0001493152-18-016249.txt : 20181115 0001493152-18-016249.hdr.sgml : 20181115 20181115123051 ACCESSION NUMBER: 0001493152-18-016249 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 50 CONFORMED PERIOD OF REPORT: 20150331 FILED AS OF DATE: 20181115 DATE AS OF CHANGE: 20181115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANADIAN CANNABIS CORP. CENTRAL INDEX KEY: 0001532424 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 453327444 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54915 FILM NUMBER: 181186555 BUSINESS ADDRESS: STREET 1: 2368 LAKESHORE ROAD WEST STREET 2: SUITE 205 CITY: OAKVILLE STATE: A6 ZIP: L6L 1H5 BUSINESS PHONE: 866-790-3324 MAIL ADDRESS: STREET 1: 2368 LAKESHORE ROAD WEST STREET 2: SUITE 205 CITY: OAKVILLE STATE: A6 ZIP: L6L 1H5 FORMER COMPANY: FORMER CONFORMED NAME: GOLD PARTY PAYDAY INC DATE OF NAME CHANGE: 20111011 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2015

 

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

 

For the transition period from ______________ to ______________

 

Commission File Number: 000-54915

 

CANADIAN CANNABIS CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   45-3327444
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     

100 Rutherford Road South

Brampton, Ontario, Canada L6W 2J2

  (866) 70-3324
(Address of principal executive offices)   (Registrant’s telephone number, including area code)

 

 

(Former name or former address, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 [X] 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 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 [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

 

As of November 9, 2018 there were 48,428,280 shares of common stock, par value $0.000001, issued and outstanding.

 

 

 

   
 

 

CANADIAN CANNABIS CORP.

FORM 10-Q

For the Period ended March 31, 2015

 

TABLE OF CONTENTS

 

  page
PART I – Financial Information  
   
Item 1. Financial Statements 4
   
Condensed Consolidated Financial Statements and Notes (Unaudited): 4
   
Condensed Consolidated Balance Sheets (Unaudited) 4
   
Condensed Consolidated Statements of Operations (Unaudited) 5
   
Condensed Consolidated Statements of Cash Flows (Unaudited) 6
   
Notes to Condensed Consolidated Financial Statements (Unaudited) 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
   
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 31
   
Item 4. Mine Safety Disclosure 31
   
Item 5. Other Information 31
   
Item 6. Exhibits 31
   
Signatures 34

 

 2 
 

 

Special Note Regarding Forward-Looking Statements

 

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

 3 
 

 

PART I

 

ITEM 1. Financial Statements and Notes

 

CANADIAN CANNABIS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31, 2015   December 31,2014 
ASSETS          
Current Assets          
Cash  $3,471   $17,813 
Total Current Assets   3,471    17,813 
           
Other Assets          
Assets of discontinued operations, net   14,875,779    15,018,962 
Total Other Assets   14,875,779    15,018,962 
Total Assets  $14,879,250   $15,036,775 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current Liabilities          
Accounts payable and accrued liabilities  $1,031,976   $1,384,458 
Accounts payable and accrued liabilities, related parties   62,659    - 
Liabilities of discontinued operations   13,366,784    10,244,970 
Total Current Liabilities   14,461,419    11,629,428 
Total Liabilities   14,461,419    11,629,428 
           
Commitments and Contingencies          
           
Stockholders’ Equity          
Preferred stock, $0.000001  par value;  5,000,000  shares authorized; None issued and outstanding   -    - 
Common stock, $0.000001  par value;  95,000,000  shares authorized; 29,910,165  issued and outstanding   30    30 
Additional paid-in-capital   17,708,598    17,186,417 
Accumulated other comprehensive income (loss)   (791,857)   948,247 
Accumulated deficit   (16,150,898)   (14,379,305)
Total Canadian Cannabis Corp. Stockholders’ Equity   765,873    3,755,389 
Non-controlling interest in consolidated variable interest entity   (348,042)   (348,042)
Total Shareholders’ Equity   417,831    3,407,347 
Total Liabilities and Stockholders’ Equity  $14,879,250   $15,036,775 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 4 
 

 

CANADIAN CANNABIS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the three months ended March 31, 2015 and 2014

 

   For the three months ended, 
   March 31, 2014   March 31, 2014 
OPERATING EXPENSES:          
General and administrative   447,872    182,739 
Total operating expenses   447,872    182,739 
           
Loss from continued operations   (447,872)   (182,739)
           
Net loss from continued operations   (447,872)   (182,739)
Net loss from discontinued operations   (1,323,721)   (797,994)
Net loss  $(1,771,593)  $(980,733)
           
Basic earnings and fully diluted per common share          
Continued operations  $(0.02)  $(0.16)
Discontinued operations  $(0.04)  $(0.72)
Loss per share - Basic and Diluted  $(0.06)  $(0.89)
           
Basic and fully diluted weighted average number of shares outstanding   29,843,749    1,107,794 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 5 
 

 

CANADIAN CANNABIS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2015 and 2014

 

   For the three months ended, 
   March 31, 2015   March 31, 2014 
Cash flows from operating activities:          
Net loss including non-controlling interests   (1,771,593)   (4,217,422)
Adjustments to reconcile net loss to net cash (used in) operating activities:          
Loss on investment in consolidated subsidiary          
Net cash flow (used in) provided by operating activities from continuing operations   (179,387)   (9,358)
Net cash flow (used in) provided by operating activities from discontinuing operations   143,183    1,557,455 
Net cash (used in) provided by operating activities   (1,807,797)   (2,669,325)
           
Cash flows from investing activities:          
Loss on investment in consolidated subsidiary          
Net cash flow (used in) provided by investing activities from discontinuing operations   -    (6,492,141)
Net cash (used in) provided by investing activities   -    (6,492,141)
           
Cash flows from financing activities:          
Loss on investment in consolidated subsidiary          
Net cash flow (used in) provided by financing activities from discontinuing operations   3,533,559    9,367,039 
Net cash (used in) provided by financing activities   3,533,559    9,367,039 
Effect of exchange on cash and cash equivalents   (1,740,104)   5,379 
Change in cash and cash equivalents   (14,342)   210,952 
           
Cash and cash equivalents at beginning of period  $17,813   $- 
Cash and cash equivalents at end of period  $3,471   $210,952 
           
Supplemental disclosure of cash flow information:          
Interest paid  $-   $1,951 
Noncash investing and financing activities:          
Deposits for acquisition of property funded by shareholders  $-   $913,100 
Issuance of common stock for prepaid services  $-   $867,756 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 6 
 

 

Canadian Cannabis Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For The Three Months Ended March 31, 2015 and 2014

 

The results for the three months ended March 31, 2015 and 2014 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial condition, results of operations, and cash flows and for the related periods presented have been made.

 

1. NATURE OF OPERATIONS, HISTORY AND PRESENTATION

 

Nature of Operations

 

Canadian Cannabis Corp. (“CCC”, “the Company” “we” or “us”) was originally incorporated on September 19, 2011, under the laws of the State of Delaware as Gold Party Payday, Inc. At that time, the Company’s business operations consisted of organizing events and parties in which guests bring their unwanted jewelry, scrap gold and silver, coins and other gold and silver items to sell to the Company at a discount, after which the Company resold the items to refineries.

 

Canada Cannabis Corp. was incorporated in the Province of Ontario, Canada on January 20, 2014. Canada Cannabis Corp. planned to cultivate and distribute medical marijuana in Canada pursuant to a license which was expected to be issued by Health Canada. Canada Cannabis Corp.’s planned business was to cultivate Cannabis for medical marijuana purposes and distribute directly to patients throughout Canada and export to international markets, where an existing framework and legislation existed for medical marijuana.

 

On May 21, 2014, the Company consummated a merger agreement (the “Merger Agreement”) with 2418146 Ontario Inc., an Ontario (Canada) corporation (“GPAY Sub”), which was our wholly-owned subsidiary formed for purposes of consummating the Merger Agreement, and Canada Cannabis Corp. Pursuant to the terms of the Merger Agreement, Canada Cannabis Corp. and GPAY Sub executed and filed Articles of Amalgamation pursuant to the Ontario Business Corporations Act to consummate the amalgamation. Pursuant to the terms of the Merger Agreement, the company resulting from the amalgamation (“CCC-Sub”) is a wholly-owned subsidiary of the Company and retained the Canada Cannabis Corp. name and business, and each of the predecessor companies ceased. Pursuant to the Merger Agreement, the Company agreed to exchange the outstanding common stock of Canada Cannabis Corp. held by its Shareholders for shares of common stock of the Company on a 1:19.5 basis. At the closing of the Merger Agreement, there were approximately 19,822,635 shares of Canada Cannabis Corp. common stock outstanding, which were exchanged for 1,016,503 new shares of the Company’s common stock, par value of $0.000001 per share. Prior to the merger, Gold Party Payday, Inc. had 333,350 shares of common stock issued outstanding and no preferred stock. After the effects of the merger transaction as discussed, there were 1,349,853 shares of common stock outstanding.

 

As a result of the transactions effected by the Merger Agreement and the Transfer Agreement, (i) the business plan of the former Canada Cannabis Corp., to market and manufacture medical marijuana products for sale in Canada, became the sole business of the Company’s wholly-owned subsidiary, CCC, (ii) the Company is the parent and holding company of the subsidiary operating company, and (iii) there was a change of control whereby the former shareholders of the former Canada Cannabis Corp. obtained ownership of a controlling 75% ownership interest in the Company. On July 16, 2014, we changed our name to Canadian Cannabis Corp. to more accurately reflect current business operations. On October 3, 2014, the Company’s common shares had a forward split of 19.5:1 for all shareholders of record on that date and the Company has reflected that split in the current share count. We also changed our trading symbol from GPAY to CCAN, effective October 15, 2014, to reflect our name change.

 

 7 
 

 

The Company intended to pursue a business plan of operating under the newly effective Marihuana for Medical Purposes Regulation (the “MMPR”) to manufacture and market medical marijuana products in Canada and internationally, as permitted by local laws. The Company’s former management raised a significant amount of capital through private placements of equity and debt and set out to establish the business in preparation for commencing full operations in the production and supply of medical marijuana in accordance with our business plan following licensure by Health Canada, the Canadian government agency charged with enforcing the MMPR.

 

On April 3, 2014, the Company submitted to Health Canada an application to obtain an initial license to produce and supply medical marijuana under the MMPR and began to identify suitable properties to acquire for the purpose of establishing a large scale grow operation.

 

On July 4, 2014, the Company closed on the acquisition of real property, including an approximately 312,500 square foot industrial building, located at 98-102 Rutherford Road South, Brampton, Ontario (the “Brampton Property”) through our consolidated VIE, 2264793 Ontario Inc., for a total consideration of CAD $13,885,000 (approximately USD $13.0 million), which included the final adjusted purchase price of CAD $13,421,000 (approximately USD $12.6 million) and land transfer taxes and related surcharges totaling CAD $464,000 (approximately USD $400,000). In connection with the acquisition of the Brampton Property, we incurred financing in the amount of CAD $9,400,000 (approximately USD $8.8 million) (the “Loan”) through 2264793 Ontario Inc., which is secured primarily by mortgage on the Brampton Property. 2264793 Ontario Inc. was required to make monthly interest only payments on the Loan in the amount of CAD $78,333 (approximately USD $73,000). A portion of the building had existing leases which provided some cash flow to the Company while it worked on the MMPR license approval which partially offset the monthly interest payments on the Loan.

 

While the Company waited for its MMPR license application to be processed, it began renovations to the Brampton property to begin to prepare for a large scale grow operation. In addition the Company acquired a 45% stake in Growlite Canada for CAD $1 million (approximately USD $900,000) cash investment. Additionally, the Company made a CAD $3 million (approximately USD $2.7 million) loan for operating capital and business expansion.

 

In the course of the Company’s audit for the year ended December 31, 2014, the Company’s management at the time reviewed this investment for impairment and had made the determination the due to unfavorable changes in the market the Company would write the investment down to $800,000 which approximated the carrying value of Growlite’s inventory at December 31, 2014. Subsequent to this analysis the Company was informed that a manufacturer’s defect has been identified in Growlite’s most popular fixture that resulted in the request for all customers to stop using the product. Given the uncertainty of the value of the remaining inventory and the financial and reputational harm Growlite would incur, the Company chose to write down its investment to zero and fully provide a reserve against the loan and receivable due from Growlite during the period ended December 31, 2014.

 

In 2015 the Company had begun renovations on the Brampton property and ultimately received notice that it would not be approved for the MMPR license from Health Canada. At this time, in addition to the CAD 9,400,000 first mortgage the Company had on the building, it had also taken a CAD $2,300,000 second mortgage on the building and an additional CAD $2,000,000 in loans from Avonlea-Drewry Holdings Inc. (“ADH”) and certain related parties of ADH (together with ADH, the “ADH Group”) which were secured by the building. The Company began to market the building for sale in mid-2015 and was able to sell the property in January 2016 for CAD $15,500,000, which after accounting for all accrued fees was enough to satisfy all but approximately CAD $254,000 of the debt on the building to the ADH Group. The Company subsequently entered into a forbearance agreement with the ADH Group with regard to the balance owed that included an agreement for a consulting agreement with ADH for CAD $1,000,000 and a forbearance fee of CAD $250,000. ADH and its affiliates own 3,750.000 shares, approximately 8%, of the Company’s common stock.

 

During 2015 and 2016, the Company pursued a number of merger and acquisition candidates with various companies in the Canadian cannabis space and signed several letters of intent to acquire companies with existing MMPR licenses, but was unable to bring any of the transactions to completion. At the same time, the Company formed a wholly owned subsidiary called The Clinic Network (“TCN”). TCN was formed as a network of medical clinics across Canada to offer multidisciplinary therapies for patients that suffer from chronic pain, rheumatoid conditions. TCN was to provide patients with access to the latest medical advancements as well as pharmaceutical and cannabis-related therapies.

 

 8 
 

 

In August 2016, Benjamin Ward, the Company’s CEO and Director resigned. Scott Keevil, an existing shareholder, was appointed as the new CEO and Director and tasked with restructuring the Company’s debt, raising additional capital and acquiring additional business in order to restore shareholder value.

 

Negotiations to settle the debts owed to the ADH Group began in late 2016 and a settlement agreement was reached in March 2017, which was later revised in March 2018. Under the terms of the agreement the Company assigned the assets of TCN to ADH, agreed to make certain payments for expenses incurred in relation to its business and the settlement agreement with the ADH Group, close a private placement financing and listing transaction satisfactory to ADH and take steps to bring the Company’s SEC filings current. In exchange and upon completion of the Company’s requirements under the agreement, the ADH Group will execute a termination and release agreement, terminating the various agreements among the various ADH parties and the Company, and acknowledging that all of the debt owed to the ADH Group are satisfied in full, and releasing the Company and its parties from their obligations under the various agreements and any related claims which the ADH Group may have against the Company and its related parties. In addition, ADH transferred the assets of TCN to a related party and delivered 1,750,000 shares of Cura-Can Health Corp (“Cura-Can”), valued and CAD $1.00 per share, into an escrow account to satisfy the Company’s obligations under the settlement agreement. The shares will be sold to fund the items required to be paid by the Company under the settlement agreement. It is anticipated that by the time that all of the Company’s obligations have been met, all of the shares of Cura-Can will have been liquidated.

 

Once completed, the settlement agreement with the ADH Group will provide a clean slate for the Company to pursue new business opportunities with the intent of restoring shareholder value.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of USD $16,150,898 for the period from inception (January 20, 2014) through March 31, 2015. The Company has not yet established a stable ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company has total shareholders’ equity of USD $417,831. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The financial statements include the results of the Company from inception on January 20, 2014 through December 31, 2014 and for the quarter ended March 31, 2015. This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

 

Variable Interest Entities

 

A variable interest entity (“VIE”) is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the party with both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE. The Company performs ongoing reassessments of whether it is the primary beneficiary of a VIE, which includes consideration of whether the Company has acquired or divested the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. The Company also reconsiders whether entities previously determined not to be VIEs have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework.

 

 9 
 

 

The Company has assessed its investment in Growlite Canada and its relationship with 2264793 Ontario Inc. with regard to whether it is the primary beneficiary of these entities. While the Company believes it is not the primary beneficiary of Growlite Canada, it believes that it is in fact the primary beneficiary of 2264793 Ontario, Inc. and accordingly, consolidates the entity in its Condensed Consolidated Financial Statements. See “Principles of Consolidation”

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include Canadian Cannabis Corp. (formerly, Gold Party Payday, Inc.) and Canada Cannabis Corp., our wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. In accordance with FIN 46(R), the Company believes that it meets the definition of the primary beneficiary for 2264793 Ontario Inc. and consolidates the entity in its Condensed Consolidated Financial Statements. See “Variable Interest Entities”

 

Property and Equipment

 

Building and land are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the relevant asset, generally 20 years.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company holds cash balances in both U.S. Dollars (USD) and Canadian Dollars (CAD) and places its cash equivalents with high credit quality financial institutions. All amounts in as deposits are insured up to CAD $100,000 by the Canadian Deposit and Insurance Corporation (CDIC), with Bank of Montreal (BMO) as a Member Institution. As of March 31, 2015 the Company’s cash balances held at Canadian banks was approximately CAD $4,408 (USD $3,471).

 

Fair Value Measurements

 

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

 

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

 

Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

 

 10 
 

 

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

 

Our financial instruments consist of cash, accounts payables and accrued expenses. The carrying values of cash, accounts payables and accrued expenses approximate their fair value due to their short maturities.

 

Long-Lived Assets

 

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. There can be no assurances that demand for the Company’s products or services, which could result in an impairment of long-lived assets in the future.

 

Advertising costs

 

Advertising costs are expensed as incurred. No advertising costs were incurred during the period from inception (January 20, 2014) through March 31, 2015.

 

Foreign Currency Transactions and Translation

 

The Company’s principal country of operations is Canada. The financial position and results of operations of the Company are determined using the local currency, Canadian Dollars (“CAD”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

 

Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The results of operations are translated from CAD to US Dollar (“USD”) at the weighted average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the USD reporting currency are dealt with as a component of accumulated other comprehensive income (loss). Translation adjustments net of tax totaled USD ($791,857) for the period from inception (January 20, 2014) through March 31, 2015.

 

As of March 31, 2015, the exchange rate is CAD .7874 per U.S. Dollar. The average exchange rate for the quarter ended March 31, 2015 is CAD .8052.

 

Comprehensive Income (Loss)

 

Comprehensive income (loss) is defined as all changes in shareholders’ equity (deficit), exclusive of transactions with owners, such as capital investments. Income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. The Company had accumulated other comprehensive loss of USD $791,857 for the period from inception (January 20, 2014) through March 31, 2015.

 

 11 
 

 

Earnings (loss) per share

 

The Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. For the period from inception (January 20, 2014) through December 31, 2014, there were 300,000 options and 400,000 warrants outstanding, but due to the Net loss, no potentially dilutive common shares are calculated as outstanding during the period.

 

Recently Issued Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which created a new topic in the Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” In addition to superseding and replacing nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance, ASC 606 requires an entity to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also specifies the accounting of some costs to obtain or fulfill a contract with a customer and expands the disclosure requirements around contracts with customers. The Company will adopt the standard beginning October 1, 2018 using the modified retrospective method.

 

In February 2016, the FASB issued ASU 2016-02, “Leases (ASC 842),” which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability. Additionally, in July 2018, the FASB issued ASU 2018-10, “Codification Improvements to ASC 842, Leases” which provides narrow amendments to clarify how to apply certain aspects of the new leases standard. The new leases standard guidance is effective for the Company for annual reporting periods, including interim periods therein, beginning October 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments,” which clarifies existing guidance related to accounting for cash receipts and cash payments and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company elected to early adopt this standard in the fourth quarter of fiscal 2017. The adoption of this standard did not have a material impact on its consolidated statement of cash flows.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (ASC 718): Scope of Modification Accounting,” which provides clarity on which changes to the terms or conditions of share-based payment awards require an entity to apply the modification accounting provisions required in ASC 718. The standard is effective for all entities for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (ASC 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (the “Act”) into retained earnings. The guidance allows entities to reclassify from accumulated other comprehensive income to retained earnings stranded tax effects resulting from the Act’s new federal corporate income tax rate. The guidance also allows entities to elect to reclassify other stranded tax effects that relate to the Act but do not directly relate to the change in the federal tax rate (e.g., state taxes, changing from a worldwide tax system to a territorial system). Tax effects that are stranded in accumulated other comprehensive income for other reasons (e.g., prior changes in tax law, a change in valuation allowance) may not be reclassified. The standard is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within the fiscal year. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. Entities have the option to apply the guidance retrospectively or in the period of adoption. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

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In March 2018, the FASB issued ASU 2018-05, “Income Taxes (ASC 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” The ASU adds various SEC paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which was effective immediately. The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Tax Cuts and Jobs Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. We have accounted for the tax effects of the Tax Cuts and Jobs Act under the guidance of SAB 118, on a provisional basis. Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects and have recorded provisional amounts in our consolidated financial statements. Refer to Note 13, “Income Taxes,” for further information.

 

3. NOTES PAYABLE

 

Notes Payable to Shareholders

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, our former CEO and shareholder advanced amounts to the Company in the form of short-term loans to help the Company with operating capital as needed. All notes have expired and are in default. The current amount due as of March 31, 2015 is CAD $433,569, (USD $341,393).

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, a shareholder advanced amounts to the company in the form of short-term loans to help the company with operating capital as needed. On December 15, 2014 these notes, totaling CAD $1,150,000, (USD $988,885) were consolidated into a one-year interest free note. The note matures December 15, 2015 but the Company may prepay the note upon receiving adequate funding. The current amount due as of March 31, 2015 is CAD $1,100,000, (USD $866,142).

 

On November 21, 2014 the Company and 2264793 Ontario Inc, a consolidated VIE of the Company, jointly issued a promissory note to Crimson Capital, LLC for CAD $600,000, (USD $472,441) to be used for various expenses related to our Brampton property. The note bears a 54% per annum interest rate and matured on February 21, 2015, however the Company has the ability to extend the note on a month-by-month basis. The total interest accrued as of March 31, 2015 was CAD$114,509.

 

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Convertible Notes

 

On May 24, 2014, the Company issued a convertible promissory note for USD $100,000 to an investor which has an interest rate of 10% per annum and matures on December 31, 2015. Under the terms of the agreement, the note is convertible into common shares of the Company at the option of the Holder at a conversion rate of USD $3.00 per share.

 

In March 2015, the Company issued two separate convertible promissory notes, each for CAD $50,000 to two separate investors. Each of the notes carried an interest rate of 10% per annum and matures on December 31, 2016. Under the agreements, each of the notes are convertible into common shares of the Company at the option of the Holders at a conversion rate of CAD $2.00 per share.

 

4. STOCK HOLDERS’ EQUITY

 

Preferred Stock

 

The Company is authorized to issue 5,000,000 shares of preferred stock, par value $0.000001. No shares of preferred stock have been issued or are outstanding, and no rights, privileges or preferences have been determined and designated by the board of directors.

 

Common Stock

 

The Company is authorized to issue 95,000,000 shares of common stock, par value $0.000001.

 

Common Stock Sales

 

Prior management conducted the following private placements:

 

On January 9, 2015, the Company issued 75,000 shares of its common stock for cash consideration of CAD $2.00 per share for a total of approximately CAD $150,000 (USD $127,500).

 

On January 12, 2015, the Company issued 10,000 shares of its common stock for cash consideration of USD $3.00 per share for a total of approximately CAD $35,300 (USD $30,000).

 

On January 30, 2015, the Company issued 40,000 shares of its common stock for cash consideration of CAD $2.50 per share for a total of approximately CAD $100,000 (USD $79,000). As part of the transaction, the investor also received a two-year warrant to purchase an additional 40,000 shares of the Company’s common stock at USD $3.00 per share.

 

On February 8, 2015, the Company issued 40,000 shares of its common stock for cash consideration of CAD $2.50 per share for a total of approximately CAD $100,000 (USD $80,000). As part of the transaction, the investor also received a five-year warrant to purchase an additional 40,000 shares of the Company’s common stock at USD $2.50 per share.

 

On March 5, 2015, the Company issued 8,000 shares of its common stock for cash consideration of USD $3.00 per share for a total of approximately CAD $30,350 (USD $24,000).

 

On March 10, 2015 the Company issued 18,333 shares of its common stock for cash consideration of CAD $3.00 per share for a total of approximately CAD $55,000 (USD $43,450).

 

On March 31, 2015 the Company issued 15,000 shares of its common stock for cash consideration of CAD $3.00 per share for a total of approximately CAD $45,000 (USD $35,550).

 

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Options:

 

On October 1, 2014 the Company issued 600,000 options to a contract employee for services provided to purchase shares of our common stock at $1.13 per share for a period of seven years. 250,000 of the options vested immediately and 100,000 options vest each subsequent year for three years and 50,000 vest after four years. On the date of the grant, the Company valued the options at USD $676,293 using the Black-Scholes option pricing model with the following assumptions: expected life of the options of 7 years, expected volatility of 226.68%, risk-free rate of 2.12% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the seven year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $329,852 was recognized based on the options that had vested as of December 31, 2014. During the quarter ended March 31, 2015 an expense of USD 28,179 in recognition of the vesting schedule of the remaining options.

 

On October 1, 2014 the Company issued 50,000 options to another contract employee for services provided to purchase shares of our common stock at $1.13 per share for a period of five years, all of which vested immediately. On the date of the grant, the Company valued the options at USD $55,890 using the Black-Scholes option pricing model with the following assumptions: expected life of the options of 5 years, expected volatility of 226.68%, risk-free rate of 1.69% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $55,890 was recognized based on the options that had vested as of December 31, 2014.

 

A summary of the options issued as of March 31, 2015 is as follows:

 

   March 31, 2015     
   Shares  

Weighted Average

Exercise

Price

   Intrinsic Value 
Outstanding at beginning of period   650,000   $-   $- 
Issued   650,000   $1.13   $734,500 
Exercised   -    -      
Forfeited   -                 -      
Expired   -    -      
Outstanding at end of period   650,000   $1.13   $734,500 
Exercisable at end of period   300,000   $1.13   $339,000 

 

    March 31, 2015 
Number of Options   Weighted
Average
Remaining
Life
   Weighted
Average
Exercise
Price
   Shares
Exercisable
 
 650,000    6.51   $1.13    300,000 
                                
 650,000    6.51   $1.13    300,000 

 

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Warrants:

 

On November 10, 2014, the Company issued an aggregate of 1.2 million warrants to purchase common stock and committed to issue another 800,000 warrants to purchase our common stock The investors received 200,000 A Warrants to purchase common shares at $1.50 per share for a five year period, 400,000 B Warrants to purchase common shares at $3.00 per share for a five year period and, upon the exercise of no less than 100,000 of the B Warrants, the Company will issue to the investor 400,000 C Warrants to purchase common shares at $3.00 per share. Each of the warrants is exercisable for a five year period from issuance.

 

On January 3, 2015 the Company issued a three year warrant to purchase 28,000 shares of its common stock at USD $2.00 per share. On the date of the grant, the Company valued the warrants at USD $117,941 using the Black-Scholes option pricing model with the following assumptions: expected life of the warrants of 3 years, expected volatility of 147.19%, risk-free rate of 1.67% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $117,941 was recognized for the warrants during the period ended March 31, 2015.

 

On January 15, 2015 the Company issued a three year warrant to purchase 50,000 shares of its common stock at USD $3.00 per share. On the date of the grant, the Company valued the warrants at USD $231,490 using the Black-Scholes option pricing model with the following assumptions: expected life of the warrants of 5 years, expected volatility of 147.19%, risk-free rate of 1.32% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $231,490 was recognized for the warrants during the period ended March 31, 2015.

 

A summary of the warrants issued as of March 31, 2015 is as follows:

 

March 31, 2015
   Shares   Weighted Average Exercise Price 
Outstanding at beginning of period   2,000,000   $2.70 
Issued   151,333   $1.68 
Exercised   -                - 
Forfeited   -    - 
Expired   -    - 
Outstanding at end of period   2,151,333   $2.70 
Exercisable at end of period   1,351,333   $2.52 

 

    March 31, 2015 
Number of Warrants  

Weighted Average Remaining

Life

  

Weighted Average Exercise

Price

   Shares Exercisable 
 400,000    4.62   $1.50    400,000 
 28,000    2.76   $2.00    28,000 
 40,000    1.84   $2.50    40,000 
 1,683,333    4.63   $3.00    883,333 
 2,151,333    4.56   $2.52    1,351,333 

 

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Total Common Shares

 

On June 16, 2014 a majority of the shareholders of the Company by written consent authorized a special dividend, whereas each of the shareholders of the common stock of the Company would receive 19.5 shares for every share of Company common stock owned. The Company filed a corporate action with FINRA on June 19, 2014 in relation to the declared stock dividend. The dividend is payable on receipt of all necessary approvals, if any, to the holders of record of all the issued and outstanding shares of common stock as of the close of business on September 30, 2014, in the amount of 19.5 shares of common stock per one (1) share of common stock held.

 

The dividend was approved by FINRA and became effective on October 3, 2014, as such, the effects of the dividend have been reflected retroactively in the unaudited condensed consolidated financial statements.

 

The total shares issued and outstanding on March 31, 2015 were 29,910,165.

 

5. EARNINGS (LOSS) PER SHARE

 

FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

 

Basic earnings (loss) per share are computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

 

The Company had 650,000 options and 2,401,333 warrants outstanding and convertible notes which are convertible into 86,301 shares as of March 31, 2015, but due to the Net loss they are not included. Therefore, there was no difference in the basic and dilutive earnings (loss) per share.

 

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The following table sets forth the computation of basic and diluted net loss per share:

 

    Period from  
    January 1, 2015  
    through  
    March 31, 2015  
Net loss from continued operations   $ (447,872 )
Net loss from discontinued operations     (1,323,721 )
Net loss     (1,771,593 )
         
Basic weighted average outstanding shares of common stock     29,843,749  
Dilutive effect of common stock equivalents     1,231,811  
Diluted weighted average common stock equivalents     31,075,560  
         
Loss per share of voting and nonvoting common stock Basic and Diluted        
Continued operations   $ (0.02 )
Discontinued operations   $ (0.04 )
Total Loss per share - Basic and Diluted   $ (0.06 )

 

6. RELATED PARTY TRANSACTIONS

 

Legal and Other Services

 

The Company engaged in a Consulting and Professional services contract with a shareholder who also provided legal and other services for the Company. For the three months ended March 31, 2015, this shareholder was paid, either as an individual or through entities controlled by the individual, approximately CAD $43,400, (USD $31,173) for legal services rendered, which includes the amounts paid under the disclosed contract.

 

The Company incurred an additional CAD $19,072, (USD $15,107) of legal fees from another shareholder. That amount was applied to their respective note payable.

 

Notes Payable to Shareholders

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, our former CEO and shareholder advanced amounts to the Company in the form of short-term loans to help the Company with operating capital as needed. All notes have expired and are in default. The current amount due as of March 31, 2015 is CAD $433,569, (USD $341,393).

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, a shareholder advanced amounts to the Company in the form of short-term loans to help the company with operating capital as needed. On December 15, 2014 these notes, totaling CAD $1,150,000, (USD $988,885) were consolidated into a one-year interest free note. The note matures December 15, 2015 but the Company may prepay the note upon receiving adequate funding. The current amount due as of March 31, 2015 is CAD $1,100,000, (USD $866,142).

 

 18 
 

 

On November 21, 2014 the Company and 2264793 Ontario Inc, a consolidated VIE of the Company, jointly issued a promissory note to Crimson Capital, LLC for CAD $600,000, (USD $472,441) to be used for various expenses related to our Brampton property. The note bears a 54% per annum interest rate and matured on February 21, 2015, however the Company had the ability to extend the note on a month-by-month basis. The loan was repaid in June 2015. The total interest accrued and paid as of June 2015 was CAD$183,748.

 

In connection with the acquisition of the Brampton Property, the Company loaned to 2264793 Ontario Inc. the amount of CAD $4,259,222, (approximately USD $3,933,000) to fund a portion of the down payment on the Brampton Property (the “Down Payment Loan”). This Down Payment Loan was evidence by a promissory note dated December 31, 2015 made by 2264793 Ontario Inc. in favor of the Company in the amount of CAD $4,259,222 (approximately USD $3,933,000), bearing interest at a rate of 0%. 2264793 Ontario Inc. is owned by several of our directors, officers, and shareholders of Canadian Cannabis Corp.

 

7. Property, Plant & Equipment

 

The Company’s property, plant and equipment are summarized as follows:

 

Description  12/31/14   Change   3/31/15 
Buildings and Equipment   3,981,925    363,128    4,345,053 
Land   11,859,807    (250,000)   11,609,807 
Impairment   -    (414,428)   (414,428)
Accumulated Depreciation   (24,268.00)   (13,752.00)   (38,020)
Total Balances in CAD   15,817,464    (315,052)   15,502,412 
                
Balances at Cost in USD  $14,737,960   $61,309   $14,799,269 

 

On December 31, 2014, the Company recorded a CAD $250,000, ($214,975 USD) accrual for remediation and site cleanup of the Brampton Property. This work will include excavation and disposal of impacted dirt, brick, garbage, waste, tires and chemicals. As of March 31, 2015, the accrual was reversed as the Company has purchased only minor improvements associated with the general maintenance of the building.

 

8. Impairment of Long-Term Asset

 

In January 2016 the Company sold the building and land for CAD $15,500,000 and recorded a loss on its investment of CAD $414,428, USD $326,321. As a result of the loss, we impaired the asset as of March 31, 2015 for the full value of the loss.

 

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9. Discontinued Operations

 

As a result of the Company’s inability to receive an MMPR license and subsequent sale of the Brampton property, the Company determined that revenues and expenses related to this portion of the business would be classified as discontinued operations. As of March 31, 2014, we recognized the sale transaction as part of the discontinued operations and will continue to do so moving forward. Below is a summary of the discontinued operations presented in our Balance Sheet and Statement of Operations.

 

BALANCE SHEET

Discontinuing Operations

 

    March 31, 2015     December 31, 2014  
ASSETS                
Accounts receivable   $ 76,510       $                45,845  
Prepaid expenses     -       201,677  
Notes receivable, related parties     -       33,480  
Property, plant & equipment, net     14,799,269       14,737,960  
Total Assets   $ 14,875,779     $ 15,022,433  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current Liabilities                
Accounts payable and accrued liabilities   $ -     $ 2,253,222  
Accrued interest, shareholders     113,456       -  
Mortgage payable     7,529,488       8,083,060  
Accrued stock payable     -       209,992  
Customer deposits     39,352       -  
Notes payable     164,491                     -  
I/C Notes payable     3,725,848       -  
Notes payable to shareholders, net of discount     1,794,149       1,951,918  
Total Liabilities     13,366,784       12,498,192  
                 
Total Stockholders’ Equity     1,508,995       2,524,241  
Total Liabilities and Stockholders’ Equity   $ 14,875,779     $ 15,022,433  

 

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STATEMENT OF OPERATIONS

Discontinuing Operations

 

   March 31, 2015   March 31, 2014 
Rental income  $102,306   $- 
           
OPERATING EXPENSES:          
Consulting fees   323,932    512,014 
Professional fees   45,977    151,842 
General and administrative   533,641    78,308 
    903,550    742,164 
           
Loss from discontinued operations   (801,244)   (742,164)
           
OTHER INCOME (EXPENSE)          
Interest expense, shareholders   (42,534)   (1,951)
Interest expense   (116,029)   - 
Interest income   69    - 
Loss on impairment of asset   (333,721)   - 
Foreign currency gain (loss), net   (30,262)   (53,879)
Total Other Income (Expense)   (522,477)   (55,830)
Net loss from discontinued operations  $(1,323,721)  $(797,994)
           
Loss per share on discontinued operations - Basic and Diluted  $(0.04)  $(0.72)
           
Weighted Average Common Shares Outstanding - Basic   29,843,749    1,107,794 

 

10. Subsequent Events

 

In 2015, the Company began renovations on the Brampton property and ultimately received notice that it would not be approved for the MMPR license from Health Canada. At this time, in addition to the CAD 9,400,000 first mortgage the Company had on the building, it had also taken a CAD $2,300,000 second mortgage on the building and an additional CAD $2,000,000 in loans from Avonlea-Drewry Holdings Inc. (“ADH”) and certain related parties of ADH (together with ADH, the “ADH Group”) which were secured by the building. The Company began to market the building for sale in mid-2015 and was able to sell the property in January 2016, for CAD $15,500,000, which after accounting for all accrued fees was enough to satisfy all but approximately CAD $254,000 of the debt on the building to the ADH Group. The Company subsequently entered into a forbearance agreement with the ADH Group with regard to the balance owed that included an agreement for a consulting agreement with ADH for CAD $1,000,000 and a forbearance fee of CAD $250,000. ADH and its affiliates own 3,750.000 shares, approximately 8%, of the Company’s common stock.

 

In October 2015, the Company entered into a letter of intent to acquire The Hydropothecary Corporation (“Hydropothecary”). Under the agreement, the Company paid a non-refundable deposit of CAD $1,000,000 consisting of two CAD $500,000 tranches. If the letter of intent was not followed by a Definitive Agreement, the deposit was to be converted into common shares of Hydropothecary at a price of CAD $4.00 per share. The CAD $1,000,000 deposit was funded by loans from Avonlea Ventures, Inc. (“Avonlea”) which were secured by the Brampton property. On January 29, 2016, the Company sold the Brampton property and repaid all loans that had encumbered the property including the loans to Avonlea. In early 2016, when the Hydropothecary transaction was terminated and the Company was issued 250,000 shares of Hydropothecary stock valued and CAD $1,000,000, the loans used to fund the deposit had already been repaid, so the Company’s then management used those shares to repay another shareholder loan from a former Director in the amount of CAD $1,000,000. 

 

During 2015 and 2016, the Company pursued a number of merger and acquisition candidates with various companies in the Canadian cannabis space and signed several letters of intent to acquire companies with existing MMPR licenses, but was unable to complete any of the transactions. At the same time, the Company formed a wholly owned subsidiary called The Clinic Network (“TCN”). TCN was formed as a network of medical clinics across Canada to offer multidisciplinary therapies for patients that suffer from chronic pain, rheumatoid conditions. TCN was to provide patients with access to the latest medical advancements as well as pharmaceutical and cannabis-related therapies.

 

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In August 2016, Benjamin Ward, the Company’s CEO and Director resigned. Scott Keevil, an existing shareholder, was appointed as the new CEO and Director and tasked with restructuring the Company’s debt, raising additional capital and acquiring additional business in order to restore shareholder value.

 

Negotiations to settle the debts owed to the ADH Group began in late 2016 and a settlement agreement was reached in March 2017, which was later revised and settled in March 2018. Under the terms of the agreement the Company assigned the assets of TCN to ADH, agree to make certain payments for expenses incurred in relation to its business and the settlement agreement with the ADH Group, close a private placement financing and listing transaction satisfactory to ADH and take steps to bring the Company’s SEC filings current. In exchange and upon completion of the Company’s requirements under the agreement, the ADH Group will execute a termination and release agreement, terminating the various agreements among the various ADH parties and the Company, and acknowledging that all of the debt owed to the ADH Group are satisfied in full, and releasing the Company and its parties from their obligations under the various agreements and any related claims which the ADH Group may have against the Company and its related parties. In addition, ADH transferred the assets of TCN to a related party and delivered 1,750,000 shares of Cura-Can Health Corp (“Cura-Can”), valued and CAD $1.00 per share, into an escrow account to satisfy the Company’s obligations under the settlement agreement. The shares will be sold to fund the items required to be paid by the Company under the settlement agreement. It is anticipated that by the time that all of the Company’s obligations have been met, all of the shares of Cura-Can will have been liquidated.

 

Once completed, the settlement agreement with the ADH Group will provide a clean slate for the Company to pursue new business opportunities with the intent of restoring shareholder value.

 

 22 
 

 

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

 

Forward Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes”, “project”, “expects”, “anticipates”, “estimates”, “intends”, “strategy”, “plan”, “may”, “will”, “would”, “will be”, “will continue”, “will likely result”, and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

This discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes included in this Quarterly Report, the Annual Report on Form 10-K for the fiscal year ended September 30, 2013, and the Current Report on Form 8-K filed on May 20, 2014 and amended on Form 8-K/A filed on June 12, 2014 and July 25, 2014.

 

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Overview

 

Canadian Cannabis Corp. (“CCC”, “the Company” “we” or “us”) was originally incorporated on September 19, 2011, under the laws of the State of Delaware as Gold Party Payday, Inc. At that time, the Company’s business operations consisted of organizing events and parties in which guests bring their unwanted jewelry, scrap gold and silver, coins and other gold and silver items to sell to the Company at a discount, after which the Company resold the items to refineries.

 

Canada Cannabis Corp. was incorporated in the Province of Ontario, Canada on January 20, 2014. Canada Cannabis Corp. planned to cultivate and distribute medical marijuana in Canada pursuant to a license which was expected to be issued by Health Canada. Canada Cannabis Corp.’s planned business was to cultivate Cannabis for medical marijuana purposes and distribute directly to patients throughout Canada and export to international markets, where an existing framework and legislation existed for medical marijuana.

 

On May 21, 2014, the Company consummated a merger agreement (the “Merger Agreement”) with 2418146 Ontario Inc., an Ontario (Canada) corporation (“GPAY Sub”), which was our wholly-owned subsidiary formed for purposes of consummating the Merger Agreement, and Canada Cannabis Corp. Pursuant to the terms of the Merger Agreement, Canada Cannabis Corp. and GPAY Sub executed and filed Articles of Amalgamation pursuant to the Ontario Business Corporations Act to consummate the amalgamation. Pursuant to the terms of the Merger Agreement, the company resulting from the amalgamation (“CCC-Sub”) is a wholly-owned subsidiary of the Company and retained the Canada Cannabis Corp. name and business, and each of the predecessor companies ceased. Pursuant to the Merger Agreement, the Company agreed to exchange the outstanding common stock of Canada Cannabis Corp. held by its Shareholders for shares of common stock of the Company on a 1:19.5 basis. At the closing of the Merger Agreement, there were approximately 19,822,635 shares of Canada Cannabis Corp. common stock outstanding, which were exchanged for 1,016,503 new shares of the Company’s common stock, par value of $0.000001 per share. At the closing of the agreement, Gold Party Payday, Inc. had 333,350 shares of common stock issued outstanding and no preferred stock. After the effects of the merger transaction as discussed, there were 1,349,853 shares of common stock outstanding.

 

As a result of the transactions effected by the Merger Agreement and the Transfer Agreement, (i) the business plan of the former Canada Cannabis Corp., to market and manufacture medical marijuana products for sale in Canada, became the sole business of the Company’s wholly-owned subsidiary, CCC, (ii) the Company is the parent and holding company of the subsidiary operating company, and (iii) there was a change of control whereby the former shareholders of the former Canada Cannabis Corp. obtained ownership of a controlling 75% ownership interest in the Company. On July 16, 2014, we changed our name to Canadian Cannabis Corp. to more accurately reflect current business operations. On October 3, 2014, the Company’s common shares had a forward split of 19.5:1 for all shareholders of record on that date and the Company has reflected that split in the current share count. We also changed our trading symbol from GPAY to CCAN, effective October 15, 2014, to reflect our name change.

 

The Company intended to pursue a business plan of operating under the newly effective Marihuana for Medical Purposes Regulation (the “MMPR”) to manufacture and market medical marijuana products in Canada and internationally, as permitted by local laws. The Company’s former management raised a significant amount of capital through private placements of equity and debt and set out to establish the business in preparation for commencing full operations in the production and supply of medical marijuana in accordance with our business plan following licensure by Health Canada, the Canadian government agency charged with enforcing the MMPR.

 

On April 3, 2014, the Company submitted to Health Canada an application to obtain an initial license to produce and supply medical marijuana under the MMPR and began to identify suitable properties to acquire for the purpose of establishing a large scale grow operation.

 

On July 4, 2014, the Company closed on the acquisition of real property, including an approximately 312,500 square foot industrial building, located at 98-102 Rutherford Road South, Brampton, Ontario (the “Brampton Property”) through our consolidated VIE, 2264793 Ontario Inc., for a total consideration of CAD $13,885,000 (approximately USD $13.0 million), which included the final adjusted purchase price of CAD $13,421,000 (approximately USD $12.6 million) and land transfer taxes and related surcharges totaling CAD $464,000 (approximately USD $400,000). In connection with the acquisition of the Brampton Property, we incurred financing in the amount of CAD $9,400,000 (approximately USD $8.8 million) (the “Loan”) through 2264793 Ontario Inc., which is secured primarily by mortgage on the Brampton Property. 2264793 Ontario Inc. was required to make monthly interest only payments on the Loan in the amount of CAD $78,333 (approximately USD $73,000). A portion of the building had existing leases which provided some cash flow to the Company while it worked on the MMPR license approval which partially offset the monthly interest payments on the Loan.

 

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While the Company waited for its MMPR license application to be processed, it began renovations to the Brampton property to begin to prepare for a large scale grow operation. In addition the Company acquired a 45% stake in Growlite Canada for CAD $1 million (approximately USD $900,000) cash investment. Additionally, the Company made a CAD $3 million (approximately USD $2.7 million) loan for operating capital and business expansion.

 

In the course of the Company’s audit for the year ended December 31, 2014, the Company’s management at the time reviewed this investment for impairment and had made the determination the due to unfavorable changes in the market the Company would write the investment down to $800,000 which approximated the carrying value of Growlite’s inventory at December 31, 2014. Subsequent to this analysis the Company was informed that a manufacturer’s defect has been identified in Growlite’s most popular fixture that resulted in the request for all customers to stop using the product. Given the uncertainty of the value of the remaining inventory and the financial and reputational harm Growlite would incur, the Company chose to write down its investment to zero and fully provide a reserve against the loan and receivable due from Growlite during the period ended December 31, 2014.

 

In 2015 the Company had begun renovations on the Brampton property and ultimately received notice that it would not be approved for the MMPR license from Health Canada. At this time, in addition to the CAD 9,400,000 first mortgage the Company had on the building, it had also taken a CAD $2,300,000 second mortgage on the building and an additional CAD $2,000,000 in loans from Avonlea-Drewry Holdings Inc. (“ADH”) and certain related parties of ADH (together with ADH, the “ADH Group”) which were secured by the building. The Company began to market the building for sale in mid-2015 and was able to sell the property in January 2016 for CAD $15,500,000, which after accounting for all accrued fees was enough to satisfy all but approximately CAD $254,000 of the debt on the building to the ADH Group. The Company subsequently entered into a forbearance agreement with the ADH Group with regard to the balance owed that included an agreement for a consulting agreement with ADH for CAD $1,000,000 and a forbearance fee of CAD $250,000. ADH and its affiliates own 3,750.000 shares, approximately 8%, of the Company’s common stock.

 

During 2015 and 2016, the Company pursued a number of merger and acquisition candidates with various companies in the Canadian cannabis space and signed several letters of intent to acquire companies with existing MMPR licenses, but was unable to bring any of the transactions to completion. At the same time, the Company formed a wholly owned subsidiary called The Clinic Network (“TCN”). TCN was formed as a network of medical clinics across Canada to offer multidisciplinary therapies for patients that suffer from chronic pain, rheumatoid conditions. TCN was to provide patients with access to the latest medical advancements as well as pharmaceutical and cannabis-related therapies.

 

In August 2016, Benjamin Ward, the Company’s CEO and Director resigned. Scott Keevil, an existing shareholder, was appointed as the new CEO and Director and tasked with restructuring the Company’s debt, raising additional capital and acquiring additional business in order to restore shareholder value.

 

Negotiations to settle the debts owed to the ADH Group began in late 2016 and a settlement agreement was reached in March 2017, which was later revised in March 2018. Under the terms of the agreement the Company assigned the assets of TCN to ADH, agreed to make certain payments for expenses incurred in relation to its business and the settlement agreement with the ADH Group, close a private placement financing and listing transaction satisfactory to ADH and take steps to bring the Company’s SEC filings current. In exchange and upon completion of the Company’s requirements under the agreement, the ADH Group will execute a termination and release agreement, terminating the various agreements among the various ADH parties and the Company, and acknowledging that all of the debt owed to the ADH Group are satisfied in full, and releasing the Company and its parties from their obligations under the various agreements and any related claims which the ADH Group may have against the Company and its related parties. In addition, ADH transferred the assets of TCN to a related party and delivered 1,750,000 shares of Cura-Can Health Corp (“Cura-Can”), valued and CAD $1.00 per share, into an escrow account to satisfy the Company’s obligations under the settlement agreement. The shares will be sold to fund the items required to be paid by the Company under the settlement agreement. It is anticipated that by the time that all of the Company’s obligations have been met, all of the shares of Cura-Can will have been liquidated.

 

Once completed, the settlement agreement with the ADH Group will provide a clean slate for the Company to pursue new business opportunities with the intent of restoring shareholder value.

 

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Results of Operations

 

As we are a company that has not commenced planned operations and are still in the startup phase, we are not yet engaged in material operations generating revenue; therefore, we have little operations to report at this time. Our main focus has been on the development of our new business plan. We have made no sales under our new business plan and all expenses from the date of the Merger through the date of this Quarterly Report have related to the development of our new business plan, including the acquisition and renovation of the Brampton Property and licensure efforts under the MMPR, and other expenses related to the daily operations of a public company.

 

Three Months Ended March 31, 2015 and March 31, 2014

 

Revenue. Revenue for the three months ended March 31, 2015 and March 31, 2014 was USD $0.

 

Consulting Fees. Consulting fees for the three months ended March 31, 2015 and March 31, 2014 were USD $0.

 

Professional Fees. Professional fees for the three months ended March 31, 2015 and March 31, 2014 were USD $0.

 

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2015 were USD $447,872. General and administrative expenses for the three months ended March 31, 2014 were USD $182,739. The expenditure of funds for general and administrative expenses is primarily services related to being a public company

 

Net Income (loss) from continued operations. For the three months ended March 31, 2015, we incurred a net loss from continued operations of USD $(447,872). For the three months ended March 31, 2014, we incurred a net loss from continued operations of USD $(182,739). The net losses were primarily a result of operating expenses without current revenue.

 

Net Income (loss) from discontinued operations. For the three months ended March 31, 2015, we incurred a net loss from discontinued operations of USD $(1,323,721). For the three months ended March 31, 2014, we incurred a net loss from discontinued operations of USD $(797,994).

 

Liquidity and Capital Resources

 

In connection with the Transfer Agreement discussed above, as of May 21, 2014, we divested all the assets related to the former operations of the Company and discontinued those operations in favor of pursuing our new business plan. Additionally, the Company’s Current Report on Form 8-K disclosing the transactions effected by the Merger and Transfer Agreement included audited financial statements of Canada Cannabis Corp. from its period of inception (January 20, 2014) through March 31, 2014, and unaudited pro-forma financial statements of the combined companies for the three months ended March 31, 2014. We believe the inclusion of comparisons to periods during which the Company was under prior control and management and business of the Company was wholly different than the current business could be misleading given the complete transition of the Company’s management and business plan, as well as the complete discontinuance of the prior business and divestiture of related assets. As such, the discussion of our liquidity and capital resources and our results of operations for the three months ended March 31, 2015 and 2014.

 

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Net cash provided by (used in) operating activities. During the three months ended March 31, 2015, net cash used in operating activities from continuing operations and discontinuing operations was USD $(179,657) and USD $143,453, respectively. During the three months ended March 31, 2014, net cash used in operating activities from continuing operations and discontinuing operations was USD $(9,358) and USD $1,557,455, respectively. Operating activities during the three months ended March 31, 2015 and 2014 were primarily the result of net loss incurred during the period, changes in accounts payable and accrued accounts payable, and decreases in building expenses associated with discontinuing operations.

 

Net cash provided by (used in) investing activities. During the three months ended March 31, 2015 and 2014, net cash used in investing activities from continuing operations was USD $(-0-) and USD $(6,492,141), respectively. The cash flow used in investing activities from discontinuing operations during the three months ended March 31, 2014 was primarily the result of an investment in Growlite (approximately USD $3.6 million) and the acquisition of the Brampton Property (approximately USD $4.2 million).

 

Net cash provided by (used in) financing activities. During the three months ended March 31, 2015 and March 31, 2014, net cash provided by financing activities from discontinuing operations was USD $3,533,559 and USD $9367,039, respectively. The cash flow provided by financing activities from discontinued operations during the three months ended March 31, 2014 was primarily the result of proceeds from the sale of common stock (approximately USD $7.5 million) and the net proceeds from the issuance of notes payable to shareholders less repayments to shareholders (approximately USD $1.8 million). During the three months ended March 31, 2015, financing activities from discontinuing operations was the result of proceeds from notes payable and notes payable, shareholders.

 

As of March 31, 2015, we had cash on hand of USD $3,471, and current liabilities of USD $14,461,419. We have incurred a loss since inception resulting in an accumulated deficit of USD $16,150,898. We do not have sufficient capital to operate our business and will require additional funding to sustain operations through December 2015.

 

In connection with the acquisition of the Brampton Property, as discussed above, we incurred financing in the amount of CAD $9,400,000 (approximately USD $8.8 million) (the “Loan”) through a related entity, 2264793 Ontario Inc., which is secured primarily by mortgage on the Brampton Property. The Company is required to make monthly interest only payments on the Loan in the amount of CAD $78,333 (approximately USD $73,000) each beginning on August 15, 2014. The Company expects to partially offset the monthly interest payments on the Loan with rental income in the amount of approximately CAD $700,000 (approximately USD $657,000) per year from existing leases of areas of the Brampton Property not presently required for our operations. The preceding description of the Loan is incomplete and qualified entirely by the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2014, in which a more detailed description with respect to the Loan can be found.

 

As a result of the Company’s inability to receive an MMPR license and subsequent sale of the Brampton property, the Company determined that revenues and expenses related to this portion of the business would be classified as discontinued operations. As of March 31, 2014, we recognized the sale transaction as part of the discontinued operations and will continue to do so moving forward. Below is a summary of the discontinued operations presented in our Balance Sheet and Statement of Operations.

 

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. In the course of its start-up activities, we have sustained operating and cash flow losses and expect to incur an operating and cash flow losses for 2015. The Company has generated a limited amount of revenue and has not achieved profitable operations or positive cash flows from operations. These factors raise substantial doubt about our ability to continue as a going concern. We will continue targeting sources of additional financing to provide continuation of our operations. There can be no assurance that the Company will be able to continue to obtain funding with acceptable terms, or that we will be able to achieve revenues sufficient to become profitable, in which case we may be unable to meet our obligations and we may cease operations. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.

 

Seasonality

 

Although we are not yet engaged in material operations with respect to our new business plan, we do not expect that our business will be seasonal.

 

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Recent Developments

 

In 2015 the Company had begun renovations on the Brampton property and ultimately received notice that it would not be approved for the MMPR license from Health Canada. At this time, in addition to the CAD 9,400,000 first mortgage the Company had on the building, it had also taken a CAD $2,300,000 second mortgage on the building and an additional CAD $2,000,000 in loans from Avonlea-Drewry Holdings Inc. (“ADH”) and certain related parties of ADH (together with ADH, the “ADH Group”) which were secured by the building. The Company began to market the building for sale in mid-2015 and was able to sell the property in January 2016 for CAD $15,500,000, which after accounting for all accrued fees was enough to satisfy all but approximately CAD $254,000 of the debt on the building to the ADH Group. The Company subsequently entered into a forbearance agreement with the ADH Group with regard to the balance owed that included an agreement for a consulting agreement with ADH for CAD $1,000,000 and a forbearance fee of CAD $250,000. ADH and its affiliates own 3,750.000 shares, approximately 8%, of the Company’s common stock.

 

In October 2015, the Company entered into a letter of intent to acquire The Hydropothecary Corporation (“Hydropothecary”). Under the agreement, the Company paid a non-refundable deposit of CAD $1,000,000 consisting of two CAD $500,000 tranches. If the letter of intent was not followed by a Definitive Agreement, the deposit was to be converted into common shares of Hydropothecary at a price of CAD $4.00 per share. The CAD $1,000,000 deposit was funded by loans from Avonlea Ventures, Inc. (“Avonlea”) which were secured by the Brampton property. On January 29, 2016, the Company sold the Brampton property and repaid all loans that had encumbered the property including the loans to Avonlea. In early 2016, when the Hydropothecary transaction was terminated and the Company was issued 250,000 shares of Hydropothecary stock valued and CAD $1,000,000, the loans used to fund the deposit had already been repaid, so the Company’s then management used those shares to repay another shareholder loan from a former Director in the amount of CAD $1,000,000. 

 

During 2015 and 2016, the Company pursued a number of merger and acquisition candidates with various companies in the Canadian cannabis space and signed several letters of intent to acquire companies with existing MMPR licenses, but was unable to bring any of the transactions to completion. At the same time, the Company formed a wholly owned subsidiary called The Clinic Network (“TCN”). TCN was formed as a network of medical clinics across Canada to offer multidisciplinary therapies for patients that suffer from chronic pain, rheumatoid conditions. TCN was to provide patients with access to the latest medical advancements as well as pharmaceutical and cannabis-related therapies.

 

In August 2016, Benjamin Ward, the Company’s CEO and Director resigned. Scott Keevil, an existing shareholder, was appointed as the new CEO and Director and tasked with restructuring the Company’s debt, raising additional capital and acquiring additional business in order to restore shareholder value.

 

Negotiations to settle the debts owed to the ADH Group began in late 2016 and a settlement agreement was reached in March 2017, which was later revised and settled in March 2018. Under the terms of the agreement the Company assigned the assets of TCN to ADH, agree to make certain payments for expenses incurred in relation to its business and the settlement agreement with the ADH Group, close a private placement financing and listing transaction satisfactory to ADH and take steps to bring the Company’s SEC filings current. In exchange and upon completion of the Company’s requirements under the agreement, the ADH Group will execute a termination and release agreement, terminating the various agreements among the various ADH parties and the Company, and acknowledging that all of the debt owed to the ADH Group are satisfied in full, and releasing the Company and its parties from their obligations under the various agreements and any related claims which the ADH Group may have against the Company and its related parties. In addition, ADH transferred the assets of TCN to a related party and delivered 1,750,000 shares of Cura-Can Health Corp (“Cura-Can”), valued and CAD $1.00 per share, into an escrow account to satisfy the Company’s obligations under the settlement agreement. The shares will be sold to fund the items required to be paid by the Company under the settlement agreement. It is anticipated that by the time that all of the Company’s obligations have been met, all of the shares of Cura-Can will have been liquidated.

 

Once completed, the settlement agreement with the ADH Group will provide a clean slate for the Company to pursue new business opportunities with the intent of restoring shareholder value.

 

Related Party Transactions

 

Legal and Other Services

 

The Company engaged in a Consulting and Professional services contract with a shareholder who also provided legal and other services for the Company. For the three months ended March 31, 2015, this shareholder was paid, either as an individual or through entities controlled by the individual, approximately CAD $43,400, (USD $31,173) for services rendered, which includes the amounts paid under the disclosed contract.

 

The Company incurred an additional CAD $19,072, (USD $15,107) of legal fees from another shareholder. That amount was applied to their respective note payable.

 

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Notes Payable to Shareholders

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, our former CEO and shareholder advanced amounts to the Company in the form of short-term loans to help the Company with operating capital as needed. All notes have expired and are in default. The current amount due as of March 31, 2015 is CAD $433,569, (USD $341,393).

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, a shareholder advanced amounts to the Company in the form of short-term loans to help the company with operating capital as needed. On December 15, 2014 these notes, totaling CAD $1,150,000, (USD $988,885) were consolidated into a one-year interest free note. The note matures December 15, 2015 but the Company may prepay the note upon receiving adequate funding. The current amount due as of March 31, 2015 is CAD $1,100,000, (USD $866,142).

 

On November 21, 2014 the Company and 2264793 Ontario Inc, a consolidated VIE of the Company, jointly issued a promissory note to Crimson Capital, LLC for CAD $600,000, (USD $472,441) to be used for various expenses related to our Brampton property. The note bears a 54% per annum interest rate and matured on February 21, 2015, however the Company had the ability to extend the note on a month-by-month basis. The loan was repaid in June 2015. The total interest accrued and paid as of June 2015 was CAD$183,748.

 

In connection with the acquisition of the Brampton Property, the Company loaned to 2264793 Ontario Inc. the amount of CAD $4,259,222, (approximately USD $3,933,000) to fund a portion of the down payment on the Brampton Property (the “Down Payment Loan”). This Down Payment Loan was evidence by a promissory note dated December 31, 2015 made by 2264793 Ontario Inc. in favor of the Company in the amount of CAD $4,259,222 (approximately USD $3,933,000), bearing interest at a rate of 0%. 2264793 Ontario Inc. is owned by several of our directors, officers, and shareholders of Canadian Cannabis Corp.

 

Off-Balance Sheet Arrangements

 

We have not entered into any 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 and would be considered material to investors.

 

Inflation

 

We do not believe that inflation has had in the past or will have in the future any significant negative impact on our operations.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

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

 

Item 4. Controls and Procedures.

 

(a) Evaluation of disclosure controls and procedures.

 

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, under the supervision and with the participation of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures and concluded that our disclosure controls and procedures are ineffective as of the date of filing this Form 10-Q due to limited accounting and reporting personnel and a lack of expertise and segregation of duties due to limited financial resources and the size of our company. We will need to adopt additional disclosure controls and procedures prior to commencement of material operations. Consistent therewith, on an on-going basis we will evaluate the adequacy of our controls and procedures.

 

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Management is committed to improving its internal controls and will continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities. At this time, however, management has not established a time table for when it intends to address the aforementioned material weaknesses.

 

(b) Changes in internal control over financial reporting.

 

There were no changes in our internal control over financial reporting during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are no legal proceedings that have occurred within the past five years concerning our directors or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.

 

Item 1A. Risk Factors.

 

As we are 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.

 

(a) Unregistered Sales of Equity Securities.

 

Prior management conducted the following private placements:

 

Equity Transactions:

 

On January 9, 2015, the Company issued 75,000 shares of its common stock for cash consideration of CAD $2.00 per share for a total of approximately CAD $150,000 (USD $127,500).

 

On January 12, 2015, the Company issued 10,000 shares of its common stock for cash consideration of USD $3.00 per share for a total of approximately CAD $35,300 (USD $30,000).

 

On January 30, 2015, the Company issued 40,000 shares of its common stock for cash consideration of CAD $2.50 per share for a total of approximately CAD $100,000 (USD $79,000). As part of the transaction, the investor also received a two year warrant to purchase an additional 40,000 shares of the Company’s common stock at USD $3.00 per share.

 

On February 8, 2015, the Company issued 40,000 shares of its common stock for cash consideration of CAD $2.50 per share for a total of approximately CAD $100,000 (USD $80,000). As part of the transaction, the investor also received a five year warrant to purchase an additional 40,000 shares of the Company’s common stock at USD $2.50 per share.

 

On March 5, 2015, the Company issued 8,000 shares of its common stock for cash consideration of USD $3.00 per share for a total of approximately CAD $30,350 (USD $24,000).

 

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On March 10, 2015 the Company issued 18,333 shares of its common stock for cash consideration of CAD $3.00 per share for a total of approximately CAD $55,000 (USD $43,450).

 

On March 31, 2015 the Company issued 15,000 shares of its common stock for cash consideration of CAD $3.00 per share for a total of approximately CAD $45,000 (USD $35,550).

 

Convertible Notes:

 

In March 2015, the Company issued two separate convertible promissory notes, each in the amount of CAD $50,000 to two separate investors. Each of the notes carried an interest rate of 10% per annum and mature on December 31, 2016. Under the agreements, each of the notes are convertible into common shares of the Company at the option of the Holders at a conversion rate of CAD $2.00 per share.

 

The transactions described above and the shares of common stock involved were exempt from registration provided by Section 4(2) of the Securities Act.

 

(b) Use of Proceeds.

 

Not Applicable.

 

(c) Affiliated Purchases of Common Stock.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

INDEX TO EXHIBITS

 

Exhibit   Description
     
*2.1   Merger Agreement, by and among the Company, 2418146 Ontario Inc. and Canada Cannabis Corp., entered into on May 14, 2014
     
*2.2   Business Transfer and Indemnity Agreement by and between the Company and Tatum L, Morita, entered into on May 14, 2014
     
*2.3   Articles of Amalgamation
     
*3.1   Certificate of Incorporation, as amended July 16, 2014
     
*3.2   By-laws

 

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10.1   Form of Subscription Agreement by and among Canadian Cannabis Corp. and various accredited investors dated November 10, 2014
     
10.2   Promissory Note, by and among 2264793 Ontario Inc., Canadian Cannabis Corp. and Crimson Capital, LLC, entered into on November 21, 2014
     
10.3   Referral Agreement, by and between Canadian Cannabis Corp. and Crimson Capital Investments, LLC, entered into on November 1, 2014
     
10.4   Promissory Note, by and between 2264793 Ontario Inc. and Canadian Cannabis Corp., entered into on December 31, 2014
     
10.5   Security Agreement, by and between Canada Cannabis Corp. and 2393245 Ontario Inc. c.o.b. Growlite Canada, made effective as of March 31, 2014
     
*10.6   Agreement of Purchase and Sale, by and among Canada Cannabis Corp., I.L. Rosen Limited, Time Holdings Limited and Tanak Group Ltd., entered into on April 1, 2014
     
*10.7   Extension Letter, by and among Canada Cannabis Corp., I.L. Rosen Limited, Time Holdings Limited and Tanak Group Ltd., entered into on May 16, 2014
     
*10.8   Mortgage, by and among 2264793 Ontario Inc., Rescom Capital, C&K Mortgage Services Inc. and The Bank of Nova Scotia Trust Company, entered into on July 4, 2014
     
*10.9   Consulting Agreement, in the form entered into by and between Canada Cannabis Corp. and each of Benjamin Ward, John Esteireiro, Peter Strang, and Silvio Serrano, each dated January 21, 2014
     
*10.10   Employment Agreement, entered into by and between Canada Cannabis Corp. and Benjamin Ward, dated March 21, 2014
     
*10.11   Acquisition Agreement, by and among Canada Cannabis Corp., 2393245 Ontario Inc. c.o.b. Growlite Canada and Silvio Serrano, entered into on March 31, 2014
     
*10.12   Loan Agreement, by and between Canada Cannabis Corp. and 2393245 Ontario Inc. c.o.b. Growlite Canada, entered into on March 31, 2014
     
*10.13   Promissory Note, by and between Canadian Cannabis Corp. and Benjamin Ward, entered into on June 18, 2014
     
*10.14   Promissory Note, by and between Canadian Cannabis Corp. and John Esteireiro, entered into on June 18, 2014
     
*10.15   Promissory Note, by and between Canadian Cannabis Corp. and Silvio Serrano, entered into on June 18, 2014
     
*10.16   Promissory Note, by and between Canadian Cannabis Corp. and John Esteireiro, entered into on June 26, 2014
     
*10.17   Promissory Note, by and between Canadian Cannabis Corp. and Wildhaus Capital Schweiz AG, entered into on July 4, 2014
     
*10.18   Promissory Note, by and between Canadian Cannabis Corp. and Benjamin Ward in the principal amount of CAD $318,000, entered into on July 4, 2014
     
*10.19   Promissory Note, by and between Canadian Cannabis Corp. and Silvio Serrano, entered into on July 4, 2014

 

 32 
 

 

*10.20   Promissory Note, by and between Canadian Cannabis Corp. and Benjamin Ward in the principal amount of CAD $932,526, entered into on December 31, 2014
     
*10.21   Promissory Note, by and between Canadian Cannabis Corp. and John Esteireiro in the principal amount of CAD $1,150,000, entered into on December 31, 2014
     
†31.1   Certification of our Principal Executive Officer and Principal Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
     
‡32.1   Certification of our Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted 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

 

* Included in previously filed reporting documents.
** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
Filed herewith
Furnished herewith

 

(a)Exhibits. See Index to Exhibits, which is incorporated by reference in this Item. The Exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this annual report.
  
(b)Not applicable.

 

 33 
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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, on November 15, 2018.

 

Canadian Cannabis Corp.  
     
By: /s/ Scott Keevil  
  Scott Keevil  
  Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Chief Accounting Officer), President and Director  

 

 34 
 

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION

 

I, Scott Keevil, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Canadian Cannabis Corp.;
   
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 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 small business issuer 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.

 

Date: November 15, 2018 /s/ Scott Keevil
  Scott Keevil
  Chief Executive Officer (Principal Executive Officer & Principal Financial Officer) and President

 

   
 

 

 

EX-32.1 3 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Canadian Cannabis Corp. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Keevil, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the date and for the periods expressed in the Report.

 

  /s/ Scott Keevil
  Scott Keevil
  Chief Executive Officer (Principal Executive Officer & Principal Financial Officer) and President
   
  November 15, 2018

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

 

   
 

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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2015
Nov. 09, 2018
Document And Entity Information    
Entity Registrant Name CANADIAN CANNABIS CORP.  
Entity Central Index Key 0001532424  
Document Type 10-Q  
Document Period End Date Mar. 31, 2015  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Common Stock, Shares Outstanding   48,428,280
Trading Symbol CCAN  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2015  
XML 11 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Balance Sheets - USD ($)
Mar. 31, 2015
Dec. 31, 2014
Current Assets    
Cash $ 3,471 $ 17,813
Total Current Assets 3,471 17,813
Other Assets    
Assets of discontinued operations, net 14,875,779 15,018,962
Total Other Assets 14,875,779 15,018,962
Total Assets 14,879,250 15,036,775
Current Liabilities    
Accounts payable and accrued liabilities 1,031,976 1,384,458
Accounts payable and accrued liabilities, related parties 62,659
Liabilities of discontinued operations 13,366,784 10,244,970
Total Current Liabilities 14,461,419 11,629,428
Total Liabilities 14,461,419 11,629,428
Commitments and Contingencies  
Stockholders' Equity    
Preferred stock, $0.000001 par value; 5,000,000 shares authorized; None issued and outstanding
Common stock, $0.000001 par value; 95,000,000 shares authorized; 29,910,165 issued and outstanding 30 30
Additional paid-in-capital 17,708,598 17,186,417
Accumulated other comprehensive income (loss) (791,857) 948,247
Accumulated deficit (16,150,898) (14,379,305)
Total Canadian Cannabis Corp. Stockholders' Equity 765,873 3,755,389
Non-controlling interest in consolidated variable interest entity (348,042) (348,042)
Total Shareholders' Equity 417,831 3,407,347
Total Liabilities and Stockholders' Equity $ 14,879,250 $ 15,036,775
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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.000001 $ 0.000001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value $ 0.000001 $ 0.000001
Common stock, shares authorized 95,000,000 95,000,000
Common stock, shares issued 29,910,165 29,910,165
Common stock, shares outstanding 29,910,165 29,910,165
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
OPERATING EXPENSES:    
General and administrative $ 447,872 $ 182,739
Total operating expenses 447,872 182,739
Loss from continued operations (447,872) (182,739)
Net loss from continued operations (447,872) (182,739)
Net loss from discontinued operations (1,323,721) (797,994)
Net loss $ (1,771,593) $ (980,733)
Basic earnings and fully diluted per common share    
Continued operations $ (0.02) $ (0.16)
Discontinued operations (0.04) (0.72)
Loss per share - Basic and Diluted $ (0.06) $ (0.89)
Basic and fully diluted weighted average number of shares outstanding 29,843,749 1,107,794
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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash flows from operating activities:    
Net loss including non-controlling interests $ (1,771,593) $ (980,733)
Loss on investment in consolidated subsidiary    
Net cash flow (used in) provided by operating activities from continuing operations (179,387) (9,358)
Net cash flow (used in) provided by operating activities from discontinuing operations 143,183 1,557,455
Net cash (used in) provided by operating activities (1,807,797) (2,669,325)
Loss on investment in consolidated subsidiary    
Net cash flow (used in) provided by investing activities from discontinuing operations (6,492,141)
Net cash (used in) provided by investing activities (6,492,141)
Loss on investment in consolidated subsidiary    
Net cash flow (used in) provided by financing activities from discontinuing operations 3,533,559 9,367,039
Net cash (used in) provided by financing activities 3,533,559 9,367,039
Effect of exchange on cash and cash equivalents (1,740,104) 5,379
Change in cash and cash equivalents (14,342) 210,952
Cash and cash equivalents at beginning of period 17,813
Cash and cash equivalents at end of period 3,471 210,952
Supplemental disclosure of cash flow information:    
Interest paid 1,951
Noncash investing and financing activities:    
Deposits for acquisition of property funded by shareholders 913,100
Issuance of common stock for prepaid services $ 867,756
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Nature of Operations, History and Presentation
3 Months Ended
Mar. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations, History and Presentation

1. NATURE OF OPERATIONS, HISTORY AND PRESENTATION

 

Nature of Operations

 

Canadian Cannabis Corp. (“CCC”, “the Company” “we” or “us”) was originally incorporated on September 19, 2011, under the laws of the State of Delaware as Gold Party Payday, Inc. At that time, the Company’s business operations consisted of organizing events and parties in which guests bring their unwanted jewelry, scrap gold and silver, coins and other gold and silver items to sell to the Company at a discount, after which the Company resold the items to refineries.

 

Canada Cannabis Corp. was incorporated in the Province of Ontario, Canada on January 20, 2014. Canada Cannabis Corp. planned to cultivate and distribute medical marijuana in Canada pursuant to a license which was expected to be issued by Health Canada. Canada Cannabis Corp.’s planned business was to cultivate Cannabis for medical marijuana purposes and distribute directly to patients throughout Canada and export to international markets, where an existing framework and legislation existed for medical marijuana.

 

On May 21, 2014, the Company consummated a merger agreement (the “Merger Agreement”) with 2418146 Ontario Inc., an Ontario (Canada) corporation (“GPAY Sub”), which was our wholly-owned subsidiary formed for purposes of consummating the Merger Agreement, and Canada Cannabis Corp. Pursuant to the terms of the Merger Agreement, Canada Cannabis Corp. and GPAY Sub executed and filed Articles of Amalgamation pursuant to the Ontario Business Corporations Act to consummate the amalgamation. Pursuant to the terms of the Merger Agreement, the company resulting from the amalgamation (“CCC-Sub”) is a wholly-owned subsidiary of the Company and retained the Canada Cannabis Corp. name and business, and each of the predecessor companies ceased. Pursuant to the Merger Agreement, the Company agreed to exchange the outstanding common stock of Canada Cannabis Corp. held by its Shareholders for shares of common stock of the Company on a 1:19.5 basis. At the closing of the Merger Agreement, there were approximately 19,822,635 shares of Canada Cannabis Corp. common stock outstanding, which were exchanged for 1,016,503 new shares of the Company’s common stock, par value of $0.000001 per share. Prior to the merger, Gold Party Payday, Inc. had 333,350 shares of common stock issued outstanding and no preferred stock. After the effects of the merger transaction as discussed, there were 1,349,853 shares of common stock outstanding.

 

As a result of the transactions effected by the Merger Agreement and the Transfer Agreement, (i) the business plan of the former Canada Cannabis Corp., to market and manufacture medical marijuana products for sale in Canada, became the sole business of the Company’s wholly-owned subsidiary, CCC, (ii) the Company is the parent and holding company of the subsidiary operating company, and (iii) there was a change of control whereby the former shareholders of the former Canada Cannabis Corp. obtained ownership of a controlling 75% ownership interest in the Company. On July 16, 2014, we changed our name to Canadian Cannabis Corp. to more accurately reflect current business operations. On October 3, 2014, the Company’s common shares had a forward split of 19.5:1 for all shareholders of record on that date and the Company has reflected that split in the current share count. We also changed our trading symbol from GPAY to CCAN, effective October 15, 2014, to reflect our name change.

 

The Company intended to pursue a business plan of operating under the newly effective Marihuana for Medical Purposes Regulation (the “MMPR”) to manufacture and market medical marijuana products in Canada and internationally, as permitted by local laws. The Company’s former management raised a significant amount of capital through private placements of equity and debt and set out to establish the business in preparation for commencing full operations in the production and supply of medical marijuana in accordance with our business plan following licensure by Health Canada, the Canadian government agency charged with enforcing the MMPR.

 

On April 3, 2014, the Company submitted to Health Canada an application to obtain an initial license to produce and supply medical marijuana under the MMPR and began to identify suitable properties to acquire for the purpose of establishing a large scale grow operation.

 

On July 4, 2014, the Company closed on the acquisition of real property, including an approximately 312,500 square foot industrial building, located at 98-102 Rutherford Road South, Brampton, Ontario (the “Brampton Property”) through our consolidated VIE, 2264793 Ontario Inc., for a total consideration of CAD $13,885,000 (approximately USD $13.0 million), which included the final adjusted purchase price of CAD $13,421,000 (approximately USD $12.6 million) and land transfer taxes and related surcharges totaling CAD $464,000 (approximately USD $400,000). In connection with the acquisition of the Brampton Property, we incurred financing in the amount of CAD $9,400,000 (approximately USD $8.8 million) (the “Loan”) through 2264793 Ontario Inc., which is secured primarily by mortgage on the Brampton Property. 2264793 Ontario Inc. was required to make monthly interest only payments on the Loan in the amount of CAD $78,333 (approximately USD $73,000). A portion of the building had existing leases which provided some cash flow to the Company while it worked on the MMPR license approval which partially offset the monthly interest payments on the Loan.

 

While the Company waited for its MMPR license application to be processed, it began renovations to the Brampton property to begin to prepare for a large scale grow operation. In addition the Company acquired a 45% stake in Growlite Canada for CAD $1 million (approximately USD $900,000) cash investment. Additionally, the Company made a CAD $3 million (approximately USD $2.7 million) loan for operating capital and business expansion.

 

In the course of the Company’s audit for the year ended December 31, 2014, the Company’s management at the time reviewed this investment for impairment and had made the determination the due to unfavorable changes in the market the Company would write the investment down to $800,000 which approximated the carrying value of Growlite’s inventory at December 31, 2014. Subsequent to this analysis the Company was informed that a manufacturer’s defect has been identified in Growlite’s most popular fixture that resulted in the request for all customers to stop using the product. Given the uncertainty of the value of the remaining inventory and the financial and reputational harm Growlite would incur, the Company chose to write down its investment to zero and fully provide a reserve against the loan and receivable due from Growlite during the period ended December 31, 2014.

 

In 2015 the Company had begun renovations on the Brampton property and ultimately received notice that it would not be approved for the MMPR license from Health Canada. At this time, in addition to the CAD 9,400,000 first mortgage the Company had on the building, it had also taken a CAD $2,300,000 second mortgage on the building and an additional CAD $2,000,000 in loans from Avonlea-Drewry Holdings Inc. (“ADH”) and certain related parties of ADH (together with ADH, the “ADH Group”) which were secured by the building. The Company began to market the building for sale in mid-2015 and was able to sell the property in January 2016 for CAD $15,500,000, which after accounting for all accrued fees was enough to satisfy all but approximately CAD $254,000 of the debt on the building to the ADH Group. The Company subsequently entered into a forbearance agreement with the ADH Group with regard to the balance owed that included an agreement for a consulting agreement with ADH for CAD $1,000,000 and a forbearance fee of CAD $250,000. ADH and its affiliates own 3,750.000 shares, approximately 8%, of the Company’s common stock.

 

During 2015 and 2016, the Company pursued a number of merger and acquisition candidates with various companies in the Canadian cannabis space and signed several letters of intent to acquire companies with existing MMPR licenses, but was unable to bring any of the transactions to completion. At the same time, the Company formed a wholly owned subsidiary called The Clinic Network (“TCN”). TCN was formed as a network of medical clinics across Canada to offer multidisciplinary therapies for patients that suffer from chronic pain, rheumatoid conditions. TCN was to provide patients with access to the latest medical advancements as well as pharmaceutical and cannabis-related therapies.

 

In August 2016, Benjamin Ward, the Company’s CEO and Director resigned. Scott Keevil, an existing shareholder, was appointed as the new CEO and Director and tasked with restructuring the Company’s debt, raising additional capital and acquiring additional business in order to restore shareholder value.

 

Negotiations to settle the debts owed to the ADH Group began in late 2016 and a settlement agreement was reached in March 2017, which was later revised in March 2018. Under the terms of the agreement the Company assigned the assets of TCN to ADH, agreed to make certain payments for expenses incurred in relation to its business and the settlement agreement with the ADH Group, close a private placement financing and listing transaction satisfactory to ADH and take steps to bring the Company’s SEC filings current. In exchange and upon completion of the Company’s requirements under the agreement, the ADH Group will execute a termination and release agreement, terminating the various agreements among the various ADH parties and the Company, and acknowledging that all of the debt owed to the ADH Group are satisfied in full, and releasing the Company and its parties from their obligations under the various agreements and any related claims which the ADH Group may have against the Company and its related parties. In addition, ADH transferred the assets of TCN to a related party and delivered 1,750,000 shares of Cura-Can Health Corp (“Cura-Can”), valued and CAD $1.00 per share, into an escrow account to satisfy the Company’s obligations under the settlement agreement. The shares will be sold to fund the items required to be paid by the Company under the settlement agreement. It is anticipated that by the time that all of the Company’s obligations have been met, all of the shares of Cura-Can will have been liquidated.

 

Once completed, the settlement agreement with the ADH Group will provide a clean slate for the Company to pursue new business opportunities with the intent of restoring shareholder value.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of USD $16,150,898 for the period from inception (January 20, 2014) through March 31, 2015. The Company has not yet established a stable ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company has total shareholders’ equity of USD $417,831. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML 16 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2015
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The financial statements include the results of the Company from inception on January 20, 2014 through December 31, 2014 and for the quarter ended March 31, 2015. This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

 

Variable Interest Entities

 

A variable interest entity (“VIE”) is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the party with both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE. The Company performs ongoing reassessments of whether it is the primary beneficiary of a VIE, which includes consideration of whether the Company has acquired or divested the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. The Company also reconsiders whether entities previously determined not to be VIEs have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework.

 

The Company has assessed its investment in Growlite Canada and its relationship with 2264793 Ontario Inc. with regard to whether it is the primary beneficiary of these entities. While the Company believes it is not the primary beneficiary of Growlite Canada, it believes that it is in fact the primary beneficiary of 2264793 Ontario, Inc. and accordingly, consolidates the entity in its Condensed Consolidated Financial Statements. See “Principles of Consolidation”

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include Canadian Cannabis Corp. (formerly, Gold Party Payday, Inc.) and Canada Cannabis Corp., our wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. In accordance with FIN 46(R), the Company believes that it meets the definition of the primary beneficiary for 2264793 Ontario Inc. and consolidates the entity in its Condensed Consolidated Financial Statements. See “Variable Interest Entities”

 

Property and Equipment

 

Building and land are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the relevant asset, generally 20 years.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company holds cash balances in both U.S. Dollars (USD) and Canadian Dollars (CAD) and places its cash equivalents with high credit quality financial institutions. All amounts in as deposits are insured up to CAD $100,000 by the Canadian Deposit and Insurance Corporation (CDIC), with Bank of Montreal (BMO) as a Member Institution. As of March 31, 2015 the Company’s cash balances held at Canadian banks was approximately CAD $4,408 (USD $3,471).

 

Fair Value Measurements

 

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

 

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

 

Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

 

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

 

Our financial instruments consist of cash, accounts payables and accrued expenses. The carrying values of cash, accounts payables and accrued expenses approximate their fair value due to their short maturities.

 

Long-Lived Assets

 

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. There can be no assurances that demand for the Company’s products or services, which could result in an impairment of long-lived assets in the future.

 

Advertising costs

 

Advertising costs are expensed as incurred. No advertising costs were incurred during the period from inception (January 20, 2014) through March 31, 2015.

 

Foreign Currency Transactions and Translation

 

The Company’s principal country of operations is Canada. The financial position and results of operations of the Company are determined using the local currency, Canadian Dollars (“CAD”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

 

Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The results of operations are translated from CAD to US Dollar (“USD”) at the weighted average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the USD reporting currency are dealt with as a component of accumulated other comprehensive income (loss). Translation adjustments net of tax totaled USD ($791,857) for the period from inception (January 20, 2014) through March 31, 2015.

 

As of March 31, 2015, the exchange rate is CAD .7874 per U.S. Dollar. The average exchange rate for the quarter ended March 31, 2015 is CAD .8052.

 

Comprehensive Income (Loss)

 

Comprehensive income (loss) is defined as all changes in shareholders’ equity (deficit), exclusive of transactions with owners, such as capital investments. Income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. The Company had accumulated other comprehensive loss of USD $791,857 for the period from inception (January 20, 2014) through March 31, 2015.

 

Earnings (loss) per share

 

The Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. For the period from inception (January 20, 2014) through December 31, 2014, there were 300,000 options and 400,000 warrants outstanding, but due to the Net loss, no potentially dilutive common shares are calculated as outstanding during the period.

 

Recently Issued Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which created a new topic in the Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” In addition to superseding and replacing nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance, ASC 606 requires an entity to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also specifies the accounting of some costs to obtain or fulfill a contract with a customer and expands the disclosure requirements around contracts with customers. The Company will adopt the standard beginning October 1, 2018 using the modified retrospective method.

 

In February 2016, the FASB issued ASU 2016-02, “Leases (ASC 842),” which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability. Additionally, in July 2018, the FASB issued ASU 2018-10, “Codification Improvements to ASC 842, Leases” which provides narrow amendments to clarify how to apply certain aspects of the new leases standard. The new leases standard guidance is effective for the Company for annual reporting periods, including interim periods therein, beginning October 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments,” which clarifies existing guidance related to accounting for cash receipts and cash payments and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company elected to early adopt this standard in the fourth quarter of fiscal 2017. The adoption of this standard did not have a material impact on its consolidated statement of cash flows.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (ASC 718): Scope of Modification Accounting,” which provides clarity on which changes to the terms or conditions of share-based payment awards require an entity to apply the modification accounting provisions required in ASC 718. The standard is effective for all entities for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (ASC 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (the “Act”) into retained earnings. The guidance allows entities to reclassify from accumulated other comprehensive income to retained earnings stranded tax effects resulting from the Act’s new federal corporate income tax rate. The guidance also allows entities to elect to reclassify other stranded tax effects that relate to the Act but do not directly relate to the change in the federal tax rate (e.g., state taxes, changing from a worldwide tax system to a territorial system). Tax effects that are stranded in accumulated other comprehensive income for other reasons (e.g., prior changes in tax law, a change in valuation allowance) may not be reclassified. The standard is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within the fiscal year. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. Entities have the option to apply the guidance retrospectively or in the period of adoption. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (ASC 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” The ASU adds various SEC paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which was effective immediately. The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Tax Cuts and Jobs Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. We have accounted for the tax effects of the Tax Cuts and Jobs Act under the guidance of SAB 118, on a provisional basis. Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects and have recorded provisional amounts in our consolidated financial statements. Refer to Note 13, “Income Taxes,” for further information.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Notes Payable
3 Months Ended
Mar. 31, 2015
Debt Disclosure [Abstract]  
Notes Payable

3. NOTES PAYABLE

 

Notes Payable to Shareholders

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, our former CEO and shareholder advanced amounts to the Company in the form of short-term loans to help the Company with operating capital as needed. All notes have expired and are in default. The current amount due as of March 31, 2015 is CAD $433,569, (USD $341,393).

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, a shareholder advanced amounts to the company in the form of short-term loans to help the company with operating capital as needed. On December 15, 2014 these notes, totaling CAD $1,150,000, (USD $988,885) were consolidated into a one-year interest free note. The note matures December 15, 2015 but the Company may prepay the note upon receiving adequate funding. The current amount due as of March 31, 2015 is CAD $1,100,000, (USD $866,142).

 

On November 21, 2014 the Company and 2264793 Ontario Inc, a consolidated VIE of the Company, jointly issued a promissory note to Crimson Capital, LLC for CAD $600,000, (USD $472,441) to be used for various expenses related to our Brampton property. The note bears a 54% per annum interest rate and matured on February 21, 2015, however the Company has the ability to extend the note on a month-by-month basis. The total interest accrued as of March 31, 2015 was CAD$114,509.

 

Convertible Notes

 

On May 24, 2014, the Company issued a convertible promissory note for USD $100,000 to an investor which has an interest rate of 10% per annum and matures on December 31, 2015. Under the terms of the agreement, the note is convertible into common shares of the Company at the option of the Holder at a conversion rate of USD $3.00 per share.

 

In March 2015, the Company issued two separate convertible promissory notes, each for CAD $50,000 to two separate investors. Each of the notes carried an interest rate of 10% per annum and matures on December 31, 2016. Under the agreements, each of the notes are convertible into common shares of the Company at the option of the Holders at a conversion rate of CAD $2.00 per share.

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity
3 Months Ended
Mar. 31, 2015
Equity [Abstract]  
Stock Holders' Equity

4. STOCK HOLDERS’ EQUITY

 

Preferred Stock

 

The Company is authorized to issue 5,000,000 shares of preferred stock, par value $0.000001. No shares of preferred stock have been issued or are outstanding, and no rights, privileges or preferences have been determined and designated by the board of directors.

 

Common Stock

 

The Company is authorized to issue 95,000,000 shares of common stock, par value $0.000001.

 

Common Stock Sales

 

Prior management conducted the following private placements:

 

On January 9, 2015, the Company issued 75,000 shares of its common stock for cash consideration of CAD $2.00 per share for a total of approximately CAD $150,000 (USD $127,500).

 

On January 12, 2015, the Company issued 10,000 shares of its common stock for cash consideration of USD $3.00 per share for a total of approximately CAD $35,300 (USD $30,000).

 

On January 30, 2015, the Company issued 40,000 shares of its common stock for cash consideration of CAD $2.50 per share for a total of approximately CAD $100,000 (USD $79,000). As part of the transaction, the investor also received a two-year warrant to purchase an additional 40,000 shares of the Company’s common stock at USD $3.00 per share.

 

On February 8, 2015, the Company issued 40,000 shares of its common stock for cash consideration of CAD $2.50 per share for a total of approximately CAD $100,000 (USD $80,000). As part of the transaction, the investor also received a five-year warrant to purchase an additional 40,000 shares of the Company’s common stock at USD $2.50 per share.

 

On March 5, 2015, the Company issued 8,000 shares of its common stock for cash consideration of USD $3.00 per share for a total of approximately CAD $30,350 (USD $24,000).

 

On March 10, 2015 the Company issued 18,333 shares of its common stock for cash consideration of CAD $3.00 per share for a total of approximately CAD $55,000 (USD $43,450).

 

On March 31, 2015 the Company issued 15,000 shares of its common stock for cash consideration of CAD $3.00 per share for a total of approximately CAD $45,000 (USD $35,550).

 

Options:

 

On October 1, 2014 the Company issued 600,000 options to a contract employee for services provided to purchase shares of our common stock at $1.13 per share for a period of seven years. 250,000 of the options vested immediately and 100,000 options vest each subsequent year for three years and 50,000 vest after four years. On the date of the grant, the Company valued the options at USD $676,293 using the Black-Scholes option pricing model with the following assumptions: expected life of the options of 7 years, expected volatility of 226.68%, risk-free rate of 2.12% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the seven year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $329,852 was recognized based on the options that had vested as of December 31, 2014. During the quarter ended March 31, 2015 an expense of USD 28,179 in recognition of the vesting schedule of the remaining options.

 

On October 1, 2014 the Company issued 50,000 options to another contract employee for services provided to purchase shares of our common stock at $1.13 per share for a period of five years, all of which vested immediately. On the date of the grant, the Company valued the options at USD $55,890 using the Black-Scholes option pricing model with the following assumptions: expected life of the options of 5 years, expected volatility of 226.68%, risk-free rate of 1.69% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $55,890 was recognized based on the options that had vested as of December 31, 2014.

 

A summary of the options issued as of March 31, 2015 is as follows:

 

    March 31, 2015        
    Shares    

Weighted Average

Exercise

Price

    Intrinsic Value  
Outstanding at beginning of period     650,000     $ -     $ -  
Issued     650,000     $ 1.13     $ 734,500  
Exercised     -       -          
Forfeited     -                    -          
Expired     -       -          
Outstanding at end of period     650,000     $ 1.13     $ 734,500  
Exercisable at end of period     300,000     $ 1.13     $ 339,000  

 

      March 31, 2015  
Number of Options     Weighted
Average
Remaining
Life
    Weighted
Average
Exercise
Price
    Shares
Exercisable
 
  650,000       6.51     $ 1.13       300,000  
                             
  650,000       6.51     $ 1.13       300,000  

 

Warrants:

 

On November 10, 2014, the Company issued an aggregate of 1.2 million warrants to purchase common stock and committed to issue another 800,000 warrants to purchase our common stock The investors received 200,000 A Warrants to purchase common shares at $1.50 per share for a five year period, 400,000 B Warrants to purchase common shares at $3.00 per share for a five year period and, upon the exercise of no less than 100,000 of the B Warrants, the Company will issue to the investor 400,000 C Warrants to purchase common shares at $3.00 per share. Each of the warrants is exercisable for a five year period from issuance.

 

On January 3, 2015 the Company issued a three year warrant to purchase 28,000 shares of its common stock at USD $2.00 per share. On the date of the grant, the Company valued the warrants at USD $117,941 using the Black-Scholes option pricing model with the following assumptions: expected life of the warrants of 3 years, expected volatility of 147.19%, risk-free rate of 1.67% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $117,941 was recognized for the warrants during the period ended March 31, 2015.

 

On January 15, 2015 the Company issued a three year warrant to purchase 50,000 shares of its common stock at USD $3.00 per share. On the date of the grant, the Company valued the warrants at USD $231,490 using the Black-Scholes option pricing model with the following assumptions: expected life of the warrants of 5 years, expected volatility of 147.19%, risk-free rate of 1.32% and no dividend yield. The expected volatility was estimated by calculating the standard deviation of daily price changes in our stock from the date of the merger to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. An expense of USD $231,490 was recognized for the warrants during the period ended March 31, 2015.

 

A summary of the warrants issued as of March 31, 2015 is as follows:

 

March 31, 2015
    Shares     Weighted Average Exercise Price  
Outstanding at beginning of period     2,000,000     $ 2.70  
Issued     151,333     $ 1.68  
Exercised     -                   -  
Forfeited     -       -  
Expired     -       -  
Outstanding at end of period     2,151,333     $ 2.70  
Exercisable at end of period     1,351,333     $ 2.52  

 

      March 31, 2015  
Number of Warrants    

Weighted Average Remaining

Life

   

Weighted Average Exercise

Price

    Shares Exercisable  
  400,000       4.62     $ 1.50       400,000  
  28,000       2.76     $ 2.00       28,000  
  40,000       1.84     $ 2.50       40,000  
  1,683,333       4.63     $ 3.00       883,333  
  2,151,333       4.56     $ 2.52       1,351,333  

 

Total Common Shares

 

On June 16, 2014 a majority of the shareholders of the Company by written consent authorized a special dividend, whereas each of the shareholders of the common stock of the Company would receive 19.5 shares for every share of Company common stock owned. The Company filed a corporate action with FINRA on June 19, 2014 in relation to the declared stock dividend. The dividend is payable on receipt of all necessary approvals, if any, to the holders of record of all the issued and outstanding shares of common stock as of the close of business on September 30, 2014, in the amount of 19.5 shares of common stock per one (1) share of common stock held.

 

The dividend was approved by FINRA and became effective on October 3, 2014, as such, the effects of the dividend have been reflected retroactively in the unaudited condensed consolidated financial statements.

 

The total shares issued and outstanding on March 31, 2015 were 29,910,165.

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
Earnings (Loss) Per Share
3 Months Ended
Mar. 31, 2015
Earnings Per Share [Abstract]  
Earnings (Loss) Per Share

5. EARNINGS (LOSS) PER SHARE

 

FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

 

Basic earnings (loss) per share are computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

 

The Company had 650,000 options and 2,401,333 warrants outstanding and convertible notes which are convertible into 86,301 shares as of March 31, 2015, but due to the Net loss they are not included. Therefore, there was no difference in the basic and dilutive earnings (loss) per share.

 

The following table sets forth the computation of basic and diluted net loss per share:

 

    Period from  
    January 1, 2015  
    through  
    March 31, 2015  
Net loss from continued operations   $ (447,872 )
Net loss from discontinued operations     (1,323,721 )
Net loss     (1,771,593 )
         
Basic weighted average outstanding shares of common stock     29,843,749  
Dilutive effect of common stock equivalents     1,231,811  
Diluted weighted average common stock equivalents     31,075,560  
         
Loss per share of voting and nonvoting common stock Basic and Diluted        
Continued operations   $ (0.02 )
Discontinued operations   $ (0.04 )
Total Loss per share - Basic and Diluted   $ (0.06 )

XML 20 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Transactions
3 Months Ended
Mar. 31, 2015
Related Party Transactions [Abstract]  
Related Party Transactions

6. RELATED PARTY TRANSACTIONS

 

Legal and Other Services

 

The Company engaged in a Consulting and Professional services contract with a shareholder who also provided legal and other services for the Company. For the three months ended March 31, 2015, this shareholder was paid, either as an individual or through entities controlled by the individual, approximately CAD $43,400, (USD $31,173) for legal services rendered, which includes the amounts paid under the disclosed contract.

 

The Company incurred an additional CAD $19,072, (USD $15,107) of legal fees from another shareholder. That amount was applied to their respective note payable.

 

Notes Payable to Shareholders

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, our former CEO and shareholder advanced amounts to the Company in the form of short-term loans to help the Company with operating capital as needed. All notes have expired and are in default. The current amount due as of March 31, 2015 is CAD $433,569, (USD $341,393).

 

At various times throughout the year ended December 31, 2014 and the quarter ended March 31, 2015, a shareholder advanced amounts to the Company in the form of short-term loans to help the company with operating capital as needed. On December 15, 2014 these notes, totaling CAD $1,150,000, (USD $988,885) were consolidated into a one-year interest free note. The note matures December 15, 2015 but the Company may prepay the note upon receiving adequate funding. The current amount due as of March 31, 2015 is CAD $1,100,000, (USD $866,142).

 

On November 21, 2014 the Company and 2264793 Ontario Inc, a consolidated VIE of the Company, jointly issued a promissory note to Crimson Capital, LLC for CAD $600,000, (USD $472,441) to be used for various expenses related to our Brampton property. The note bears a 54% per annum interest rate and matured on February 21, 2015, however the Company had the ability to extend the note on a month-by-month basis. The loan was repaid in June 2015. The total interest accrued and paid as of June 2015 was CAD$183,748.

 

In connection with the acquisition of the Brampton Property, the Company loaned to 2264793 Ontario Inc. the amount of CAD $4,259,222, (approximately USD $3,933,000) to fund a portion of the down payment on the Brampton Property (the “Down Payment Loan”). This Down Payment Loan was evidence by a promissory note dated December 31, 2015 made by 2264793 Ontario Inc. in favor of the Company in the amount of CAD $4,259,222 (approximately USD $3,933,000), bearing interest at a rate of 0%. 2264793 Ontario Inc. is owned by several of our directors, officers, and shareholders of Canadian Cannabis Corp.

XML 21 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant & Equipment
3 Months Ended
Mar. 31, 2015
Property, Plant and Equipment [Abstract]  
Property, Plant & Equipment

7. Property, Plant & Equipment

 

The Company’s property, plant and equipment are summarized as follows:

 

Description   12/31/14     Change     3/31/15  
Buildings and Equipment     3,981,925       363,128       4,345,053  
Land     11,859,807       (250,000 )     11,609,807  
Impairment     -       (414,428 )     (414,428 )
Accumulated Depreciation     (24,268.00 )     (13,752.00 )     (38,020 )
Total Balances in CAD     15,817,464       (315,052 )     15,502,412  
                         
Balances at Cost in USD   $ 14,737,960     $ 61,309     $ 14,799,269  

 

On December 31, 2014, the Company recorded a CAD $250,000, ($214,975 USD) accrual for remediation and site cleanup of the Brampton Property. This work will include excavation and disposal of impacted dirt, brick, garbage, waste, tires and chemicals. As of March 31, 2015, the accrual was reversed as the Company has purchased only minor improvements associated with the general maintenance of the building.

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Impairment of Long-Term Asset
3 Months Ended
Mar. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]  
Impairment of Long-Term Asset

8. Impairment of Long-Term Asset

 

In January 2016 the Company sold the building and land for CAD $15,500,000 and recorded a loss on its investment of CAD $414,428, USD $326,321. As a result of the loss, we impaired the asset as of March 31, 2015 for the full value of the loss.

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Discontinued Operations
3 Months Ended
Mar. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

9. Discontinued Operations

 

As a result of the Company’s inability to receive an MMPR license and subsequent sale of the Brampton property, the Company determined that revenues and expenses related to this portion of the business would be classified as discontinued operations. As of March 31, 2014, we recognized the sale transaction as part of the discontinued operations and will continue to do so moving forward. Below is a summary of the discontinued operations presented in our Balance Sheet and Statement of Operations.

 

BALANCE SHEET

Discontinuing Operations

 

    March 31, 2015     December 31, 2014  
ASSETS                
Accounts receivable   $ 76,510       $                45,845  
Prepaid expenses     -       201,677  
Notes receivable, related parties     -       33,480  
Property, plant & equipment, net     14,799,269       14,737,960  
Total Assets   $ 14,875,779     $ 15,022,433  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current Liabilities                
Accounts payable and accrued liabilities   $ -     $ 2,253,222  
Accrued interest, shareholders     113,456       -  
Mortgage payable     7,529,488       8,083,060  
Accrued stock payable     -       209,992  
Customer deposits     39,352       -  
Notes payable     164,491                     -  
I/C Notes payable     3,725,848       -  
Notes payable to shareholders, net of discount     1,794,149       1,951,918  
Total Liabilities     13,366,784       12,498,192  
                 
Total Stockholders’ Equity     1,508,995       2,524,241  
Total Liabilities and Stockholders’ Equity   $ 14,875,779     $ 15,022,433  

 

STATEMENT OF OPERATIONS

Discontinuing Operations

 

    March 31, 2015     March 31, 2014  
Rental income   $ 102,306     $ -  
                 
OPERATING EXPENSES:                
Consulting fees     323,932       512,014  
Professional fees     45,977       151,842  
General and administrative     533,641       78,308  
      903,550       742,164  
                 
Loss from discontinued operations     (801,244 )     (742,164 )
                 
OTHER INCOME (EXPENSE)                
Interest expense, shareholders     (42,534 )     (1,951 )
Interest expense     (116,029 )     -  
Interest income     69       -  
Loss on impairment of asset     (333,721 )     -  
Foreign currency gain (loss), net     (30,262 )     (53,879 )
Total Other Income (Expense)     (522,477 )     (55,830 )
Net loss from discontinued operations   $ (1,323,721 )   $ (797,994 )
                 
Loss per share on discontinued operations - Basic and Diluted   $ (0.04 )   $ (0.72 )
                 
Weighted Average Common Shares Outstanding - Basic     29,843,749       1,107,794  

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Events
3 Months Ended
Mar. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events

10. Subsequent Events

 

In 2015, the Company began renovations on the Brampton property and ultimately received notice that it would not be approved for the MMPR license from Health Canada. At this time, in addition to the CAD 9,400,000 first mortgage the Company had on the building, it had also taken a CAD $2,300,000 second mortgage on the building and an additional CAD $2,000,000 in loans from Avonlea-Drewry Holdings Inc. (“ADH”) and certain related parties of ADH (together with ADH, the “ADH Group”) which were secured by the building. The Company began to market the building for sale in mid-2015 and was able to sell the property in January 2016, for CAD $15,500,000, which after accounting for all accrued fees was enough to satisfy all but approximately CAD $254,000 of the debt on the building to the ADH Group. The Company subsequently entered into a forbearance agreement with the ADH Group with regard to the balance owed that included an agreement for a consulting agreement with ADH for CAD $1,000,000 and a forbearance fee of CAD $250,000. ADH and its affiliates own 3,750.000 shares, approximately 8%, of the Company’s common stock.

 

In October 2015, the Company entered into a letter of intent to acquire The Hydropothecary Corporation (“Hydropothecary”). Under the agreement, the Company paid a non-refundable deposit of CAD $1,000,000 consisting of two CAD $500,000 tranches. If the letter of intent was not followed by a Definitive Agreement, the deposit was to be converted into common shares of Hydropothecary at a price of CAD $4.00 per share. The CAD $1,000,000 deposit was funded by loans from Avonlea Ventures, Inc. (“Avonlea”) which were secured by the Brampton property. On January 29, 2016, the Company sold the Brampton property and repaid all loans that had encumbered the property including the loans to Avonlea. In early 2016, when the Hydropothecary transaction was terminated and the Company was issued 250,000 shares of Hydropothecary stock valued and CAD $1,000,000, the loans used to fund the deposit had already been repaid, so the Company’s then management used those shares to repay another shareholder loan from a former Director in the amount of CAD $1,000,000. 

 

During 2015 and 2016, the Company pursued a number of merger and acquisition candidates with various companies in the Canadian cannabis space and signed several letters of intent to acquire companies with existing MMPR licenses, but was unable to complete any of the transactions. At the same time, the Company formed a wholly owned subsidiary called The Clinic Network (“TCN”). TCN was formed as a network of medical clinics across Canada to offer multidisciplinary therapies for patients that suffer from chronic pain, rheumatoid conditions. TCN was to provide patients with access to the latest medical advancements as well as pharmaceutical and cannabis-related therapies.

 

In August 2016, Benjamin Ward, the Company’s CEO and Director resigned. Scott Keevil, an existing shareholder, was appointed as the new CEO and Director and tasked with restructuring the Company’s debt, raising additional capital and acquiring additional business in order to restore shareholder value.

 

Negotiations to settle the debts owed to the ADH Group began in late 2016 and a settlement agreement was reached in March 2017, which was later revised and settled in March 2018. Under the terms of the agreement the Company assigned the assets of TCN to ADH, agree to make certain payments for expenses incurred in relation to its business and the settlement agreement with the ADH Group, close a private placement financing and listing transaction satisfactory to ADH and take steps to bring the Company’s SEC filings current. In exchange and upon completion of the Company’s requirements under the agreement, the ADH Group will execute a termination and release agreement, terminating the various agreements among the various ADH parties and the Company, and acknowledging that all of the debt owed to the ADH Group are satisfied in full, and releasing the Company and its parties from their obligations under the various agreements and any related claims which the ADH Group may have against the Company and its related parties. In addition, ADH transferred the assets of TCN to a related party and delivered 1,750,000 shares of Cura-Can Health Corp (“Cura-Can”), valued and CAD $1.00 per share, into an escrow account to satisfy the Company’s obligations under the settlement agreement. The shares will be sold to fund the items required to be paid by the Company under the settlement agreement. It is anticipated that by the time that all of the Company’s obligations have been met, all of the shares of Cura-Can will have been liquidated.

 

Once completed, the settlement agreement with the ADH Group will provide a clean slate for the Company to pursue new business opportunities with the intent of restoring shareholder value.

XML 25 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2015
Accounting Policies [Abstract]  
Variable Interest Entities

Variable Interest Entities

 

A variable interest entity (“VIE”) is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the party with both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE. The Company performs ongoing reassessments of whether it is the primary beneficiary of a VIE, which includes consideration of whether the Company has acquired or divested the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. The Company also reconsiders whether entities previously determined not to be VIEs have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework.

 

The Company has assessed its investment in Growlite Canada and its relationship with 2264793 Ontario Inc. with regard to whether it is the primary beneficiary of these entities. While the Company believes it is not the primary beneficiary of Growlite Canada, it believes that it is in fact the primary beneficiary of 2264793 Ontario, Inc. and accordingly, consolidates the entity in its Condensed Consolidated Financial Statements. See “Principles of Consolidation”

Principles of Consolidation

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include Canadian Cannabis Corp. (formerly, Gold Party Payday, Inc.) and Canada Cannabis Corp., our wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. In accordance with FIN 46(R), the Company believes that it meets the definition of the primary beneficiary for 2264793 Ontario Inc. and consolidates the entity in its Condensed Consolidated Financial Statements. See “Variable Interest Entities”

Property and Equipment

Property and Equipment

 

Building and land are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the relevant asset, generally 20 years.

Cash and Cash Equivalents

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company holds cash balances in both U.S. Dollars (USD) and Canadian Dollars (CAD) and places its cash equivalents with high credit quality financial institutions. All amounts in as deposits are insured up to CAD $100,000 by the Canadian Deposit and Insurance Corporation (CDIC), with Bank of Montreal (BMO) as a Member Institution. As of March 31, 2015 the Company’s cash balances held at Canadian banks was approximately CAD $4,408 (USD $3,471).

Fair Value Measurements

Fair Value Measurements

 

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

 

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

 

Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

 

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

 

Our financial instruments consist of cash, accounts payables and accrued expenses. The carrying values of cash, accounts payables and accrued expenses approximate their fair value due to their short maturities.

Long-Lived Assets

Long-Lived Assets

 

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. There can be no assurances that demand for the Company’s products or services, which could result in an impairment of long-lived assets in the future.

Advertising Costs

Advertising costs

 

Advertising costs are expensed as incurred. No advertising costs were incurred during the period from inception (January 20, 2014) through March 31, 2015.

Foreign Currency Transactions and Translation

Foreign Currency Transactions and Translation

 

The Company’s principal country of operations is Canada. The financial position and results of operations of the Company are determined using the local currency, Canadian Dollars (“CAD”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

 

Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The results of operations are translated from CAD to US Dollar (“USD”) at the weighted average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the USD reporting currency are dealt with as a component of accumulated other comprehensive income (loss). Translation adjustments net of tax totaled USD ($791,857) for the period from inception (January 20, 2014) through March 31, 2015.

 

As of March 31, 2015, the exchange rate is CAD .7874 per U.S. Dollar. The average exchange rate for the quarter ended March 31, 2015 is CAD .8052.

Comprehensive Income (loss)

Comprehensive Income (Loss)

 

Comprehensive income (loss) is defined as all changes in shareholders’ equity (deficit), exclusive of transactions with owners, such as capital investments. Income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. The Company had accumulated other comprehensive loss of USD $791,857 for the period from inception (January 20, 2014) through March 31, 2015.

Earnings (loss) Per Share

Earnings (loss) per share

 

The Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. For the period from inception (January 20, 2014) through December 31, 2014, there were 300,000 options and 400,000 warrants outstanding, but due to the Net loss, no potentially dilutive common shares are calculated as outstanding during the period.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which created a new topic in the Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” In addition to superseding and replacing nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance, ASC 606 requires an entity to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also specifies the accounting of some costs to obtain or fulfill a contract with a customer and expands the disclosure requirements around contracts with customers. The Company will adopt the standard beginning October 1, 2018 using the modified retrospective method.

 

In February 2016, the FASB issued ASU 2016-02, “Leases (ASC 842),” which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability. Additionally, in July 2018, the FASB issued ASU 2018-10, “Codification Improvements to ASC 842, Leases” which provides narrow amendments to clarify how to apply certain aspects of the new leases standard. The new leases standard guidance is effective for the Company for annual reporting periods, including interim periods therein, beginning October 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments,” which clarifies existing guidance related to accounting for cash receipts and cash payments and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company elected to early adopt this standard in the fourth quarter of fiscal 2017. The adoption of this standard did not have a material impact on its consolidated statement of cash flows.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (ASC 718): Scope of Modification Accounting,” which provides clarity on which changes to the terms or conditions of share-based payment awards require an entity to apply the modification accounting provisions required in ASC 718. The standard is effective for all entities for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (ASC 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (the “Act”) into retained earnings. The guidance allows entities to reclassify from accumulated other comprehensive income to retained earnings stranded tax effects resulting from the Act’s new federal corporate income tax rate. The guidance also allows entities to elect to reclassify other stranded tax effects that relate to the Act but do not directly relate to the change in the federal tax rate (e.g., state taxes, changing from a worldwide tax system to a territorial system). Tax effects that are stranded in accumulated other comprehensive income for other reasons (e.g., prior changes in tax law, a change in valuation allowance) may not be reclassified. The standard is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within the fiscal year. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. Entities have the option to apply the guidance retrospectively or in the period of adoption. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (ASC 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” The ASU adds various SEC paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which was effective immediately. The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Tax Cuts and Jobs Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. We have accounted for the tax effects of the Tax Cuts and Jobs Act under the guidance of SAB 118, on a provisional basis. Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects and have recorded provisional amounts in our consolidated financial statements. Refer to Note 13, “Income Taxes,” for further information.

XML 26 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity (Tables)
3 Months Ended
Mar. 31, 2015
Equity [Abstract]  
Summary of Stock Options Activity

A summary of the options issued as of March 31, 2015 is as follows:

 

    March 31, 2015        
    Shares    

Weighted Average

Exercise

Price

    Intrinsic Value  
Outstanding at beginning of period     650,000     $ -     $ -  
Issued     650,000     $ 1.13     $ 734,500  
Exercised     -       -          
Forfeited     -                    -          
Expired     -       -          
Outstanding at end of period     650,000     $ 1.13     $ 734,500  
Exercisable at end of period     300,000     $ 1.13     $ 339,000  

Schedule of Option Exercisable

      March 31, 2015  
Number of Options     Weighted
Average
Remaining
Life
    Weighted
Average
Exercise
Price
    Shares
Exercisable
 
  650,000       6.51     $ 1.13       300,000  
                             
  650,000       6.51     $ 1.13       300,000  

Summary of Warrants Activity

A summary of the warrants issued as of March 31, 2015 is as follows:

 

March 31, 2015
    Shares     Weighted Average Exercise Price  
Outstanding at beginning of period     2,000,000     $ 2.70  
Issued     151,333     $ 1.68  
Exercised     -                   -  
Forfeited     -       -  
Expired     -       -  
Outstanding at end of period     2,151,333     $ 2.70  
Exercisable at end of period     1,351,333     $ 2.52  

Schedule of Warrants Exercisable

      March 31, 2015  
Number of Warrants    

Weighted Average Remaining

Life

   

Weighted Average Exercise

Price

    Shares Exercisable  
  400,000       4.62     $ 1.50       400,000  
  28,000       2.76     $ 2.00       28,000  
  40,000       1.84     $ 2.50       40,000  
  1,683,333       4.63     $ 3.00       883,333  
  2,151,333       4.56     $ 2.52       1,351,333  

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Earnings (Loss) Per Share (Tables)
3 Months Ended
Mar. 31, 2015
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Net Income Per Share

The following table sets forth the computation of basic and diluted net loss per share:

 

    Period from  
    January 1, 2015  
    through  
    March 31, 2015  
Net loss from continued operations   $ (447,872 )
Net loss from discontinued operations     (1,323,721 )
Net loss     (1,771,593 )
         
Basic weighted average outstanding shares of common stock     29,843,749  
Dilutive effect of common stock equivalents     1,231,811  
Diluted weighted average common stock equivalents     31,075,560  
         
Loss per share of voting and nonvoting common stock Basic and Diluted        
Continued operations   $ (0.02 )
Discontinued operations   $ (0.04 )
Total Loss per share - Basic and Diluted   $ (0.06 )

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant & Equipment (Tables)
3 Months Ended
Mar. 31, 2015
Property, Plant and Equipment [Abstract]  
Schedule of Property, Plant and Equipment

The Company’s property, plant and equipment are summarized as follows:

 

Description   12/31/14     Change     3/31/15  
Buildings and Equipment     3,981,925       363,128       4,345,053  
Land     11,859,807       (250,000 )     11,609,807  
Impairment     -       (414,428 )     (414,428 )
Accumulated Depreciation     (24,268.00 )     (13,752.00 )     (38,020 )
Total Balances in CAD     15,817,464       (315,052 )     15,502,412  
                         
Balances at Cost in USD   $ 14,737,960     $ 61,309     $ 14,799,269  

XML 29 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Discontinued Operations (Tables)
3 Months Ended
Mar. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Discontinued Operations

Below is a summary of the discontinued operations presented in our Balance Sheet and Statement of Operations.

 

BALANCE SHEET

Discontinuing Operations

 

    March 31, 2015     December 31, 2014  
ASSETS                
Accounts receivable   $ 76,510       $                45,845  
Prepaid expenses     -       201,677  
Notes receivable, related parties     -       33,480  
Property, plant & equipment, net     14,799,269       14,737,960  
Total Assets   $ 14,875,779     $ 15,022,433  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current Liabilities                
Accounts payable and accrued liabilities   $ -     $ 2,253,222  
Accrued interest, shareholders     113,456       -  
Mortgage payable     7,529,488       8,083,060  
Accrued stock payable     -       209,992  
Customer deposits     39,352       -  
Notes payable     164,491                     -  
I/C Notes payable     3,725,848       -  
Notes payable to shareholders, net of discount     1,794,149       1,951,918  
Total Liabilities     13,366,784       12,498,192  
                 
Total Stockholders’ Equity     1,508,995       2,524,241  
Total Liabilities and Stockholders’ Equity   $ 14,875,779     $ 15,022,433  

 

STATEMENT OF OPERATIONS

Discontinuing Operations

 

    March 31, 2015     March 31, 2014  
Rental income   $ 102,306     $ -  
                 
OPERATING EXPENSES:                
Consulting fees     323,932       512,014  
Professional fees     45,977       151,842  
General and administrative     533,641       78,308  
      903,550       742,164  
                 
Loss from discontinued operations     (801,244 )     (742,164 )
                 
OTHER INCOME (EXPENSE)                
Interest expense, shareholders     (42,534 )     (1,951 )
Interest expense     (116,029 )     -  
Interest income     69       -  
Loss on impairment of asset     (333,721 )     -  
Foreign currency gain (loss), net     (30,262 )     (53,879 )
Total Other Income (Expense)     (522,477 )     (55,830 )
Net loss from discontinued operations   $ (1,323,721 )   $ (797,994 )
                 
Loss per share on discontinued operations - Basic and Diluted   $ (0.04 )   $ (0.72 )
                 
Weighted Average Common Shares Outstanding - Basic     29,843,749       1,107,794  

XML 30 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Nature of Operations, History and Presentation (Details Narrative)
1 Months Ended 3 Months Ended 12 Months Ended 14 Months Ended
Oct. 03, 2014
Jul. 04, 2014
USD ($)
ft²
Jul. 04, 2014
CAD ($)
May 21, 2014
$ / shares
shares
Aug. 31, 2016
$ / shares
shares
Mar. 31, 2015
USD ($)
$ / shares
shares
Mar. 31, 2015
CAD ($)
shares
Mar. 31, 2014
USD ($)
Dec. 31, 2014
CAD ($)
Mar. 31, 2015
USD ($)
$ / shares
shares
Mar. 31, 2015
CAD ($)
$ / shares
shares
Dec. 31, 2014
USD ($)
$ / shares
shares
Jul. 04, 2014
CAD ($)
ft²
Common stock, par value | $ / shares           $ 0.000001       $ 0.000001   $ 0.000001  
Common stock, shares outstanding | shares           29,910,165       29,910,165 29,910,165 29,910,165  
Net loss           $ (1,771,593)   $ (980,733)   $ 16,150,898      
Shareholders equity           $ 417,831       $ 417,831   $ 3,407,347  
CAD [Member] | January 2016 [Member]                          
Proceeds from sale of building             $ 15,500,000            
Repayment of debt             $ 254,000            
CAD [Member] | First Mortgage [Member]                          
Mortgage loan                     $ 9,400,000    
CAD [Member] | Second Mortgage [Member]                          
Mortgage loan                     2,300,000    
Brampton Property [Member]                          
Area of building | ft²   312,500                     312,500
Consideration transferred for acquisition of property   $ 13,000,000                      
Land transfer taxes and surcharges   400,000                      
Mortgage loan   8,800,000                      
Monthly payments of loan   $ 73,000                      
Brampton Property [Member] | CAD [Member]                          
Consideration transferred for acquisition of property     $ 13,885,000                    
Land transfer taxes and surcharges     464,000                    
Mortgage loan                         $ 9,400,000
Monthly payments of loan     $ 78,333                    
Growlite [Member]                          
Ownership interest   45.00%                     45.00%
Cash investment   $ 900,000                      
Additional loan for operating capital   $ 2,700,000                      
Write off of investments                 $ 800,000        
Growlite [Member] | CAD [Member]                          
Cash investment                         $ 1,000,000
Additional loan for operating capital                         $ 3,000,000
Avonlea-Drewry Holdings Inc. [Member] | CAD [Member]                          
Mortgage loan                     $ 2,000,000    
Cura-Can Health Corp [Member]                          
Number of shares exchanged | shares         1,750,000                
Cura-Can Health Corp [Member] | CAD [Member]                          
Price per share | $ / shares         $ 1.00                
Cura-Can Health Corp [Member] | August 2016 [Member]                          
Number of shares exchanged | shares           1,750,000 1,750,000            
Cura-Can Health Corp [Member] | August 2016 [Member] | CAD [Member]                          
Price per share | $ / shares                     $ 1.00    
Merger Agreement [Member]                          
Share exchange ratio       1:19.5                  
Common stock, par value | $ / shares       $ 0.000001                  
Common stock, shares outstanding | shares       1,349,853                  
Merger Agreement [Member] | Gold Party Payday, Inc. [Member]                          
Number of shares exchanged | shares       1,016,503                  
Common stock, shares outstanding | shares       333,350                  
Merger Agreement [Member] | Parent [Member]                          
Number of shares exchanged | shares       19,822,635                  
Merger Agreement and Transfer Agreement [Member] | Parent [Member]                          
Ownership interest           75.00%       75.00% 75.00%    
Forwards stock split 19.5:1                        
Consulting Agreement [Member] | Avonlea-Drewry Holdings Inc. [Member]                          
Number of shares owned | shares           3,750.000 3,750.000            
Common stock percentage           8.00% 8.00%            
Consulting Agreement [Member] | Avonlea-Drewry Holdings Inc. [Member] | CAD [Member]                          
Mortgage loan                     $ 1,000,000    
Forbearance fee             $ 250,000            
XML 31 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details Narrative)
3 Months Ended 11 Months Ended 14 Months Ended
Mar. 31, 2015
USD ($)
Dec. 31, 2014
shares
Mar. 31, 2015
USD ($)
Mar. 31, 2015
CAD ($)
Mar. 31, 2015
CAD ($)
Advertising cost        
Foreign currency translation     $ (791,857)    
Currency exchange rate, Description As of March 31, 2015, the exchange rate is CAD .7874 per U.S. Dollar. The average exchange rate for the quarter ended March 31, 2015 is CAD .8052.        
Warrant [Member]          
Antidilutive potential options and warrants outstanding | shares   400,000      
Option [Member]          
Antidilutive potential options and warrants outstanding | shares   300,000      
Bank of Montreal (BMO) [Member]          
Deposit amount by CDIC         $ 100,000
Canadian Banks [Member]          
Cash at bank $ 3,471   $ 3,471    
Canadian Banks [Member] | CAD [Member]          
Cash at bank         $ 4,408
XML 32 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Notes Payable (Details Narrative)
1 Months Ended
Dec. 15, 2014
USD ($)
Nov. 21, 2014
USD ($)
Mar. 24, 2014
Mar. 31, 2015
USD ($)
Mar. 31, 2015
CAD ($)
$ / shares
Dec. 15, 2014
CAD ($)
Nov. 21, 2014
CAD ($)
May 24, 2014
USD ($)
May 24, 2014
$ / shares
Crimson Capital, LLC [Member]                  
Notes payable   $ 472,441              
Debt maturity date   Feb. 21, 2015              
Interest rate   54.00%         54.00%    
CAD [Member] | Crimson Capital, LLC [Member]                  
Notes payable             $ 600,000    
Accrued interest         $ 114,509        
CEO and Shareholder [Member]                  
Due to officers and shareholders       $ 341,393          
CEO and Shareholder [Member] | CAD [Member]                  
Due to officers and shareholders         433,569        
Shareholder [Member]                  
Due to officers and shareholders       $ 866,142          
Notes payable $ 988,885                
Debt maturity date Dec. 15, 2015                
Shareholder [Member] | CAD [Member]                  
Due to officers and shareholders         $ 1,100,000        
Notes payable           $ 1,150,000      
Investor [Member] | Convertible Promissory Note [Member]                  
Debt maturity date     Dec. 31, 2015            
Interest rate               10.00%  
Debt face amount               $ 100,000  
Debt conversion price per share | $ / shares                 $ 3.00
Investor One [Member] | Convertible Promissory Note Two [Member]                  
Debt maturity date       Dec. 31, 2016          
Interest rate       10.00% 10.00%        
Investor One [Member] | CAD [Member] | Convertible Promissory Note Two [Member]                  
Debt face amount         $ 50,000        
Debt conversion price per share | $ / shares         $ 2.00        
Investor Two [Member] | Convertible Promissory Note Two [Member]                  
Debt maturity date       Dec. 31, 2016          
Interest rate       10.00% 10.00%        
Investor Two [Member] | CAD [Member] | Convertible Promissory Note Two [Member]                  
Debt face amount         $ 50,000        
Debt conversion price per share | $ / shares         $ 2.00        
XML 33 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity (Details Narrative)
3 Months Ended 12 Months Ended
Mar. 31, 2015
USD ($)
$ / shares
shares
Mar. 31, 2015
CAD ($)
shares
Mar. 10, 2015
USD ($)
shares
Mar. 10, 2015
CAD ($)
$ / shares
shares
Mar. 05, 2015
USD ($)
$ / shares
shares
Mar. 05, 2015
CAD ($)
shares
Feb. 08, 2015
USD ($)
$ / shares
shares
Feb. 08, 2015
CAD ($)
shares
Jan. 30, 2015
USD ($)
$ / shares
shares
Jan. 30, 2015
CAD ($)
shares
Jan. 15, 2015
USD ($)
$ / shares
shares
Jan. 12, 2015
USD ($)
$ / shares
shares
Jan. 12, 2015
CAD ($)
shares
Jan. 09, 2015
USD ($)
shares
Jan. 09, 2015
CAD ($)
$ / shares
shares
Jan. 03, 2015
USD ($)
$ / shares
shares
Nov. 10, 2014
$ / shares
shares
Oct. 02, 2014
USD ($)
$ / shares
shares
Jun. 16, 2014
Mar. 31, 2015
USD ($)
$ / shares
shares
Dec. 31, 2014
USD ($)
$ / shares
shares
Mar. 31, 2015
$ / shares
shares
Feb. 08, 2015
$ / shares
shares
Jan. 30, 2015
$ / shares
shares
Preferred stock, shares authorized 5,000,000                                     5,000,000 5,000,000 5,000,000    
Preferred stock, par value | $ / shares $ 0.000001                                     $ 0.000001 $ 0.000001      
Preferred stock, shares issued                                        
Preferred stock, shares outstanding                                        
Common stock, par value | $ / shares $ 0.000001                                     $ 0.000001 $ 0.000001      
Common stock, shares authorized 95,000,000                                     95,000,000 95,000,000 95,000,000    
Number of shares issued during period 15,000 15,000 18,333 18,333 8,000 8,000 40,000 40,000 40,000 40,000   10,000 10,000 75,000 75,000                  
Shares issued price per share | $ / shares         $ 3.00   $ 2.50   $ 3.00     $ 3.00                        
Value of shares issued during period | $ $ 35,550   $ 43,450   $ 24,000   $ 80,000   $ 79,000     $ 30,000   $ 127,500                    
Warrant term             5 years   2 years                           5 years 2 years
Warrants to purchase common stock             40,000   40,000                           40,000 40,000
Options issued to purchase common stock                                   600,000   650,000        
Expiration term                                   7 years            
Common stock, shares issued 29,910,165                                     29,910,165 29,910,165 29,910,165    
Common stock, shares outstanding 29,910,165                                     29,910,165 29,910,165 29,910,165    
Warrant [Member]                                                
Warrant term                     3 years         3 years                
Warrants to purchase common stock                     50,000         28,000 1,200,000              
Purchase price of common stock | $ / shares                     $ 3.00         $ 2.00                
Expected term                     5 years         3 years                
Expected volatility                     147.19%         147.19%                
Risk free interest rate                     1.32%         1.67%                
Dividend yield                     0.00%         0.00%                
Warran exercisable period                                 5 years              
Value of warrants | $                     $ 231,490         $ 117,941                
Warrant expense | $                                       $ 117,941        
Warrant One [Member]                                                
Warrants to purchase common stock                                 800,000              
Warran exercisable period                                 5 years              
Warrant expense | $                                       231,490        
Dividend stock declared                                     On June 16, 2014 a majority of the shareholders of the Company by written consent authorized a special dividend, whereas each of the shareholders of the common stock of the Company would receive 19.5 shares for every share of Company common stock owned. The Company filed a corporate action with FINRA on June 19, 2014 in relation to the declared stock dividend. The dividend is payable on receipt of all necessary approvals, if any, to the holders of record of all the issued and outstanding shares of common stock as of the close of business on September 30, 2014, in the amount of 19.5 shares of common stock per one (1) share of common stock held.          
A Warrant [Member]                                                
Warrant term                                 5 years              
Warrants to purchase common stock                                 200,000              
Purchase price of common stock | $ / shares                                 $ 1.50              
Warran exercisable period                                 5 years              
B Warrant [Member]                                                
Warrant term                                 5 years              
Warrants to purchase common stock                                 400,000              
Purchase price of common stock | $ / shares                                 $ 3.00              
Warran exercisable period                                 5 years              
B Warrant [Member] | Minimum [Member]                                                
Warrants to purchase common stock                                 100,000              
C Warrant [Member]                                                
Warrants to purchase common stock                                 400,000              
Purchase price of common stock | $ / shares                                 $ 3.00              
Warran exercisable period                                 5 years              
Subsequent Year One [Member]                                                
Number of options vested                                   100,000            
Subsequent Year Two [Member]                                                
Number of options vested                                   100,000            
Subsequent Year Three [Member]                                                
Number of options vested                                   100,000            
After Four Years [Member]                                                
Number of options vested                                   50,000            
Contract Employee [Member]                                                
Purchase price of common stock | $ / shares                                   $ 1.13            
Number of options vested                                   250,000            
Value of options vested | $                                   $ 676,293            
Expected term                                   7 years            
Expected volatility                                   226.68%            
Risk free interest rate                                   2.12%            
Dividend yield                                   0.00%            
Stock option expense | $                                       $ 28,179 $ 329,852      
Another Contract Employee [Member]                                                
Options issued to purchase common stock                                   50,000            
Purchase price of common stock | $ / shares                                   $ 1.13            
Expiration term                                   5 years            
Value of options vested | $                                   $ 55,890            
Expected term                                   5 years            
Expected volatility                                   226.68%            
Risk free interest rate                                   1.69%            
Dividend yield                                   0.00%            
Stock option expense | $                                         $ 55,890      
CAD [Member]                                                
Shares issued price per share | $ / shares       $ 3.00                     $ 2.00             $ 3.00 $ 2.50 $ 2.50
Value of shares issued during period | $   $ 45,000   $ 55,000   $ 30,350   $ 100,000   $ 100,000     $ 35,300   $ 150,000                  
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity - Summary of Stock Options Activity (Details) - USD ($)
3 Months Ended
Oct. 02, 2014
Mar. 31, 2015
Equity [Abstract]    
Number of Shares Outstanding, Beginning balance   650,000
Number of Shares Outstanding, Issued 600,000 650,000
Number of Shares Outstanding, Exercised  
Number of Shares Outstanding, Forfeited  
Number of Shares Outstanding, Expired  
Number of Shares Outstanding, Ending balance   650,000
Number of Shares Outstanding, Exercisable   300,000
Weighted Average Exercise Price, Beginning balance  
Weighted Average Exercise Price, Issued   1.13
Weighted Average Exercise Price, Exercised  
Weighted Average Exercise Price, Forfeited  
Weighted Average Exercise Price, Expired  
Weighted Average Exercise Price, Ending balance   1.13
Weighted Average Exercise Price, Exercisable   $ 1.13
Intrinsic Value, Beginning balance  
Intrinsic Value, Issued   734,500
Intrinsic Value, Ending balance   734,500
Intrinsic Value, Exercisable   $ 339,000
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity - Schedule of Option Exercisable (Details) - $ / shares
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Number of Options 650,000 650,000
Weighted Average Remaining Life 6 years 6 months 3 days  
Weighted Average Exercise Price $ 1.13  
Shares Exercisable 300,000  
Option [Member]    
Number of Options 650,000  
Weighted Average Remaining Life 6 years 6 months 3 days  
Weighted Average Exercise Price $ 1.13  
Shares Exercisable 300,000  
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity - Summary of Warrants Activity (Details)
3 Months Ended
Mar. 31, 2015
$ / shares
shares
Number of Shares Outstanding, Ending balance 2,151,333
Warrant [Member]  
Number of Shares Outstanding, Beginning balance 2,000,000
Number of Shares Outstanding, Issued 151,333
Number of Shares Outstanding, Exercised
Number of Shares Outstanding, Forfeited
Number of Shares Outstanding, Expired
Number of Shares Outstanding, Ending balance 2,151,333
Number of Shares Outstanding, Exercisable 1,351,333
Weighted Average Exercise Price, Beginning balance | $ / shares $ 2.70
Weighted Average Exercise Price, Issued | $ / shares 1.68
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited | $ / shares
Weighted Average Exercise Price, Expired | $ / shares
Weighted Average Exercise Price, Ending balance | $ / shares 2.70
Weighted Average Exercise Price, Exercisable | $ / shares $ 2.52
XML 37 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Holders' Equity - Schedule of Warrants Exercisable (Details)
3 Months Ended
Mar. 31, 2015
$ / shares
shares
Number of Warrants 2,151,333
Weighted Average Remaining Life 4 years 6 months 21 days
Weighted Average Exercise Price | $ / shares $ 2.52
Shares Exercisable 1,351,333
Warrant One [Member]  
Number of Warrants 400,000
Weighted Average Remaining Life 4 years 7 months 13 days
Weighted Average Exercise Price | $ / shares $ 1.50
Shares Exercisable 400,000
Warrant Two [Member]  
Number of Warrants 28,000
Weighted Average Remaining Life 2 years 9 months 3 days
Weighted Average Exercise Price | $ / shares $ 2.00
Shares Exercisable 28,000
Warrant Three [Member]  
Number of Warrants 40,000
Weighted Average Remaining Life 1 year 10 months 3 days
Weighted Average Exercise Price | $ / shares $ 2.50
Shares Exercisable 40,000
Warrant Four [Member]  
Number of Warrants 1,683,333
Weighted Average Remaining Life 4 years 7 months 17 days
Weighted Average Exercise Price | $ / shares $ 3.00
Shares Exercisable 883,333
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Earnings (Loss) Per Share (Details Narrative)
3 Months Ended
Mar. 31, 2015
shares
Options [Member]  
Securities excluded from computation of net loss 650,000
Warrants [Member]  
Securities excluded from computation of net loss 2,401,333
Convertible Notes [Member]  
Securities excluded from computation of net loss 86,301
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Earnings (Loss) Per Share - Schedule of basic and diluted net income per share (Details) - USD ($)
3 Months Ended 14 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Mar. 31, 2015
Earnings Per Share [Abstract]      
Net loss from continued operations $ (447,872) $ (182,739)  
Net loss from discontinued operations (1,323,721) (797,994)  
Net loss $ (1,771,593) $ (980,733) $ 16,150,898
Basic weighted average outstanding shares of common stock 29,843,749 1,107,794  
Dilutive effect of common stock equivalents 1,231,811    
Diluted weighted average common stock equivalents 31,075,560    
Continued operations $ (0.02) $ (0.16)  
Discontinued operations (0.04) (0.72)  
Total Loss per share - Basic and Diluted $ (0.06) $ (0.89)  
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Transactions (Details Narrative)
3 Months Ended
Dec. 15, 2014
USD ($)
Nov. 21, 2014
USD ($)
Mar. 31, 2015
USD ($)
Mar. 31, 2015
CAD ($)
Mar. 31, 2015
CAD ($)
Dec. 15, 2014
CAD ($)
Nov. 21, 2014
CAD ($)
Payments legal fees     $ 45,977        
Shareholder [Member]              
Due to officers and shareholders     866,142        
Notes payable $ 988,885            
Debt maturity date Dec. 15, 2015            
Shareholder [Member] | CAD [Member]              
Due to officers and shareholders         $ 1,100,000    
Notes payable           $ 1,150,000  
CEO and Shareholder [Member]              
Due to officers and shareholders     341,393        
CEO and Shareholder [Member] | CAD [Member]              
Due to officers and shareholders         433,569    
Crimson Capital, LLC [Member]              
Notes payable   $ 472,441          
Debt maturity date   Feb. 21, 2015          
Interest rate   54.00%         54.00%
Crimson Capital, LLC [Member] | CAD [Member]              
Notes payable             $ 600,000
Crimson Capital, LLC [Member] | CAD [Member] | June 2015 [Member]              
Accrued interest         $ 183,748    
Ontario Inc. [Member]              
Notes payable     $ 3,933,000        
Interest rate     0.00%   0.00%    
Ontario Inc. [Member] | CAD [Member]              
Notes payable         $ 4,259,222    
Consulting and Professional Services Contract [Member]              
Payments legal fees     $ 15,107        
Consulting and Professional Services Contract [Member] | CAD [Member]              
Payments legal fees       $ 19,072      
Consulting and Professional Services Contract [Member] | Shareholder [Member]              
Payments legal fees     $ 31,173        
Consulting and Professional Services Contract [Member] | Shareholder [Member] | CAD [Member]              
Payments legal fees       $ 43,400      
XML 41 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant & Equipment (Details Narrative) - Dec. 31, 2014
USD ($)
CAD ($)
Accrual for remediation and site cleanup $ 214,975  
CAD [Member]    
Accrual for remediation and site cleanup   $ 250,000
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property, Plant & Equipment - Schedule of Property, Plant and Equipment (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2015
USD ($)
Mar. 31, 2015
CAD ($)
Dec. 31, 2014
CAD ($)
Mar. 31, 2015
CAD ($)
Dec. 31, 2014
USD ($)
Dec. 31, 2014
CAD ($)
Total Balances       $ 14,737,960  
Change in Total Balances $ 61,309          
CAD [Member]            
Impairment   $ (414,428)      
Accumulated Depreciation       $ (38,020)   $ (24,268)
Total Balances       15,502,412   15,817,464
Change in Impairment   (414,428)        
Change in Accumulated Depreciation   (13,752)        
Change in Total Balances   315,052        
Buildings and Equipment [Member] | CAD [Member]            
Property, Plant & Equipment, Gross       4,345,053   3,981,925
Change in Property, Plant & Equipment, Gross   363,128        
Land [Member] | CAD [Member]            
Property, Plant & Equipment, Gross       $ 11,609,807   $ 11,859,807
Change in Property, Plant & Equipment, Gross   $ (250,000)        
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Impairment of Long-Term Asset (Details Narrative) - 3 months ended Mar. 31, 2015
USD ($)
CAD ($)
Loss on investment $ 326,321  
CAD [Member]    
Loss on investment   $ 414,428
January 2016 [Member] | CAD [Member]    
Proceeds from sale of building   $ 15,500,000
XML 44 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]      
Accounts receivable $ 76,510   $ 45,845
Prepaid expenses   201,677
Notes receivable, related parties     33,480
Property, plant & equipment, net 14,799,269   14,737,960
Total Assets 14,875,779   15,022,433
Accounts payable and accrued liabilities   2,253,222
Accrued interest, shareholders 113,456  
Mortgage payable 7,529,488   8,083,060
Accrued stock payable   209,992
Customer deposits 39,352  
Notes payable 164,491  
I/C Notes payable 3,725,848  
Notes payable to shareholders, net of discount 1,794,149   1,951,918
Total Liabilities 13,366,784   12,498,192
Total Stockholders’ Equity 1,508,995   2,524,241
Total Liabilities and Stockholders’ Equity 14,875,779   $ 15,022,433
Rental income 102,306  
Consulting fees 323,932 512,014  
Professional fees 45,977 151,842  
General and administrative 533,641 78,308  
Total operating expense 903,550 742,164  
Loss from discontinued operations (801,244) (742,164)  
Interest expense, shareholders (42,534) (1,951)  
Interest expense (116,029)  
Interest income 69  
Loss on impairment of asset (333,721)  
Foreign currency gain (loss), net (30,262) (53,879)  
Total Other Income (Expense) (522,477) (55,830)  
Net loss from discontinued operations $ (1,323,721) $ (797,994)  
Loss per share on discontinued operations - Basic and Diluted $ (0.04) $ (0.72)  
Weighted Average Common Shares Outstanding - Basic 29,843,749 1,107,794  
XML 45 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Events (Details Narrative)
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 29, 2016
CAD ($)
shares
Mar. 31, 2015
USD ($)
shares
Mar. 31, 2015
CAD ($)
shares
Mar. 10, 2015
USD ($)
shares
Mar. 10, 2015
CAD ($)
shares
Mar. 05, 2015
USD ($)
shares
Mar. 05, 2015
CAD ($)
shares
Feb. 08, 2015
USD ($)
shares
Feb. 08, 2015
CAD ($)
shares
Jan. 30, 2015
USD ($)
shares
Jan. 30, 2015
CAD ($)
shares
Jan. 12, 2015
USD ($)
shares
Jan. 12, 2015
CAD ($)
shares
Jan. 09, 2015
USD ($)
shares
Jan. 09, 2015
CAD ($)
shares
Aug. 31, 2016
$ / shares
shares
Jan. 31, 2016
CAD ($)
Mar. 31, 2015
CAD ($)
shares
Dec. 31, 2015
CAD ($)
shares
Oct. 31, 2015
CAD ($)
$ / shares
Number of common shares issued during period | shares   15,000 15,000 18,333 18,333 8,000 8,000 40,000 40,000 40,000 40,000 10,000 10,000 75,000 75,000          
Number of common shares issued during period, value   $ 35,550   $ 43,450   $ 24,000   $ 80,000   $ 79,000   $ 30,000   $ 127,500            
Avonlea-Drewry Holdings Inc. [Member] | Consulting Agreement [Member]                                        
Number of shares owned | shares                                   3,750.000    
Common stock percentage                                   8.00%    
Cura-Can Health Corp [Member]                                        
Number of shares issued to related party | shares                               1,750,000        
CAD [Member]                                        
Number of common shares issued during period, value     $ 45,000   $ 55,000   $ 30,350   $ 100,000   $ 100,000   $ 35,300   $ 150,000          
CAD [Member] | Avonlea-Drewry Holdings Inc. [Member]                                        
Mortgage loan     2,000,000                             $ 2,000,000    
CAD [Member] | Avonlea-Drewry Holdings Inc. [Member] | Consulting Agreement [Member]                                        
Mortgage loan     1,000,000                             1,000,000    
Forbearance fee                                   250,000    
CAD [Member] | Cura-Can Health Corp [Member]                                        
Price per share | $ / shares                               $ 1.00        
First Mortgage [Member] | CAD [Member]                                        
Mortgage loan     9,400,000                             9,400,000    
Second Mortgage [Member] | CAD [Member]                                        
Mortgage loan     $ 2,300,000                             $ 2,300,000    
Subsequent Event [Member] | Avonlea-Drewry Holdings Inc. [Member] | Consulting Agreement [Member]                                        
Number of shares owned | shares                                     3,750.000  
Common stock percentage                                     8.00%  
Subsequent Event [Member] | The Hydropothecary Corporation [Member]                                        
Number of common shares issued during period | shares 250,000                                      
Number of common shares issued during period, value $ 1,000,000                                      
Subsequent Event [Member] | The Hydropothecary Corporation [Member] | Former Director [Member]                                        
Pay to another shareholder loan $ 1,000,000                                      
Subsequent Event [Member] | CAD [Member]                                        
Proceeds from sale of building mortgage                                 $ 15,500,000      
Repayment of debt                                 $ 254,000      
Subsequent Event [Member] | CAD [Member] | Avonlea-Drewry Holdings Inc. [Member]                                        
Mortgage loan                                     $ 2,000,000  
Subsequent Event [Member] | CAD [Member] | Avonlea-Drewry Holdings Inc. [Member] | Consulting Agreement [Member]                                        
Mortgage loan                                     1,000,000  
Subsequent Event [Member] | CAD [Member] | The Hydropothecary Corporation [Member]                                        
Non-refundable deposit                                       $ 1,000,000
Desposit funded by loan                                       $ 1,000,000
Price per share | $ / shares                                       $ 4.00
Subsequent Event [Member] | CAD [Member] | The Hydropothecary Corporation [Member] | Tranche One [Member]                                        
Non-refundable deposit                                       $ 500,000
Subsequent Event [Member] | CAD [Member] | The Hydropothecary Corporation [Member] | Tranche Two [Member]                                        
Non-refundable deposit                                       $ 500,000
Subsequent Event [Member] | First Mortgage [Member] | CAD [Member]                                        
Mortgage loan                                     9,400,000  
Subsequent Event [Member] | Second Mortgage [Member] | CAD [Member]                                        
Mortgage loan                                     $ 2,300,000  
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