 2019
Jan. 31, 2018
Property Plant And Equipment    
Depreciation expense $ 381,876 $ 199,725
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.19.1
Inventory and Work in Progress - Schedule of Work in Progress (Details) - USD ($)
Jan. 31, 2019
Apr. 30, 2018
Work in Progress $ 471,891 $ 64,245
Seeds    
Work in Progress 60,000
Labor    
Work in Progress 272,139 30,000
Materials and Supplies    
Work in Progress 118,147 34,865
Site Development    
Work in Progress $ 21,605
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.19.1
Inventory and Work in Progress - Schedule of Inventory (Details) - USD ($)
Jan. 31, 2019
Apr. 30, 2018
Total Inventory $ 913,079 $ 63,297
Retail Segment    
Inventory 480,463 38,714
Ag Segment    
Inventory 24,450 23,963
Total    
Inventory 408,166
Total Inventory $ 913,079 $ 62,677
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies - Schedule of Accounts Receivable (Details) - USD ($)
Jan. 31, 2019
Apr. 30, 2018
Accounts Receivable, Net $ 425,719 $ 2,159,267
Credit Card Receivable    
Accounts Receivable, Net 27,462 28,431
Customer Receivable    
Accounts Receivable, Net 2,402,101 2,061,352
Subscription Receivable    
Accounts Receivable, Net 42,500 186,784
Bad Debt    
Accounts Receivable, Net (2,003,844)
Subscription Receivable, Not Received    
Accounts Receivable, Net $ (42,500) $ (117,300)
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.19.1
Accounts Receivable (Details Narrative) - USD ($)
Jan. 31, 2019
Apr. 30, 2018
Accounts Receivable, Net $ 425,719 $ 2,159,267
Subscription receivables (42,500)  
Reserve for uncollected accounts 2,003,844  
Ag Segment    
Accounts Receivable, Net 559,145  
Media Segment    
Accounts Receivable, Net 1,250,000  
Retail Segment    
Accounts Receivable, Net $ 416,746  
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)
Jan. 31, 2019
Apr. 30, 2018
Adjustment for sale of asset $ (73,540)
Total Intangible Assets 555,086 835,320
Internet Domains    
Finite Lived intangible assets, gross carrying amount 365,847 363,348
Trademarks    
Finite Lived intangible assets, gross carrying amount 455,860 455,637
Website Designs    
Finite Lived intangible assets, gross carrying amount 30,491 41,760
VitaCBD    
Finite Lived intangible assets, gross carrying amount 200,000 200,000
Total    
Finite Lived intangible assets, gross carrying amount 1,052,198 1,060,745
Finite Lived intangible assets, accumulated amortization $ (423,572) $ (225,649)
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets (Details Narrative)
9 Months Ended
Jan. 31, 2019
Intangible Assets Details Narrative Abstract  
Intangible Assets, Useful Life 3 years
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.19.1
Cost Basis Investments - Schedule of Cost Basis Investments (Details) - USD ($)
9 Months Ended 12 Months Ended
Jan. 31, 2019
Apr. 30, 2018
Investments $ 4,263,594  
Cost basis investment 4,263,594 $ 967,608
#1    
Investments 700,000 700,000
#2    
Investments 152,023 152,023
#3    
Investments 50,000
#4    
Investments 50,000 50,000
#5    
Investments 225,585 15,585
#6    
Investments 2,966,029
#7    
Investments 160,008
#8    
Investments $ 9,949
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.19.1
Cost Basis Investments (Details Narrative)
9 Months Ended
Jan. 31, 2019
USD ($)
Investments, Debt and Equity Securities [Abstract]  
Investments $ 4,263,594
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.19.1
Business Segments - Schedule of Segment Reporting (Details) - USD ($)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Oct. 31, 2018
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2017
Revenue $ 763,084   $ 780,241   $ 1,941,478 $ 6,006,252  
Depreciation and Amortization         570,739 230,927  
CMD Segment              
Revenue   118,195 $ 1,090,982 70,000 3,112,545 $ 1,340,844
Segment Income (Loss) from Operations (54,407)   (10,593)   (286,002) 180,186  
Total Assets 641,294   785,985   641,294 785,335  
Capital Expenditures   15,714   15,714  
Depreciation and Amortization 2,070   130   6,211 389  
Retail Segment              
Revenue 754,114   586,140 271,707 1,816,188 1,551,651 896,561
Segment Income (Loss) from Operations 208,617   29,532   341,126 138,303  
Total Assets 978,299   410,491   978,299 414,939  
Capital Expenditures 72,636   225   72,636 225  
Depreciation and Amortization 21,316   271   75,243 813  
Media Segment              
Revenue 8,970   75,906 46,320 1,342,056
Segment Income (Loss) from Operations (1,436,719)   (78,462)   (1,929,462) 766,473  
Total Assets 4,113,713   4,717,014   4,113,713 4,670,214  
Capital Expenditures 312   5,689   277,966 256,089  
Depreciation and Amortization 121,805   115,495   365,312 199,455  
Ag Segment              
Revenue  
Segment Income (Loss) from Operations (44,261)   (28,876)   (243,902) (28,876)  
Total Assets (79,385)   (28,886)   (79,385)  
Capital Expenditures   55,408   (503,554) 55,408  
Depreciation and Amortization 2,067     6,201  
Corporate Segment              
Revenue  
Segment Income (Loss) from Operations (140,518)   (366,166)   (454,857) (694,752)  
Total Assets 4,363,153   2,245,486   4,363,153 2,241,464  
Capital Expenditures   (3,076,467)   (232,470) (3,076,467)  
Depreciation and Amortization 43,077   10,180   129,231 30,270  
Total              
Revenue $ 763,084 $ 763,084 780,241 $ 1,362,689 1,941,478 6,006,252 $ 2,237,405
Segment Income (Loss) from Operations   (1,467,288) (454,565)   (2,564,346) 361,334  
Total Assets   10,017,074 8,130,090   10,017,074 8,111,952  
Capital Expenditures   72,948 (2,999,431)   (385,422) (2,749,031)  
Depreciation and Amortization   $ 190,335 $ 126,076   $ 582,198 $ 230,927  
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.19.1
NonGAAP Accounting and GAAP Reconciliation Net Income and EBITDA - Schedule of Non-GAAP Consolidated Statements of Operations (Details) - USD ($)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2019
Jan. 31, 2018
Sales $ 763,084 $ 780,241 $ 1,941,478 $ 6,006,252
Total Cost of Sales 510,195 468,326 1,680,356 4,073,307
Gross Profit 252,889 311,915 261,122 1,933,024
Selling, general, and administrative 144,830 84,033 383,041 241,786
Professional Fees 73,578 65,043 259,956 106,056
Marketing & advertising 40,098 13,345 60,487 25,503
Consultant Fees 142,495 430,092 632,682 962,209
Total Operating Expenses 1,720,177 837,107 2,834,219 1,650,410
Income (Loss) from operations (1,467,288) (525,192) (2,573,097) 282,614
Other income (expense) 1,541 25,319
Net Income (Loss) Before Non-Controlling Interest (1,482,315) (525,192) (2,564,358) 282,614
Gain (Loss) Attributable to Non-Controlling Interest 731,671 70,422 1,022,382 70,422
Net Income (Loss) Attributable to Controlling Interest $ (750,644) $ (454,770) $ (1,637,086) $ 353,036
Basic and diluted (Loss) per share:        
Income(Loss) per share from Continuing Operations $ (0.0015) $ (0.0012) $ (0.0032) $ 0.0009
Income(Loss) Per Share $ (0.0015) $ (0.0012) $ (0.0032) $ 0.0009
Weighted Average Shares Outstanding - Basic and Diluted 480,262,805 392,843,133 493,439,072 392,843,133
Adjustments        
Sales $ 763,084 $ 780,241 $ 1,941,478 $ 6,006,252
Total Cost of Sales 389,036 468,326 1,317,221 4,073,307
Gross Profit 374,048 311,915 624,257 1,932,945
Selling, general, and administrative 144,830 84,033 383,041 241,786
Professional Fees 27,635 65,043 114,984 106,056
Marketing & advertising 40,098 13,345 60,487 25,503
Consultant Fees 142,495 430,092 632,682 962,209
Total Operating Expenses 355,058 592,513 1,191,194 1,335,554
Income (Loss) from operations 18,990 (280,598) (566,937) 597,391
Other income (expense) 17
Net Income (Loss) Before Non-Controlling Interest 18,990 (280,598) (566,920) 597,391
Gain (Loss) Attributable to Non-Controlling Interest (6,282) (121,300)
Net Income (Loss) Attributable to Controlling Interest $ 25,272 $ (280,598) $ (445,620) $ 597,391
Basic and diluted (Loss) per share:        
Income(Loss) per share from Continuing Operations $ 0.00 $ (0.00) $ (0.00) $ 0.00
Income(Loss) Per Share $ 0.00 $ (0.00) $ (0.00) $ 0.00
Weighted Average Shares Outstanding - Basic and Diluted 480,262,805 392,843,133 493,439,072 392,843,133
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.19.1
NonGAAP Accounting and GAAP Reconciliation Net Income and EBITDA - Schedule of Reconciliation (Details) - USD ($)
3 Months Ended 9 Months Ended
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2019
Jan. 31, 2018
Net income (loss) attributable to controlling interest $ (750,644) $ (454,770) $ (1,637,086) $ 353,036
Depreciation and Amortization     570,739 230,927
Stock Based Compensation 233,500 28,990 278,750
Gain attributable to non-controlling interest 731,671 70,422 1,022,382 70,422
Reconciliation        
Net income (loss) attributable to controlling interest (728,436) (457,770) (1,591,652) 356,036
Interest 17
Depreciation and Amortization 190,335 126,076 582,198 230,923
EBITDA (538,101) (328,694) (1,003,797) 583,962
Stock Based Compensation 233,500 28,990 278,750
Gains not in ordinary course of business 562,731 413,527
Gain attributable to non-controlling interest 6,282   121,300  
Adjusted Net Income $ 25,272 $ (95,194) $ (445,620) $ 862,712
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.19.1
Acquisitions - Schedule of Acquisitions (Details) - USD ($)
9 Months Ended
Jan. 31, 2019
Apr. 30, 2018
Cash and cash equivalents $ 380,297 $ 511,950
Accounts receivable, net 425,719 2,159,267
Prepaid expenses 20,189 90,141
Inventory 913,079 63,297
Intangible assets, net 555,086 835,320
Total assets 10,017,074 7,831,376
Total current liabilities 2,692,175 2,132,125
Total Liabilities 2,692,175 2,132,125
Notes receivable 148,000 $ 1,529
CBJ    
Cash and cash equivalents 112,557  
Accounts receivable, net 158,064  
Prepaid expenses 3,840  
Inventory 385,379  
Intangible assets, net 47,758  
Total assets 707,598  
Total current liabilities 94,226  
Total Liabilities $ 94,226  
Shares Issued, Purchase of Assets 3,388,078  
Notes receivable $ 1,529  
Related Party Receivable 139,254  
Conversion of stock option 50,000  
Total Purchase Price 3,578,861  
Total assets acquired 707,598  
Total liabilities assumed 94,226  
Gains not in ordinary course of business 540  
Investment $ 2,966,029  
XML 62 R51.htm IDEA: XBRL DOCUMENT v3.19.1
Acquisitions (Details Narrative) - USD ($)
9 Months Ended
Jan. 31, 2019
Apr. 30, 2018
Shares Issued, Par Value $ 0.0001 $ 0.0001
CBJ    
Date of Agreement May 01, 2018  
Shares Issued, Purchase of Assets 3,388,078  
Shares Issued, Par Value $ 0.29  
Cash Payment for Acquisition $ 190,783  
Total Purchase Price $ 3,578,861  
XML 63 R52.htm IDEA: XBRL DOCUMENT v3.19.1
Sale of Asset - Schedule of Sale Transaction (Details) - USD ($)
9 Months Ended
Jan. 31, 2019
Apr. 30, 2018
Notes receivable $ 148,000 $ 1,529
Sale of Domain    
Notes receivable 100,000  
Income for financing (10,000)  
Total sales price 90,000  
Domain name acquisition cost 82,500  
Accumulated amortization (11,458)  
Total reductions from sales price 71,042  
Gain on asset $ 18,958  
XML 64 R53.htm IDEA: XBRL DOCUMENT v3.19.1
Sale of Asset (Details Narrative) - Convert Prom Note #4
9 Months Ended
Jan. 31, 2019
Date of Agreement Sep. 15, 2018
Debt Instrument, Due Date Sep. 14, 2019
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.19.1
Related Parties and Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Jan. 31, 2019
Jan. 31, 2018
Jan. 31, 2019
Jan. 31, 2018
Apr. 30, 2017
Professional Fees, Monthly $ 73,578 $ 65,043 $ 259,956 $ 106,056  
Line of Credit Agmt          
Date of Agreement         May 01, 2016
Line of Credit, Borrowing Capacity         $ 100,000
Line of Credit, Borrowed $ 1,157,271   $ 1,157,271    
XML 66 R55.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders Equity (Details Narrative) - USD ($)
3 Months Ended
Jan. 31, 2019
Apr. 30, 2018
Equity [Abstract]    
Common Stock, Par Value $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 560,000,000 560,000,000
Common Stock, Issued 516,974,596 415,610,809
Preferred Stock, Par Value $ 0.0001 $ 0.0001
Preferred Stock, Shares Authorized 50,000,000 50,000,000
Preferred Stock, Issued 4,350,000 11,850,000
Preferred Stock, Series A, Designated 23,000,000  
Preferred Stock, Series A, Par Value $ 0.0001  
Preferred Stock, Series A, Issued 1,000,000  
Proceeds from Issuance of Preferred Stock $ 200,000  
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