Restatement of prior period results

9 Months Ended

Sep. 30, 2018

Restatement of Prior Year Income [Abstract]

Restatement of prior period results

3. Restatement of prior period results

The Company finalized the Purchase Price allocation for the acquisition of the assets of Seastone and CCH during December 2017. This resulted in the retroactive restatement of the statement of the unaudited condensed consolidated statement of operations and the unaudited condensed consolidated statement of cash flows for the three and nine months ended September 30, 2017.

The value of the assets acquired were adjusted in line with valuations received and the corresponding depreciation charge was adjusted accordingly.

This resulted in an increase in other expense of $0 and $4,701,415 for the three months and nine months ended September 30, 2017, respectively, on the transfer of assets between parties under common control and a net reduction in the associated depreciation charge of $52,517 and $127,430 for the three months and nine months ended September 30, 2017, respectively.

A further adjustment was made to other income, which was reduced by $67,596 and $162,536, for the three months and nine months ended September 30, 2017, respectively, to modify the Company’s estimate of deferred purchase price consideration due on the disposal of Muskoka. 

The reconciliation of the unaudited condensed consolidated statement of operations for the three months ended September 30, 2017 is as follows:

	As  previously reported			Adjustments			As Restated
Revenues	$	648,298		$	—		$	648,298
Operating expenses
General and administrative		127,786						127,786
Management fees		42,705						42,705
Professional fees		53,830						53,830
Salaries and wages		200,863						200,863
Depreciation and amortization		131,784			(52,517	)		79,267
Total operating expenses		556,968			(52,517	)		504,451
Operating income		91,330			52,517			143,847
Other Income (expense)
Other income		67,596			(67,596	)		—
Interest expense		(86,371	)					(86,371	)
Debt discount		(13,052	)					(13,052	)
Derivative liability movement		(19,329	)					(19,329	)
Foreign exchange movements		53,294						53,294
Net income before taxation from continuing operations		93,468			(15,079	)		78,389
Taxation		—			—			—
Net income from continuing operations		93,468			(15,079	)		78,389
Net loss from discontinued operations, net of tax		(218,253	)					(218,253	)
Net loss		(124,785	)		(15,079	)		(139,864	)
Accumulated other comprehensive gain
Foreign currency translation adjustment		277,923						277,923
Total comprehensive income	$	153,138		$	(15,079	)	$	138,059
Basic income per common share from continuing operations	$	—		$	—		$	—
Basic loss per share from discontinued operations	$	—		$	—		$	—
Basic income per common share	$	—		$	—		$	—
Diluted income per common share from continuing operations	$	—		$	—		$	—
Diluted loss per share from discontinued operations	$	—		$	—		$	—
Diluted loss per common share	$	—		$	—		$	—
Weighted average common shares outstanding - Basic		119,407,668			119,407,668			119,407,668
Weighted average common shares outstanding - Diluted		119,407,668			119,407,668			119,407,668

The reconciliation of the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2017 is as follows:

	As  previously reported			Adjustments			As Restated
Revenues	$	1,373,028		$	—		$	1,373,028
Operating expenses
General and administrative		334,386						334,386
Rent expense		2,622						2,622
Management fees		241,923						241,923
Professional fees		453,034						453,034
Salaries and wages		583,559						583,559
Depreciation and amortization		314,190			(127,430	)		186,760
Total operating expenses		1,929,714			(127,430	)		1,802,284
Operating loss		(556,686	)		127,430			(429,256	)
Other Income (expense)
Other income		635,904			(162,536	)		473,368
Other expense		(392,538	)		(4,701,415	)		(5,093,953	)
Interest income		32,074						32,074
Interest expense		(242,992	)					(242,992	)
Debt discount		(442,377	)					(442,377	)
Derivative liability movement		75,203						75,203
Foreign exchange movements		(111,052	)					(111,052	)
Net loss before taxation from continuing operations		(1,002,464	)		(4,736,521	)		(5,738,985	)
Taxation		—			—			—
Net loss from continuing operations		(1,002,464	)		(4,736,521	)		(5,738,985	)
Gain on disposal of business		7,494,828						7,494,828
Operating loss from discontinued operations, net of tax		(300,439	)					(300,439	)
Net income from discontinued operations, net of tax		7,194,389			—			7,194,389
Net income		6,191,925			(4,736,521	)		1,455,404
Accumulated other comprehensive gain
Foreign currency translation adjustment		241,231						241,231
Total comprehensive income	$	6,433,156		$	(4,736,521	)	$	1,696,635
Basic loss per common share from continuing operations	$	(0.01	)	$	(0.05	)	$	(0.06	)
Basic income per share from discontinued operations	$	0.07		$	—		$	0.07
Basic income per common share	$	0.06		$	(0.05	)	$	0.01
Diluted loss per common share from continuing operations	$	(0.01	)	$	(0.04	)	$	(0.05	)
Diluted income per share from discontinued operations	$	0.06		$	—		$	0.06
Diluted income per common share	$	0.05		$	(0.04	)	$	0.01
Weighted average common shares outstanding - Basic		102,455,451			102,455,451			102,455,451
Weighted average common shares outstanding - Diluted		117,312,150			117,312,150			117,312,150

The reconciliation of the unadjusted condensed consolidated statement of cash flows for the nine months ended September 30, 2017 is as follows:

	As previously reported			Adjustments			Adjusted Total
Operating activities
Net income	$	6,191,925		$	(4,736,521	)	$	1,455,404
Net income from discontinued operations		(7,194,389	)					(7,194,389	)
Net loss from continuing operations		(1,002,464	)		(4,736,521	)		(5,738,985	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation		314,190			(127,430	)		186,760
Non cash compensation expense on acquisition of subsidiary		373,274			4,701,415			5,074,689
Loss on mortgage sold		19,265						19,265
Non cash compensation for services		4,000						4,000
Other foreign exchange movements		63,962						63,962
Amortization of debt discount		442,377						442,377
Derivative liability movements		(75,203	)					(75,203	)
Provision against receivable on sale of subsidiary		(446,476	)					(446,476	)
Non-cash earnout accrual		(162,536	)		162,536			—
Changes in operating assets and liabilities
Accounts receivable		(833,374	)					(833,374	)
Prepaid expenses		(12,013	)					(12,013	)
Accounts payable and accrued liabilities		(162,834	)					(162,834	)
Taxes payable		(2,393,899	)					(2,393,899	)
Net cash used in operating activities - continuing operations		(3,871,731	)		—			(3,871,731	)
Net cash used in operating activities - discontinued operations		(117,221	)					(117,221	)
		(3,988,952	)		—			(3,988,952	)
Investing activities
Investments in Seastone		(2,960,000	)					(2,960,000	)
Proceeds from restricted cash		74,480						74,480
Purchase of fixed assets		(8,878	)					(8,878	)
Net cash used in investing activities - continuing operations		(2,894,398	)		—			(2,894,398	)
Net cash provided by investing activities - discontinued operations		6,285,852						6,285,852
		3,391,454			—			3,391,454
Financing activities
Decrease in bank overdraft		(56,105	)					(56,105	)
Proceeds from mortgage sold		111,554						111,554
Proceeds from mortgage		4,367,000						4,367,000
Repayment of mortgage		(3,482,144	)					(3,482,144	)
Proceeds from convertible notes		294,500						294,500
Repayment of convertible notes		(274,958	)					(274,958	)
Repayment of related party notes		(595,736	)					(595,736	)
Net cash provided by financing activities		364,111			—			364,111
Effect of exchange rate on cash		241,231						241,231
Net change in cash		7,844						7,844
Beginning cash balance		4,779						4,779
Ending cash balance	$	12,623		$	—		$	12,623