UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Amendment #1
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2015 |
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
For the transition period from N/A to N/A |
Commission File No. 333-175941
mCig Inc.
(Name of small business issuer as specified in its charter)
Nevada |
27-4439285 |
( State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
|
|
433 North Camden Drive, 6th Floor Beverly Hills, CA 90210
(Address of principal executive offices) (Zip Code)
310-402-6937
Registrant’s telephone number, including area code
Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
¨ |
Accelerated filer |
¨ |
Non–Accelerated filer |
¨ |
Smaller reporting company |
x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class |
|
Outstanding at March 25, 2015 |
Common stock, $0.0001 par value |
|
272,986,495 |
Transitional Small Business Disclosure Format Yes No x
Explanation Note
mCig, Inc. (the “Company”) is filing this Amendment #1 on Form 10-Q/A (the Amendment”) to the Company’s quarter report on Form 10-Q for the period ended January 31, 2015 (the “Form 10-Q”), filed with the Securities and Exchange Commission on March 23, 2015 (the “Original Filing Date”), solely for the purpose of furnishing Exhibits 31.1, 31.2, 32.1 and 32.2. Per the original 10-Q filing, due to technical difficulties, these exhibits were left out as part of the filing. As a result, this Amendment #1 corrects this issue.
No other changes were made as part of this 10-Q Amendment #1. This Amendment speaks as of the Original Filing Date of the Form 10-Q, does not reflect events that may have occurred subsequent to the Original Filing Date and does not modify or update in any way disclosures made in the original Form 10-Q and the subsequent amendments.
1
MCIG, INC.
INDEX TO FORM 10-Q FILING
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2015 AND
2014
TABLE OF CONTENTS
31.1 |
Certification of Chief Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act. |
31.2 |
Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act. |
32.2 |
Certification of Chief Executive Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act. |
32.2 |
Certification of Chief Financial Officer Pursuant
to Section 906 of the Sarbanes-Oxley
Act. |
2
PART I
FINANCIAL INFORMATION
Item
1. |
Financial
Statements |
The
accompanying interim consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q. Therefore, they do not
include all information and footnotes necessary for a complete presentation of
financial position, results of operations, cash flows, and stockholders' equity
in conformity with generally accepted accounting principles. Except as
disclosed herein, there has been no material change in the information disclosed
in the notes to the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the year ended April 30, 2014. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring
nature. Operating results for the nine months ended January 31, 2015
are not necessarily indicative of the results that can be expected for the year
ending April 30, 2015.
3
mCIG, Inc. |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
|
|
|
|
|
|
|
January 31, |
|
April 30, |
|
|
2015 |
|
2014 |
ASSETS |
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash |
|
$ 206,994 |
|
$ 358,839 |
Accounts
receivable |
|
38,922 |
|
41,098 |
Inventory |
|
91,012 |
|
138,657 |
Prepaid
expenses |
|
434,231 |
|
6,253 |
Total
current assets |
|
771,159 |
|
544,847 |
|
|
|
|
|
PROPERTY,
PLANT, AND EQUIPMENT |
|
1,770 |
|
- |
|
|
|
|
|
Advances
from Vitacig, Inc. |
|
100,264 |
|
- |
Intangible
assets, net |
|
6,927 |
|
11,848 |
Investment
in Vitacig |
|
9,006 |
|
- |
Investment
in Vapolution |
|
625,000 |
|
625,000 |
|
|
|
|
|
TOTAL
ASSETS |
|
$ 1,514,126 |
|
$ 1,181,695 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Accounts
payable and accrued expenses |
|
$ 3,783 |
|
$ 132,756 |
Deferred
revenue |
|
- |
|
4,141 |
Due to
related party |
|
10,000 |
|
3,000 |
Total
current liabilities |
|
13,783 |
|
139,897 |
TOTAL
LIABILITIES |
|
13,783 |
|
139,897 |
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
- |
|
- |
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
Preferred
stock, $0.0001 par value, 50,000,000 shares authorized; 23,000,000 shares
issued and outstanding |
|
2,300 |
|
2,300 |
Common
stock, $0.0001 par value, 560,000,000 shares authorized; 272,986,495 and
270,135,000 issued and outstanding |
|
27,299 |
|
27,014 |
Stock
payable |
|
23,023 |
|
- |
Additional
paid-in capital |
|
4,399,693 |
|
1,394,137 |
Accumulated deficit |
|
(2,951,972) |
|
(381,653) |
Total
stockholders' equity |
|
1,500,343 |
|
1,041,798 |
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 1,514,126 |
|
$ 1,181,695 |
The accompanying notes are an integral part of
these unaudited consolidated financial
statements. |
4
mCIG, Inc. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
January 31, |
|
January 31, |
|
|
2015 |
2014 |
|
2015 |
2014 |
|
|
|
|
|
|
|
REVENUES |
|
$ 88,119 |
$ 73,920 |
|
$ 444,136 |
$ 99,600 |
COST OF
REVENUES |
|
27,518 |
30,420 |
|
194,151 |
30,420 |
|
|
|
|
|
|
|
GROSS
PROFIT |
|
60,601 |
43,500 |
|
249,985 |
69,180 |
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
Selling,
general and administrative |
|
118,260 |
21,807 |
|
343,795 |
56,260 |
Consulting |
|
684,251 |
18,158 |
|
2,479,974 |
34,058 |
Amortization and depreciation |
|
1,690 |
1,294 |
|
5,542 |
3,881 |
Total
operating expenses |
|
804,201 |
41,259 |
|
2,829,311 |
94,199 |
OPERATING
LOSS |
|
(743,600) |
2,241 |
|
(2,579,326) |
(25,019) |
|
|
|
|
|
|
|
NET
LOSS |
|
$ (743,600) |
$ 2,241 |
|
$ (2,579,326) |
$ (25,019) |
|
|
|
|
|
|
|
NET LOSS
PER COMMON SHARE: |
|
|
|
|
|
|
Basic |
|
$ (0.00) |
$ 0.00 |
|
$ (0.01) |
$ (0.00) |
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER COMMON SHARES OUTSTANDING |
|
|
|
Basic |
|
271,760,634 |
270,000,000 |
|
178,674,378 |
270,000,000 |
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these unaudited consolidated financial
statements. |
5
mCIG, Inc. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(UNAUDITED) |
|
|
NINE MONTHS ENDED |
|
|
January 31, |
|
|
2015 |
|
2014 |
|
|
|
|
|
Net
Loss |
$ |
(2,579,326) |
$ |
(25,019) |
|
|
|
|
|
Adjustments to reconcile net loss from continuing
operations |
|
|
to net
cash from operating activities: |
|
|
|
|
Depreciation and
amortization |
|
4,942 |
|
3,881 |
Share-based compensation |
|
2,479,974 |
|
34,059 |
Changes in
operating assets and liabilities: |
|
|
|
|
Accounts receivables |
|
2,176 |
|
(6,309) |
Prepaid
expenses |
|
(5,325) |
|
- |
Inventory |
|
47,645 |
|
(11,560) |
Accounts
payables and accrued liabilities |
|
(128,973) |
|
5,969 |
Deferred
revenue |
|
(4,141) |
|
(37,500) |
Net cash
(used in) operating activities |
|
(183,028) |
|
(36,479) |
|
|
|
|
|
CASHFLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
Advances
to Vitacig Inc. |
|
(100,264) |
|
- |
Purchase
of furniture and fixtures |
|
(1,791) |
|
- |
Purchase
of intangible asset |
|
- |
|
(9,955) |
Spin off
of Vitacig |
|
26,238 |
|
- |
Net cash
used in investing activities |
|
(75,817) |
|
(9,955) |
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
Advances from
officer |
|
7,000 |
|
- |
Capital
contribution from officer |
|
100,000 |
|
- |
Proceed
from convertibe note related party |
|
- |
|
65,050 |
Net cash
provided by financing activities |
|
107,000 |
|
65,050 |
|
|
|
|
|
INCREASE
(DECREASE) IN CASH |
|
(151,845) |
|
18,616 |
CASH,
BEGINNING OF PERIOD |
|
358,839 |
|
3,600 |
CASH, END
OF PERIOD |
$ |
206,994 |
$ |
22,216 |
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE |
|
|
|
|
Interest
paid |
$ |
- |
$ |
- |
Taxes
paid |
$ |
- |
$ |
- |
|
|
|
|
|
NONCASH
OPERATING, INVESTING, AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
Write-off
of related party debt to additional paid-in capital |
$ |
3,156,218 |
$ |
5,000 |
Prepaid
stock based compensation expensed in current period |
$ |
(422,652) |
$ |
- |
Debt
forgiveness |
$ |
- |
$ |
172,678 |
Investment
in Vitacig, Inc. |
$ |
9,006 |
$ |
- |
Reclass
debt forgiven to note payable |
$ |
476,872 |
$ |
- |
The accompanying notes are an integral part of
these unaudited financial statements. |
6
MCIG, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JANAURY 31, 2015 AND
2014
(Unaudited)
NOTE 1-
DESCRIPTION OF BUSINESS
mCig,
Inc. (mCig) was incorporated in the State of Nevada on
December 30, 2010 originally under the name Lifetech Industries, Inc. Effective
August 2, 2013, the name was changed from "Lifetech Industries, Inc." to "mCig,
Inc." reflecting the new business model. Since October 2013, mCig, Inc. has positioned itself as
a technology company focused on two long-term secular trends: (1) the
decriminalization and legalization of marijuana for medicinal or recreational
purposes - legalizing medicinal and recreational marijuana usage is
steadily on the rise not only domestically but also internationally. Marijuana
has been decriminalized in over twenty countries, in over five continents.
Twenty-three states and the District of Columbia
currently have laws legalizing marijuana in some form (See http://www.governing.com/gov-data/safety-justice/state-marijuana-laws-map-medical-recreational.html, which website is not incorporated into this
filing). Management believes that by 2016 it is very
likely that many more States will legalize the use and sale of recreational
marijuana in forms similar to the States of Washington, Alaska, Oregon, and
Colorado or the District of Columbia. (2) The adoption of electronic vaporizing cigarettes
(commonly known as “eCigsâ€), as smokers move away from traditional cigarettes onto e-cigarettes. Smoking
tobacco causes numerous health problems, including disease and death. Smoking
becomes very addicting quickly, and the most difficult part is cessation. The
Company contends that E-cigarettes offer a safer and healthier alternative to
traditional tobacco cigarettes. E-cigarettes operate by heating a mixture of
liquid nicotine and flavoring, which is then inhaled and exhaled in the same
manner as a cigarette. However, e-cigarettes do not contain any tobacco or other
dangerous additives. Scientific research has shown that the leading cause of
cancer in smokers comes from the carcinogens in tobacco. As the movement towards
personal health grows, smokers are trying to quit their harmful habits.
Management believes that E-cigarettes provide a safe transition from harmful
traditional cigarettes.
All agreements related to the Lifetech business were
terminated and closed as of April 30, 2014. There is no impact on the
current and future operations because all of these agreements are related to the
previous business directions of the Company.
We manufacture and retail the mCig – an affordable loose-leaf eCig.
Designed in the USA – the mCig provides a smoking experience by heating plant
material, waxes, and oils delivering, in the Company’s opinion, a smoother
inhalation experience. The Company also maintains an investment in
Vapolution, Inc. which manufactures and retails home-use vaporizers such as the
Vapolution 2.0. Through VitaCig, Inc., in which the Company is a
controlling shareholder, the Company is engaged in the manufacturing and
retailing of a nicotine-free eCig that delivers a water-vapor mixed with
vitamins and natural flavors.
On January
23, 2014, the Company signed a Stock Purchase Agreement with Vapolution, Inc.
which manufactures and retails home-use vaporizers. In accordance with this
agreement mCig, Inc. acquired 100% of Vapolution, Inc.; as part of this
transaction mCig, Inc. issued 5,000,000 shares to shareholders of Vapolution,
Inc. The shareholders of Vapolution, Inc. retain the right to rescind the
transaction, which expired on January 23, 2015 but was extended to May 23, 2015
based on an Amended Stock Purchase Agreement executed on May 23, 2014. On
January 23, 2014, Paul Rosenberg, CEO of mCig, Inc. cancelled an equal amount
(2,500,000 shares) of common shares owned by him resulting in a net non-dilutive
transaction to existing mCig, Inc. shareholders. The remaining 2,500,000 of
common shares owned by Paul Rosenberg will be cancelled on the one year
anniversary of the Amended Stock Purchase Agreement to offset the
2,500,000 new shares issued from the treasury to complete the purchase of
Vapolution, Inc. The Company extended this agreement to May 15, 2015 while
it negotiates new terms.
On February 24, 2014, the Company entered
into a Contribution Agreement with VitaCig, Inc. In accordance with this agreement, VitaCig,
Inc. accepted the contribution by mCig, Inc. of specific assets consisting
solely of pending trademarks for the term “VitaCig†filed with the USPTO and
$500 in cash as contribution in exchange for 500,135,000 shares of common
capital stock representing 100% of the shares outstanding of VitaCig,
Inc.
On
November 28, 2014, mCig completed the spin-off of VitaCig, Inc. (the
“Spin-offâ€). Effective as of 11:59 p.m., New York City time, on November 28,
2014 (the “Distribution Dateâ€), the Company distributed 270,135,000 shares
of common stock of VitaCig, Inc., par value $0.0001 per share (“VitaCig Common
Stockâ€), to holders of mCig’s stockholders of record as a pro rata
dividend. The record date for the dividend was November 28, 2014. The
Ex-Dividend Date was set for November 25, 2014. mCig stockholders received
one share of VitaCig Common Stock for every one share of common stock, par value
$0.0001 per share, of mCig. The Spin-off was completed for the
purpose of legally and structurally separating VitaCig, Inc. from mCig. MCig
retained 230,000,000 shares of common stock and remains as a controlling
shareholder. The shares of common stock to be received by mCig shareholders were
registered on a Form S-1 filed by VitaCig and declared effective by the
Securities and Exchange Commission on November 5, 2014.
NOTE 2 – BASIS OF PRESENTATION OF INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
7
The
Company prepares its consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America.
The accompanying interim unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information in accordance with the instructions to Form 10-Q
and Article 8 of Regulation S-X. In management’s opinion, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included.
Operating
results for the nine months ended January 31, 2015 are not necessarily
indicative of the results that may be expected for the year ending April 30,
2015. Notes to the unaudited interim consolidated financial statements that
would substantially duplicate the disclosures contained in the audited
consolidated financial statements for the year ended
April 30, 2014 have been omitted; this report should be read in
conjunction with the audited consolidated financial statements and the footnotes
thereto for the fiscal year ended April 30, 2014 included within the Company’s
Form 10-K as filed with the Securities and Exchange Commission.
NOTE 3 - GOING
CONCERN
The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. However, the
Company has recurring losses from operations and an accumulated deficit at
January 31, 2015 of $2,951,972 and needs additional cash to maintain its
operations.
These
factors raise doubt about the Company’s ability to continue as a going concern.
The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. The
Company’s continued existence is dependent upon management’s ability to develop
profitable operations, continued contributions from the Company’s executive
officers to finance its operations and the ability to obtain additional funding
sources to explore potential strategic relationships and to provide capital and
other resources for the further development and marketing of the Company’s
products and business.
NOTE 4 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The
Company prepares its consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America.
Significant accounting policies are as follows:
Use of
Estimates and Assumptions
The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States (“GAAPâ€) requires management
to make estimates and assumptions that affect (i) the reported amounts of
assets and liabilities, (ii) the disclosure of contingent assets and
liabilities known to exist as of the date the consolidated financial statements
are published, and (iii) the reported amount of net revenues and expenses
recognized during the periods presented. Adjustments made with respect to the
use of estimates often relate to improved information not previously available.
Uncertainties with respect to such estimates and assumptions are inherent in the
preparation of consolidated financial statements; accordingly, actual results
could differ from these estimates. The Company’s most significant
estimates relate to the valuation of its proprietary technology and its
valuation of its common stock.
Cash and
Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. At January 31, 2015,
cash and cash equivalents include cash on hand and cash in the bank and the FDIC
insures these deposits up to $250,000.
Impairment
of Long-Lived Assets
Long-lived
assets are evaluated for impairment whenever events or changes in business
circumstances indicate that the carrying amount of the assets may not be fully
recoverable or that the useful lives of these assets are no longer appropriate.
Each impairment test is based on a comparison of the undiscounted future cash
flows to the recorded value of the asset. If impairment is indicated, the asset
is written down to its estimated fair value. The acquired software technologies
are reviewed annually for impairment.
Fair Value
of Financial Instruments
The
Company's financial instruments consist primarily of cash, accounts payable and
accrued expenses, and debt. The carrying amounts of such financial
instruments approximate their respective estimated fair value due to the
short-term maturities and approximate market interest rates of these
instruments.
Fair value
is focused on an exit price that would be received upon sale of an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. Within the measurement of fair value, the use
of market-based information is prioritized over entity specific
information and a three-level hierarchy for fair value measurements is used
based on the nature of inputs used in the valuation of an asset or liability as
of the measurement date.
8
The
three-level hierarchy for fair value measurements is defined as
follows:
• |
|
Level 1 –
inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets; liabilities in active
markets; |
• |
|
Level 2 –
inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability other than quoted prices, either directly or
indirectly, including inputs in markets that are not considered to be
active; or directly or indirectly including inputs in markets that are not
considered to be active; |
• |
|
Level 3 –
inputs to the valuation methodology are unobservable and significant to
the fair value measurement. |
|
|
|
|
The following table
summarizes fair value measurements by level at January 31, 2015 and April 30,
2014 for assets measured at fair value on a recurring basis:
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
|
At January 31,
2015 |
|
|
|
|
|
|
|
|
|
|
|
Investment and
intangible |
$ |
- |
|
$ |
- |
|
$ |
640,933 |
|
$ |
640,933 |
|
Cash |
|
|
|
|
|
|
|
206,994 |
|
|
206,994 |
|
Total
Investment and intangible |
$ |
- |
|
$ |
- |
|
$ |
847,927 |
|
$ |
847,927 |
|
|
|
|
|
|
|
|
|
|
|
|
At April 30,
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment and
intangible |
$ |
- |
|
$ |
- |
|
$ |
636,848 |
|
$ |
636,848 |
|
Cash |
|
|
|
|
|
|
|
358,839 |
|
|
358,839 |
|
Total
Investment and intangible |
$ |
- |
|
$ |
- |
|
$ |
995,687 |
|
$ |
995,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Receivable and Allowance for Uncollectible Accounts
Substantially all of the Company’s accounts receivable
balance is related to trade receivables. Trade accounts receivable are recorded
at the invoiced amount and do not bear interest. The allowance for doubtful
accounts is the Company’s best estimate of the amount of probable credit losses
in its existing accounts receivable. The Company will maintain allowances for
doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments for services. Accounts with known financial
issues are first reviewed and specific estimates are recorded. The remaining
accounts receivable balances are then grouped in categories by the number of
days the balance is past due, and the estimated loss is calculated as a
percentage of the total category based upon past history. Account balances are
charged against the allowance when it is probable the receivable will not be
recovered.
Income
Taxes
The
Company utilizes the asset and liability method in accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized for
operating loss and tax credit carry-forwards and for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the year in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the results of operations in the period
that includes the enactment date. A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets unless it is more likely than not
that the value of such assets will be realized.
The
Company uses the two-step approach to recognizing and measuring uncertain tax
positions. The first step is to evaluate the tax position for recognition by
determining if the weight of available evidence indicates it is more likely than
not, that the position will be sustained on audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure
the tax benefit as the largest amount, which is more than 50% likely of being
realized upon ultimate settlement. The Company considers many factors when
evaluating and estimating the Company's tax positions and tax benefits, which
may require periodic adjustments. At January 31, 2015, the Company did not
record any liabilities for uncertain tax positions.
Revenue
Recognition
9
The
Company’s revenue recognition policy is in accordance with generally
accepted accounting principles, which requires the recognition of sales when
there is evidence of a sales agreement, the delivery of goods has occurred, the
sales price is fixed or determinable and the collectability of revenue is
reasonably assured.
Inventory
Inventory consists of
finished product, mCig and VitaCig electronic vaporizing cigarettes valued at the lower
of cost or market valuation under the first-in, first-out method of costing.
Warranties
Warranty reserves include management’s best estimate of
the projected costs to repair or to replace any items under warranty, based on
actual warranty experience as it becomes available and other known factors that
may impact the Company’s evaluation of historical data. Management reviews
mCig’s reserves at least quarterly to ensure that its accruals are adequate in
meeting expected future warranty obligations, and the Company will adjust its
estimates as needed. Initial warranty data can be limited early in the launch of
a product and accordingly, the adjustments that are recorded may be material.
Because of the nature of its products, customers are made aware that as soon as
a mCig is packed with marijuana, they automatically void their warranty,
primarily because it is against federal laws to mail a product that has been in
proximity of marijuana. As a result, the products that can be returned as a
warranty replacement is extremely limited. As a result, due to the Company’s
warranty policy, the Company did not have any significant warranty expenses to
report as of Quarter Ended January 31, 2015. Based on these actual expenses, the
warranty reserve, as estimated by management as of Quarter Ended January 31,
2015 was at $0. Any adjustments to warranty reserves are to be recorded in cost
of sales.
It is
likely that as we start selling higher priced products, that are not affected by
federal shipping laws and/or are not single use items (such as eLiquid Juice
Vaporizer), we will acquire additional information on the projected costs to
service work under warranty and may need to make additional adjustments.
Further, a small change in the Company’s warranty estimates may result in a
material charge to the Company’s reported financial results.
Product
exchanges and product returns
The total for
product exchanges and product returns as of January 31, 2015 were minimal. As a
result, all product exchanges and product returns were recorded as a reduction
to revenues.
Deferred
Revenue
Deferred
revenue result from fees billed to customers for which revenue has not yet been
recognized or for which the conditions of the arrangement have been
modified. The Company recognizes revenue when earned and defers revenues
that are unearned.
The
Company has deferred revenue of $0 as of January 31, 2015 and $4,141for April
30, 2014.
Share-Based Compensation
The
Company measures the cost of services received in exchange for an award of an
equity instrument based on the grant-date fair value of the award.
Compensation cost is recognized over the vesting or requisite service
period.
Basic and
Diluted Net Income (Loss) per Common Share
Basic
income (loss) per share is computed by dividing net income (loss) available to
common shareholders by the weighted average number of common shares outstanding
during the reporting period. The weighted average number of shares is
calculated by taking the number of shares outstanding and weighting them by the
amount of time that they were outstanding. Diluted earnings per share
reflects the potential dilution that could occur if stock options, warrants, and
other commitments to issue common stock were exercised or equity awards vest
resulting in the issuance of common stock that could share in the earnings of
the Company.
The
Company has 23,000,000 preferred shares that can be converted subject to the
limitation of the Company’s authorized shares at 1 preferred share for 10 common
shares. The conversion can only take place with the approval of the Board of
Directors after the expiration of the lock up agreement on April 30, 2015. The
preferred shares are anti-dilutive due to the losses the Company has incurred
for the periods ended January 31, 2015 and 2014.
Diluted
loss per share is the same as basic loss per share during periods where net
losses are incurred since the inclusion of the potential common stock
equivalents would be anti-dilutive as a result of the net
loss.
Concentration of Credit Risk
10
All of the
Company’s cash and cash equivalents are maintained in regional and national
financial institutions. The Company has exposure to credit risk to the extent
that its cash and cash equivalents exceed amounts covered by the U.S. federal
deposit insurance; however, the Company has not experienced any losses in such
accounts. In management’s opinion, the capitalization and operating history of
the financial institutions are such that the likelihood of material loss is
remote.
Recent Accounting
Pronouncements
No
accounting standards or interpretations issued recently are expected to a have a
material impact on the Company’s financial position, operations or cash
flows.
NOTE 5 –
PROPERTY PLANT AND EQUIPMENT
The
following is a detail of software at January 31, 2015 and April 30,
2014:
|
January 31,
2015 |
|
|
April 30,
2014 |
Furniture
& Fixtures |
|
$ |
1,792 |
|
|
|
$ |
- |
Total
property plant and equipment |
|
|
1,792 |
|
|
|
|
- |
Accumulated depreciation of fixed
assets |
|
|
(22 |
) |
|
|
|
(-) |
Total
intangible assets |
|
$ |
1,770 |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for January 31, 2015 is
$22.
NOTE 6 –
INTANGIBLE
The
following is a detail of software at January 31, 2015 and April 30,
2014:
|
January 31,
2015 |
|
|
April 30,
2014 |
Website |
|
$ |
19,510 |
|
|
|
$ |
19,510 |
Total
intangible assets |
|
|
19,510 |
|
|
|
|
19,510 |
Accumulated amortization of intangible
assets |
|
|
(12,583 |
) |
|
|
|
(7,662) |
Total
intangible assets |
|
$ |
6,927 |
|
|
|
$ |
11,848 |
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for the nine months ended January
31, 2015 and 2014 is $4,921 and $3,881 respectively.
NOTE 7 –
INVESTMENTS
Website
development costs
Under the provisions of FASB-ASC Topic 350, the Company
previously capitalized costs of design, configuration, coding, installation, and
testing of the Company’s website up to its initial implementation. Costs will be
amortized to expense over an estimated useful life of three years using the
straight-line method. Ongoing website post- implementation cost of operations, including training and
application, are expensed as incurred. The Company evaluates the recoverability
of website development costs in accordance with FASB-ASC Topic 350. As of
January 31, 2015, management does not believe that there is a need for the
impairment of costs incurred towards the development of its website.
The
following is a detail of software and investment at January 31, 2015 and April
30, 2014:
|
January 31,
2015 |
|
|
April 30,
2014 |
Vitacig
investment |
|
|
$ 9,006 |
|
|
|
|
$ - |
Vapolution
investment |
|
|
625,000 |
|
|
|
|
625,000 |
Total
investments |
|
|
634,006 |
|
|
|
|
625,000 |
|
|
|
|
|
|
|
|
|
|
|
Investment
in Vapolution
The
Company has determined the appropriate way to report its deposit in Vapolution
using the cost method of accounting. Specifically, as reported Per ASC
325-20-25-1, the fair value of restricted stock is not readily determinable
since the seller has the right to rescind the agreement effective through
January 23, 2015. Therefore the Company has recorded this as a deposit on the
cost method,
mCig reported its deposit in Vapolution as of January 31, 2015 and April 30,
2014 in the amount of $625,000. The Company issued the 2,500,000 in common stock
as a deposit and the transaction with Vapolution will then be finally transacted
on May 23, 2015 in accordance with the Amended Stock Purchase Agreement when the
right to rescind the transaction has expired. The right to rescind has
expired but the parties are in the process of renegotiating the terms of the
agreement therefore the Company will continue to treat this as an investment
until final negotiations and terms have been met.
11
The
Company has treated this transaction as a deposit since the payment of the
2,500,000 million shares is a pre-closing deposit. The Company will true
up the remaining balance of the shares to be issued in May of 2015 in accordance
with the Amended Stock Purchase Agreement after the right to rescind the
transaction has expired as noted in the Amended Stock Purchase Agreement. The
Company intends to revalue the transaction in May based up on the current
performance of the operations. The Company does not presently have control of
Vapolution and will not until the final closing of this transaction. At that
time the Company will treat this acquisition in May of 2015 as an investment
until final negotiations and terms have been met.
Investment
in Vitacig, Inc.
mCig, Inc.
owns 47% of VitaCigand reports this ownership on the equity method of
accounting. VitaCigs has no control over mCig in the ownership or the
control of the Company. The Company has an original investment of $9,390
and the consolidated portion of the VitaCigs, Inc. where the profit of 18,396 is
off set showing a balance of$9,006. The Company continues their
relationship with VitaCigs, Inc. but has no control over any part of VitaCig
except as a majority shareholder and Paul Rosenberg is a member of the
VitaCig Board of Directors. The executive officers and other director of VitaCig
are not officers or directors of mCig.
NOTE 8 –
RELATED PARTY TRANSACTIONS
Stock
Issued for Services
During the
nine months ended January 31, 2015, the Company issued 7,517,005 shares of
common stock as compensation from the Company’s Chief Executive Officer’s
personal shares as a loan to the Company. The shares were originally issued as
additional paid in capital but management reviewed the accounting treatment and
reclassified those shares as a loan from the Company’s Chief Executive Officer.
The fair values of the shares were a total of $3,019,307 and were recorded at
the market price on the date of grant. The Company recorded this fair value as a
loan from the Company’s Chief Executive Officer and in January of 2015 the
Company’s Chief Executive Officer forgave this debt and we recorded that as an
adjustment to Additional Paid in Capital. The issuances of stock were as
follows:
Date |
|
Number of Shares |
|
Fair Value |
|
Description of Services |
|
August 29,
2014 |
|
|
|
324,009 |
|
|
$ |
94,465 |
|
|
Compensation to
consultants |
|
September 30,
2014 |
|
|
|
357,984 |
|
|
|
91,475 |
|
|
Compensation to
consultants |
|
October 31,
2014 |
|
|
|
1,022,353 |
|
|
|
152,893 |
|
|
Compensation to
consultants |
|
Reclass of stock
issued in 1st Quarter to note payable |
|
|
|
5,812,659 |
|
|
|
2,680,474 |
|
|
Compensation to
consultants |
|
Stock issued to
Adam Chase Trust |
|
|
|
714,286 |
|
|
|
100,000 |
|
|
Stock issued for
cash to our CEO loan to the Company and our CEO forgave the debt.
|
|
Total |
|
|
|
8,231,291 |
|
|
$ |
3,119,307 |
|
|
|
During the
year ended April 30, 2014, the Company issued 1,491,224 shares of common stock
as compensation and cash. The shares were issued from the Company’s Chief
Executive Officer’s personal shares as a loan to the Company. The shares were
originally issued as additional paid in capital but management reviewed the
accounting treatment and reclassed those shares as a loan to the Company’s Chief
Executive Officer’s personal. The fair values of the shares were a total of
$476,872 and were recorded at the market price on the date of grant.
On April 14, 2014, the Company issued 750,000 shares of
common stock at $0.4 per share in accordance with a Security Purchase Agreement
between mCig, Inc. and an institutional investor as part of the Company's
deployment of a national market strategy dated as of April 14, 2014.
Simultaneously, the Company’s Chief Executive Officer cancelled an equal amount of shares (750,000) owned by
him, resulting in a net non-dilutive transaction to existing mCig, Inc.
shareholders. These shares were valued at $300,000 based on the price at $0.4
per share. It was considered as capital contribution.
Date |
|
Number of Shares |
|
Fair Value |
|
Description of Services |
|
Reclass of stock
issued in year ended April 30, 2014 to note payable |
|
|
|
1,191,224 |
|
|
|
176,872 |
|
|
Compensation to
consultants |
|
Stock issued for
cash |
|
|
|
750,000 |
|
|
|
300,000 |
|
|
Stock issued for
cash |
|
Total |
|
|
|
1,494,224 |
|
|
$ |
476,872 |
|
|
|
12
As of
December 1, 2014, the Company issued 293,636 shares of common stock as
compensation. The shares were issued from the Company’s Chief Executive
Officer’s personal shares as a loan to the Company. The fair values of the
shares were a total of $136,911 and were recorded at the market price on the
date of grant.
Date |
|
Number of Shares |
|
Fair Value |
|
Description of Services |
|
Stock issued by
CEO for services |
|
|
|
293,636 |
|
|
|
136,911 |
|
|
Compensation to
consultants |
|
Total |
|
|
|
293,636 |
|
|
$ |
136,911 |
|
|
|
As at
January 31, 2015,,the Company’s Chief Operating Officer has advanced a
non-interest bearing loan of $10,000 to the Company which is due upon demand.
In
December 2014, the Company issued 9,011,229 common stock to the Company’s Chief
Executive Officer as repayment of debt and the Company’s Chief Executive Officer
immediately cancelled those shares into treasury. The entire debt owed to our
Chief Executive Office is paid in full and there is no outstanding balance as of
December 22, 2014.
On
November 28, 2014, mCig completed the spin-off of VitaCig, Inc. (the
“Spin-offâ€). Effective as of 11:59 p.m., New York City time, on November 28,
2014 (the “Distribution Dateâ€), the Company distributed 270,135,000 shares
of common stock of VitaCig, Inc., par value $0.0001 per share (“VitaCig Common
Stockâ€), to holders of mCig’s stockholders of record as a pro rata
dividend. The record date for the dividend was November 28, 2014. The
Ex-Dividend Date was set for November 25, 2014. mCig stockholders received
one share of VitaCig Common Stock for every one share of common stock, par value
$0.0001 per share, of mCig. The Spin-off was completed for the
purpose of legally and structurally separating VitaCig, Inc. from mCig. MCig
retained 230,000,000 shares of common stock and remains as a controlling
shareholder. The shares of common stock to be received by mCig shareholders were
registered on a Form S-1 filed by VitaCig and declared effective by the
Securities and Exchange Commission on November 5, 2014.
NOTE 9 –
COMMITMENTS AND CONTINGENCIES
On
September 18, 2014, the Company entered into an exclusive sales agreement with
Omni Cam to become exclusive distributor for the Product in Korea. The Company
agreed to manufacture product to meet Omni Cam’s purchase agreement including
material, equipment and other supplies. The purchase price of the product is
based on products being packaged in VitaCig design. The agreement is a 2 year
agreement in which Omni Cam agreed to purchase from mCig 100% of requirements.
The purchase price shall be $3.00 per unit and cannot change without notice to
Omni Cam in writing within 120 days. Omni Cam must purchase $350,000 worth of
products within 6 months. The initial order to execute this contact should be
for $100,000 worth of product; there was no other product purchase before
January 2014.
NOTE 10 -
EQUITY
As of January 31,
2015, the Company was authorized to issue 560,000,000 common shares
and 23,000,000 preferred shares at a par value of $0.0001.
During the
nine months ended January 31, 2015, the Company issued 2,851,495 shares of
common stock as compensation. The shares were issued from the Company. The fair
values of the shares were a total of $406,661 and were recorded at the market
price on the date of grant. The issuances of stock were as follows:
Date |
|
Number of Shares |
|
Fair Value |
|
Description of Services |
|
December 9,
2014 |
|
|
|
531,621 |
|
|
$ |
85,325 |
|
|
Compensation to
consultants |
|
December 31,
2014 |
|
|
|
1,306,050 |
|
|
|
168,481 |
|
|
Compensation to
consultants |
|
January 31,
2015 |
|
|
|
1,013,824 |
|
|
|
152,854 |
|
|
Compensation to
consultants |
|
Total |
|
|
|
2,851,495 |
|
|
$ |
406,661 |
|
|
|
The Company has
prepaid common stock of $429,230 that has been issued to consultants and
employees from the Company’s Chief Executive Officer’s
common stock. The shares are earned in accordance
with their agreements and are earned by the employees’ and consultants in less
than a year. These shares have been issued from the Company’s Chief
Executive Officer’s common stock and recorded as part of the related party
note. (See Note 7)
Preferred
Stock
The
Company has authorized 50,000,000 shares of preferred stock, at $0.0001 par
value and 23,000,000 are issued and outstanding as of January 31, 2015. Each
share of the Preferred Stock has 10 votes on all matters presented to be voted
by the holders of the Company’s
common stock. All 23,000,000 shares of preferred stock were granted to the
Company’s Chief Executive Officer on September 23, 2013, which was valued at
$2,300, the price of the common stock of $0.0001 exchanged in the
transaction.
13
On
September 23, 2013, the Company entered into a Share Cancellation / Exchange /
Return to Treasury Agreement with Paul Rosenberg, the Chief Executive Officer of
mCig, Inc., for the cancellation of 230,000,000 shares of its common stock held
by Mr. Rosenberg in exchange for 23,000,000 shares of the Company’s Series A
Preferred Stock. Under the terms of the Agreement, the Preferred Shares only
have voting rights and no right to convert to common stock in accordance with
the Certificate of Certification filed with the State of Nevada on September 10,
2013. The Series A Preferred shares of mCig, Inc. carry ten (10) votes per each
share of Preferred stock while mCig, Inc.’s common shares carry one (1) vote per
each share outstanding.
On April
10, 2014, the Share Cancellation / Exchange / Return to Treasury Agreement were
amended. Under terms of the amended agreement, all or any part of the Preferred
Shares held by Shareholder can be converted at any time or from time to time,
and can be exchanged for a stated number of the Company's Common Stock
Shares. The amendment was rejected by the State of Nevada as the
conversion did not have a stated number of shares that converts and thus was
invalid.
On
July 16, 2014, the Board of Directors approved the conversion rate of ten for one (ten shares
of common stock for each share of Series A
Preferred Stock). In addition, the Board of Directors reduced the authorized
number of shares of Series A Preferred Stock to the amount issued and
outstanding (23,000,000) and executed a lock up agreement such that Mr.
Rosenberg cannot convert the Series A Convertible Preferred Stock until after
the year ended April 30, 2015. The Certificate of Certification was filed on
July 17, 2014 with the State of Nevada.
NOTE 11 – SUBSEQUENT
EVENTS
On February 3, 2015, the Company (the
“Companyâ€) executed a Product Distribution Agreement (“Distribution Agreementâ€)
with Café Serendipity Holdings, Inc. (f/k/a Force Fuels, Inc.)
(“Caféâ€).
In accordance with the Distribution
Agreement, the Company will sell its products and can sell VitaCig, Inc. (a
controlled entity) products to Café, pursuant to the terms and conditions of the
Distribution Agreement, including but not limited to, providing sixty (60)
percent of the products carried in the Café stores and the right of first
refusal to provide needed products to Café. The Distribution Agreement can be
terminated by either party with notice except that Café cannot terminate the
Distribution Agreement for the initial fifteen (15 months).
The foregoing description of the Agreement
does not purport to be complete and is qualified in its entirety by reference to
the text of the Distribution Agreement.
On February 3, 2015, the Company executed an
Agreement for the Exchange of Securities (“Agreementâ€) with
Café.
The Agreement provides, among other things,
that (i) the Café will issue ten million (10,000,000) restricted shares of Café
common stock to mCig, (ii) mCig will issue three million (3,000,000) restricted
shares of mCig’s Common stock to Café, subject to satisfaction of certain
conditions, including but not limited to, confirmation of the filing of
Form 10 or a Registration Statement on Form S-1 by Café such that Café becomes a
reporting company on equal status with mCig and appointment of a designee of the
Company to the Board of Directors of Café (with best efforts used to retain this
designee during the duration of the time in which the Company holds Café shares
of common stock or three (3) years, whichever is sooner). If the Agreement
conditions are not satisfied or waived on or before December 31, 2015, the
obligations of the parties will terminate.
On March
5, 2015, the Company announced an initial CBD (or cannabidiol) product order
estimated, but not guaranteed, to be, worth more than $1.2 million. mCig,
Inc. also announces that it is finalizing a nationwide wholesale agreement with
two large national distributors to supply these high-demand CBD products to more
than 1,000 retail store locations to start. No assurances can be provided that
this order will be finalized or profitable. An agreement with Café Serendipity will allow cross
promotion and selling of products to thousands of dispensary locations
nationwide.
* * *
* * * * * * * * *
14
In this
Quarterly Report on Form 10-Q, “we,†“our company,†“us,†and “our†refer to
mCig, Inc. and its subsidiaries, unless the context requires
otherwise.
ITEM 2 -
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements
Management’s Discussion and Analysis contains various
“forward looking statements†within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, regarding future events or the future
financial performance of the Company that involve risks and uncertainties.
Certain statements included in this Form 10-Q, including, without limitation,
statements related to anticipated cash flow sources and uses, and words
including but not limited to “anticipatesâ€, “believesâ€, “plansâ€, “expectsâ€,
“future†and similar statements or expressions, identify forward looking
statements. Any forward-looking statements herein are subject to certain risks
and uncertainties in the Company’s business, including but not limited to,
reliance on key customers and competition in its markets, market demand, delayed
payments of accounts receivables, technological developments, maintenance of
relationships with key suppliers, changes to e-cigarette regulation or marijuana
regulations, difficulties of hiring or retaining key personnel and any changes
in current accounting rules, all of which may be beyond the control of the
Company. Management will elect additional changes to revenue recognition to
comply with the most conservative SEC recognition on a forward going accrual
basis as the model is replicated with other similar markets (i.e. SBDC). The
Company’s actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth therein.
Forward-looking statements involve risks, uncertainties
and other factors, which may cause our actual results, performance or
achievements to be materially different from those expressed or implied by such
forward-looking statements. Factors and risks that could affect our results and
achievements and cause them to materially differ from those contained in the
forward-looking statements include those identified in the section titled “Risk
Factors†in the Company’s Annual Report on Form 10-K for the year ended April
30, 2014, as well as other factors that we are currently unable to identify or
quantify, but that may exist in the future.
In
addition, the foregoing factors may affect generally our business, results of
operations and financial position. Forward-looking statements speak only as of
the date the statement was made. We do not undertake and specifically decline
any obligation to update any forward-looking statements.
Our
Business
We were
incorporated as mCig, Inc. (mCig) in the State of Nevada on December
30, 2010 originally under the name Lifetech Industries, Inc. Effective August 2,
2013, our name was changed from "Lifetech Industries, Inc." to "mCig, Inc."
reflecting our new business model. Since October 2013, we have positioned ourselves as
a technology company focused on two long-term secular trends sweeping the
globe: (1) The decriminalization and legalization of marijuana for medicinal or
recreational purposes (2) The adoption of electronic vaporizing cigarettes
(commonly known as “eCigsâ€) by the world’s smokers. The FDA has
indicated that e-cigarettes and their potential risks have not been fully
studied. Since e-cigarettes are new, their long-term effects are not well known,
including the potential risks of e-cigarettes when used as intended and how many
potentially harmful chemicals are being inhaled during use. However, even with
the limited research that we have now, it is believed that e-cigarettes are
still much safer and healthier than traditional cigarettes. The largest health
benefit of e-cigarettes is when used as a smoking cessation tool. The leading
cause of disease from smokers is caused by the tar found in cigarettes, which
e-cigarettes do not have.
On January
23, 2014, through a Stock Purchase Agreement with Vapolution, Inc., we made a
down payment towards the acquisition of Vapolution, Inc. Upon closing of
this transaction on January 23, 2015 (subsequently amended to May 23, 2015) we
can acquire all of Vapolution, Inc.’s issued and outstanding shares in exchange
for an aggregate of 5,000,000 shares of our common stock at a market value of
$0.25 per share on the date of the closing of the acquisition. Upon closing the
acquisition January 23, 2015(subsequently amended to May 23, 2015), Vapolution
will become a wholly owned subsidiary. The shareholders of Vapolution, Inc.
retain the right to rescind the transaction on or before January 23, 2015
(subsequently amended to May 23, 2015).
On
January 23, 2014, Paul Rosenberg, our Chief Executive Officer, cancelled an
equal amount (2,500,000 shares) of common shares owned by him resulting in a net
non-dilutive transaction to our existing shareholders. The remaining 2,500,000
of common shares owned by Paul Rosenberg will be cancelled on the one year
anniversary of the agreement on January 23, 2015(subsequently amended
to May 23, 2015), to offset the 2,500,000 new shares to be issued from
the treasury for the completion of the acquisition of Vapolution. Since only
half of the agreed upon shares had been paid out by us to the previous owners of
Vapolution, Inc. as on July 31, 2014 as part of the agreed upon purchase price,
only half of the purchase price ($625,000) was reported on our balance sheet as
investment in Vapolution, Inc. at the quarter end date. The remaining purchase
price of 2,500,000 shares of our common stock will be recognized in the amount
of $625,000 on our balance sheet on the commencement date of January 23,
2015(subsequently amended to May 23, 2015). At
that time, we intend to satisfy all requirements necessary to consolidate
Vapolution audited year-end results as part of our financials. On May 23,
2014, the parties to the agreement agreed to amend the original Stock Purchase
Agreement. Per the Amended Stock Purchase Agreement executed as of May 23, 2014,
a clarification was made to the agreement that more appropriately expresses the
spirit of the transaction as agreed upon by us and the previous owners of
Vapolution, Inc.
15
Future Acquisitions
As
part of its business plan, management is looking to acquire interests in all or
part of related business entities, increase its employee and consultant base
through engaging personnel knowledgeable in our field, release new products,
filing patents, and establish retail outlets. At this time, any discussions are
preliminary and there can be no assurances that any acquisitions will be
finalized. For example, we have appointed Michael Snody to the position of Chief Research and
Development Officer. Mr. Snody will run our company's new metalworks and
hardware division and this will be the first division that concentrates on
American-made products. On December 11, 2014, together with our 47% owned affiliate VitaCig, Inc., we launched a
jointly operated retail outlet at the world renowned Dolby Theater (formerly
known as the Kodak Theatre) located in the heart of Hollywood alongside the
"Walk of Fame", at the Hollywood & Highland Mall.
On March
5, 2015, the Company announced an initial CBD (or cannabidiol) product order
estimated, but not guaranteed, to be, worth more than $1.2 million. mCig,
Inc. also announces that it is finalizing a nationwide wholesale agreement with
two large national distributors to supply these high-demand CBD products to more
than 1,000 retail store locations to start. No assurances can be provided that
this order will be finalized or profitable.
SIGNIFICANT ACCOUNTING POLICIES
We prepare
our consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America. Significant accounting
policies are as follows:
Use of
Estimates and Assumptions
The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States (“GAAPâ€) requires management
to make estimates and assumptions that affect (i) the reported amounts of
assets and liabilities, (ii) the disclosure of contingent assets and
liabilities known to exist as of the date the consolidated financial statements
are published, and (iii) the reported amount of net revenues and expenses
recognized during the periods presented. Adjustments made with respect to the
use of estimates often relate to improved information not previously available.
Uncertainties with respect to such estimates and assumptions are inherent in the
preparation of consolidated financial statements; accordingly, actual results
could differ from these estimates. Our most significant estimates relate
to the valuation of its proprietary technology and its valuation of its common
stock.
Share-Based Compensation
We measure
the cost of services received in exchange for an award of an equity instrument
based on the grant-date fair value of the award. Compensation cost is
recognized over the vesting or requisite service period.
Basic and
Diluted Net Income (Loss) per Common Share
Basic
income (loss) per share is computed by dividing net income (loss) available to
common shareholders by the weighted average number of our common shares
outstanding during the reporting period. The weighted average number of
shares is calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Diluted earnings
per share reflects the potential dilution that could occur if stock options,
warrants, and other commitments to issue common stock were exercised or equity
awards vest resulting in the issuance of common stock that could share in the
earnings of the Company. We have 23,000,000 preferred shares that can be
converted subject to the limitation of our authorized shares at 1 preferred
share for 10 common shares. The conversion can only take place after April 15,
2015.
Diluted
loss per share is the same as basic loss per share during periods where net
losses are incurred since the inclusion of the potential common stock
equivalents would be anti-dilutive as a result of the net
loss.
Revenue
Recognition
Our
revenue recognition policy is in accordance with generally accepted accounting
principles, which requires the recognition of sales when there is evidence of a
sales agreement, the delivery of goods has occurred, the sales price is fixed or
determinable and the collectability of revenue is reasonably assured.
Financial results and trends
16
Results of
Operations for the Three Months Ended January 31, 2015 and 2014
Revenue increased to $88,119 from $73,920 for the three
months ended January 31, 2015 and 2014, respectively. Our revenues increased as
a result of higher sales activity during the three months ended January 31, 2015
compared to the three months ended January 31, 2014.
Cost
of revenue was $27,518 and $30,420 for the three months ended January 31, 2015
and 2014, respectively. Our cost of revenue was related to the cost of
production.
Selling,
general and administrative expenses increased to $118,260 from $21,807 for the
three months ended January 31, 2015 and 2014, respectively. The increase in our
selling, general and administrative expenses is related to the contract
services, investor relations, legal and accounting in the three months ended
January 31, 2015.
Consulting
costs increased to $684,251 from $18,158 for the three months ended January 31,
2015 and 2014, respectively. Our consulting costs increase is related to
increase in salaries and primarily from common stock issued for services from
our Chief Executive Officer.
Depreciation and amortization was $1,690 and $1,294 for
the three months ended January 31, 2015 and 2014, respectively. Our depreciation
and amortization was related to the changes in our fixed and intangible
assets.
Results of Operations for the Nine months Ended January
31, 2015 and 2014
Revenue increased to $444,136 from $99,600 for the nine
months ended January 31, 2015 and 2014, respectively. Our revenues increased as
a result of higher sales activity during the nine months ended January 31, 2015
compared to the nine months ended January 31, 2014.
Cost
of revenue increased to $194,151 from $30,420 for the nine months ended January
31, 2015 and 2014, respectively. Our cost of revenue was related to the cost of
production.
Selling,
general and administrative expenses increased to $343,795 from $56,260 for the
nine months ended January 31, 2015 and 2014, respectively. The increase in our
selling, general and administrative expenses are related to the salaries and
bonuses of management, contract services, accounting fees, investor relations,
and legal costs in the nine months ended January 31, 2015.
Consulting
costs increased to $2,479,974 from $34,058 for the nine months ended January 31,
2015 and 2014, respectively. Our consulting costs increase is related to
increase in salaries and primarily from common stock issued for services from
our Chief Executive Officer and more recently stock issued from the
Company.
Depreciation and amortization was $5,542 and $3,881 for
the nine months ended January 31, 2015 and 2014, respectively. Our depreciation
and amortization was related to the changes in our fix and intangible
assets.
Liquidity
and Capital Resources
We
expect to incur substantial expenses and generate significant operating losses
as we continue to grow our operations, as well as incur expenses related to
operating as a public company and compliance with regulatory requirements. At
January 31, 2015, we had cash of $206,994.
We
have an accumulated deficit at January 31, 2015 of $2,951,972 and need
additional cash flows to maintain our operations.
Sources of Cash
The
Company has advances from our Chief Operating Officer of an aggregate of
$10,000.
We believe
that our existing cash and investment balances, our ability to issue new debt
instruments, and cash generated from operations will be sufficient to meet our
working capital and capital expenditure requirements. Our strategy emphasizes
organic growth through internal innovation and will be complemented by
acquisitions that fit strategically and meet specific internal profitability
hurdles.
Cash
Flow
The following table
summarizes, for the periods indicated, selected items in our Condensed
Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
Nine months Ended |
|
|
|
January 31,
2015 |
|
|
January 31,
2014 |
|
|
|
|
|
Net cash
provided by (used in): |
|
|
|
|
|
|
|
|
Operating
activities |
|
$ |
(183,028) |
|
|
$ |
(36,479 |
) |
Investing
activities |
|
|
(75,817 |
) |
|
|
(9,955 |
) |
Financing
activities |
|
|
107,000 |
|
|
|
65,050 |
|
17
Operating
Activities
Cash flows
from operating activities. Our cash (used in) provided by operating
activities were ($183,028) and $(36,479) for the nine months ended January 31,
2015 and 2014, respectively. The increase in cash provided by operations
was primarily attributable to the increase of revenue.
Investing
Activities
Cash flows
from investing activities. Our cash used in investing activities were
$75,817 and $9,955 for the nine months ended January 31, 2015 and 2014,
respectively. The increase in cash used in investing activities was
primarily attributable to the purchase of furniture and fixtures of $1,791 and
advances to Vitacitg, Inc. of $100,264 and $26,238 towards investment from spin
off of Vitacig as compared to the purchase of $12,600 of intangible assets for
January 31, 2014.
Financing Activities
Cash
flows from financing activities. Cash provided by
financing activities was $107,000 and $42,885 for the nine months ended January
31, 2015 and 2014, respectively. We received cash from the advance from our
Chief Operating Officer for the nine months ended January 31, 2015 and 2014,
respectively. During the nine months ended January 31, 2014, we received $42,885
as advances from our Chief Executive Officer.
Off-Balance Sheet Arrangements
We have no
off-balance sheet arrangements including arrangements that would affect the
liquidity, capital resources, market risk support and credit risk support or
other benefits.
WHERE YOU CAN FIND MORE INFORMATION
You
are advised to read this Quarterly Report on Form 10-Q in conjunction with other
reports and documents that we file from time to time with the SEC. In
particular, please read our Quarterly Reports on Form 10-Q, Annual Report on
Form 10-K, and Current Reports on Form 8-K that we file from time to time. You
may obtain copies of these reports directly from us or from the SEC at the SEC’s
Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may
obtain information about obtaining access to the Reference Room by calling the
SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic
filers at its website http://www.sec.gov.
18
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not hold
any derivative instruments and do not engage in any hedging
activities.
ITEM
4. CONTROLS AND
PROCEDURES
(a) Evaluation of Disclosure Controls and
Procedures
We
maintain disclosure controls and procedures that are designed to ensure 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 our Chief Executive Officer and Principal
Financial Officer, as appropriate, to allow for timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures. Our disclosure controls and procedures were designed to provide
reasonable assurance that the controls and procedures would meet their
objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and
Principal Financial Officer carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of the end
of the period covered by this report. Based on the foregoing, our Chief
Executive Officer and Principal Financial Officer concluded that our disclosure
controls and procedures were not effective.
Our
Chief Executive Officer and Principal Financial Officer are responsible for
establishing and maintaining adequate internal control over our financial
reporting. In order to evaluate the effectiveness of internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act,
management has conducted an assessment, including testing, using the criteria in
Internal Control — Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSOâ€). Our system of internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
consolidated financial statements for external purposes in accordance with
generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Management has used the framework set forth in the report
entitled Internal Control-Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate
the effectiveness of our internal control over financial reporting. Based on
this assessment, our Chief Executive Officer and Principal Financial Officer
have concluded that our internal control over financial reporting were not
effective as of January 31, 2015. There has been no change in our internal
controls over financial reporting during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
The Company’s
material weaknesses in financial reporting were:
|
a. |
There is
no segregation of duties as our CEO is also our CFO.
|
|
b. |
It should
be noted that any system of controls, however well designed and operated,
can provide only reasonable and not absolute assurance that the objectives
of the system are met. In addition, the design of any control system is
based in part upon certain assumptions about the likelihood of certain
events. Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions,
regardless of how remote. |
(b) Changes In
Internal Control Over Financial Reporting
|
|
There were
no changes in our internal control over financial reporting that occurred
during the nine months ended January 31, 2015 that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting. |
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
We
are currently not involved in any litigation that we believe could have a
material adverse effect on our financial condition or results of operations.
There is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the executive officers of our company or any of
our subsidiaries, threatened against or affecting our company, our common stock,
any of our subsidiaries or of our company’s or our company’s subsidiaries’
officers or directors in their capacities as such, in which an adverse decision
could have a material adverse effect.
ITEM 1A - RISK
FACTORS
19
Not
required under Regulation S-K for “smaller reporting companies.â€
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
SECURITIES
During the
nine months ended January 31, 2015, the Company issued 2,851,495 shares of
common stock as compensation. The shares were issued from the Company. The fair
values of the shares were a total of $406,661 and were recorded at the market
price on the date of grant. The issuances of stock were as follows:
Date |
|
Number of Shares |
|
Fair Value |
|
Description of Services |
|
December 9,
2014 |
|
|
|
531,621 |
|
|
$ |
85,325 |
|
|
Compensation to
consultants |
|
December 31,
2014 |
|
|
|
1,306,050 |
|
|
|
168,481 |
|
|
Compensation to
consultants |
|
January 31,
2015 |
|
|
|
1,013,824 |
|
|
|
152,854 |
|
|
Compensation to
consultants |
|
Total |
|
|
|
2,851,495 |
|
|
$ |
406,661 |
|
|
|
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
There were
no defaults upon senior securities during the nine months ended January 31,
2015.
ITEM 4.
MINING SAFETY DISCLOSURES
Not
applicable.
ITEM
5. OTHER INFORMATION
There is
no information with respect to which information is not otherwise called for by
this form.
20
ITEM 6. EXHIBITS
Exhibits
|
3.1 |
Articles of Incorporation(1) |
|
3.2
3.3
3.4
3.5
3.6 |
Amendment to the Articles of incorporation (2)
Amendment to the Articles of incorporation (3)
Certificate of Correction (8)
Certificate of Designation (12)
Bylaws(1) |
|
3.3 |
Certificate of Designation filed with the Secretary of State July 23, 2014 |
|
10.2 |
Joint Venture Agreement with Leadwill Corporation (1) |
|
10.3 |
Exclusive International Distributorship Agreement with Leadwill Corporation (1) |
|
10.4 |
Exclusive Technology License Agreement (1) |
|
10.5 |
Exclusive Distributorship Agreement with Epik Investments Limited (1) |
|
10.6 |
Joint Venture Agreement with LifeTech Japan Corporation (1) |
|
10.7 |
Exclusive Technology License Agreement with LifeTech Japan Corporation (1) |
|
10.8 |
Distributorship Partnership Agreement with SunPlex Limited (1) |
|
10.9 |
Debt Assignment, Consent and Release Agreement (1) |
|
10.10 |
Exclusive International Distributorship Agreement (1) |
|
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21 |
Share Cancellation/Exchange/Return To Treasury Agreement(3)
Employment Agreement with Mark James Linkhorst (5)
Stock Purchase Agreement with the shareholders of Vapolution, Inc.(6)
Section 351 Contribution Agreement With Vitacig, Inc.(4)
Consulting Agreements (7)
Share Cancellation/Exchange/Return To Treasury Agreement(8)
Amendment to Stock Purchase Agreement with Vapolution shareholders (9)
Employment Agreement with Patrick J. Lucey (10)
Lock Up Agreement with Paul Rosenberg (11)
Amendment to Stock Purchase Agreement with Vapolution shareholders (12)
Securities Purchase Agreement(13) |
|
14 |
Code of Ethics (12) |
|
31 |
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act* |
|
32 |
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act* |
101.INS |
|
XBRL Instance Document |
|
101.SCH |
|
XBRL Taxonomy Extension Schema Document |
|
101.CAL |
|
XBRL Taxonomy Calculation Linkbase Document |
|
101.LAB |
|
XBRL Taxonomy Labels Linkbase Document |
|
101.PRE |
|
XBRL Taxonomy Presentation Linkbase Document |
|
101.DEF |
|
XBRL Definition Linkbase Document |
|
|
|
|
|
|
|
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
|
Incorporated by references to our Amended Annual Report on Form 10-K/A, filed on April 14, 2014.
Incorporated by reference to our Current Report on Form 8-K, filed on August 6, 2013.
Incorporated by references to our Quarterly Report on Form 10-Q, filed on September 23, 2013.
Incorporated by reference to our Current Report on Form 8-K, filed on March 21, 2014.
Incorporated by reference to our Current Report on Form 8-K, filed on March 21, 2014.
Incorporated by reference to our Current Report on Form 8-K/A, filed on April 23, 2014.
Incorporated by reference to our Quarterly Report on Form 10-Q/A, filed on May 29, 2014
Incorporated by reference to our Current Report on Form 8-K/A, filed on May 29, 2014.
Incorporated by reference to our Current Report on Form 8-K/A, filed on May 30, 2014.
Incorporated by reference to our Current Report on Form 8-K, filed on July 10, 2014.
Incorporated by reference to our Current Report on Form 8-K, filed on July 18, 2014
Incorporated by references to our Annual Report on Form 10-K, filed on August 13, 2014.
Incorporated by reference to our Quarterly Report on Form 10-Q/A, filed on December 30, 2014
*Filed herein |
Exhibit No. |
|
Exhibit Description |
10.11
31.1* |
|
Amendment to Stock Purchase Agreement
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1* |
|
Certification 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 Calculation Linkbase Document |
101.LAB |
|
XBRL Taxonomy Labels Linkbase Document |
101.PRE |
|
XBRL Taxonomy Presentation Linkbase Document |
101.DEF |
|
XBRL Definition Linkbase Document |
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.
Date: March 25, 2015 |
|
MCIG, Inc.
By: /s/ Paul Rosenberg |
|
|
Paul Rosenberg |
|
|
Chief Executive Officer (Principal Executive Officer) |
Date: March 25, 2015 |
|
MCIG, Inc.
By: /s/ Paul Rosenberg |
|
|
Paul Rosenberg |
|
|
Chief Financial Officer (Principal Accounting Officer) |
21
Exhibit 31.1
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14 under the Securities Exchange Act of 1934
I, Paul Rosenberg, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of mCig, Inc. ; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure 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 evaluations: 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 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. |
Registrant
|
|
MCIG, Inc.
By: /s/ Paul Rosenberg |
Date: March 25, 2015 |
|
Paul Rosenberg |
|
|
Chief Executive Officer (Principal Executive Officer,) |
Exhibit 31.2
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14 under the Securities Exchange Act of 1934
I, Paul Rosenberg, certify that:
1 |
I have reviewed this Quarterly Report on Form 10-Q of mCig, Inc. ; |
2 |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure 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 evaluations: 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 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. |
Registrant
|
|
MCIG, Inc.
By: /s/ Paul Rosenberg |
Date: March 25, 2015 |
|
Paul Rosenberg |
|
|
Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of mCig, Inc. (the "Company") on Form 10-Q for the period ending January 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul Rosenberg, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Registrant
|
|
MCIG, Inc.
By: /s/ Paul Rosenberg |
Date: March 25, 2015 |
|
Paul Rosenberg |
|
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of mCig, Inc. (the "Company") on Form 10-Q for the period ending January 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul Rosenberg, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Registrant
Date: March 25, 2015 |
|
MCIG, Inc.
By: /s/ Paul Rosenberg |
|
|
Paul Rosenberg |
|
|
Chief Financial Officer (Principal Financial Officer) |