See accompanying notes to unaudited consolidated condensed financial statements.
See accompanying notes to unaudited consolidated condensed financial statements.
See accompanying notes to unaudited consolidated condensed financial statements.
See accompanying notes to unaudited consolidated condensed financial statements.
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
NOTE 1 – NATURE OF BUSINESS AND PRESENTATION
Organization
DOCASA, Inc. (the “Company,” “we,” “us,” “our,” or “DOCASA”) was incorporated in the State of Nevada on July 22, 2014, under the name of FWF Holdings, Inc. The Company changed its name on August 4, 2016. The Company was originally engaged in the business of commercial production and distribution of hot sauce. On August 4, 2016, the Company changed its year end from July 31 to August 31.
On July 8, 2016, the Company experienced a change in control. Atlantik LP (“Atlantik”), a related party, acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between Atlantik and Nami Shams (“Seller”). On the closing date, July 8, 2016, pursuant to the terms of the Stock Purchase Agreement, Atlantik purchased from the Seller 115,000,000 shares of the Company’s outstanding restricted common stock for $200,000, representing 75.8% of the total issued and outstanding at that time. See Notes 2, 9, 10 and 11.
The Company determined that it would expand its products in the food industry. On September 1, 2016, the Company acquired 99.8% of the voting stock of Department of Coffee and Social Affairs Limited (“DEPT-UK”), a United Kingdom corporation. DEPT-UK was incorporated on August 12, 2009. The acquisition of 99.8% of the voting stock of DEPT-UK from Stefan Allesch-Taylor (“Allesch-Taylor”) was pursuant to a stock exchange (the “Share Exchange”), which obligated the Company to issue Allesch-Taylor 170,000,000 shares of restricted common stock—110,000,000 shares initially and 60,000,000 additional shares at a date to be determined by the Company’s Board of Directors, but no later than August 31, 2017. See Notes 2, 10 and 11.
Also on September 1, 2016, the Company acquired 115,000,000 shares of the Company’s common stock from Atlantik in exchange for issuing Atlantik a promissory note for $320,000, which shares were cancelled (the “Stock Cancellation”). As a result of the Stock Cancellation and the initial 110,000,000 share issuance to Allesch-Taylor, Allesch-Taylor, the Chairman of the Company, became the holder of the majority of the issued and outstanding stock of the Company, holding 74.9% of the outstanding common stock of the Company. See Note 9.
DEPT-UK formed a wholly-owned subsidiary, Department of Coffee and Internal Affairs Limited (“DCIA”), on September 11, 2014, as filed with the Registrar of Companies for England and Wales. As of February 28, 2017, DCIA has had no operations or activity.
DEPT-UK formed a wholly-owned subsidiary, The Department of Coffee and Social Affairs Limited, on November 9, 2014, as filed with the Registrar of Companies for England and Wales. On February 28, 2014, the name was changed to DOCASA Limited. On May 1, 2015, the name was changed to Eat Sleep Juice Repeat Limited. As of January 18, 2017, this subsidiary, with no operations or activity, was sold for £1.
On April 5, 2017, the Company formed Department of Coffee and Social Affairs IL, Inc., an Illinois corporation. See Note 15.
For financial reporting purposes, the Share Exchange transaction represented a "reverse merger" rather than a business combination and DEPT-UK is deemed to be the accounting acquirer in the transaction. The Share Exchange transaction is being accounted for as a reverse-merger and recapitalization. DEPT-UK is the acquirer for financial reporting purposes, and the Company (DOCASA, Inc., f/k/a FWF Holdings, Inc., the public company) is being treated as the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of the Private Company and will be recorded at the historical cost basis of the Private Company, and the financial statements after completion of the Share Exchange will include the assets and liabilities of the Public Company and the Private Company and the historical operations of Private Company and operations of both companies from the closing date of the Share Exchange.
Nature of Operations
We are currently devoting our efforts to migrating to the specialty coffee industry, specifically with company-operated stores. The Company will generate revenue through sales at fourteen existing company-operated coffee shop locations in the UK, with five more locations under construction. Our objective is to continue to be recognized as one of the upper tier specialty coffee retail operations. Similar to leading operators, we sell our proprietary coffee and related products, and complementary food and snacks. The Company will continue to market its hot sauce products.
Basis of Presentation
The accompanying unaudited condensed financial statements of DOCASA, Inc. have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and done under §240.13(a) of the Securities Act. The results of operations for the interim period ended February 28, 2017 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending August 31, 2017. In the opinion of the Company’s management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company’s Form 10-K for the year ended July 31, 2016, filed on October 4, 2016 and Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Form 8-K/A filed on December 5, 2016 which includes the audited financial statements of the subsidiary, Department of Coffee and Social Affairs Limited and its audited financial statements for the year ended August 31, 2016 and 2015 and Management’s Discussion and Analysis of Financial Condition and Results of Operations.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance for accounts receivable, depreciable lives of the web site and fixed assets, and valuation of share-based payments.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Accounts Receivable
Accounts receivable consisted of amounts due from customers primarily for management fees. The Company considered accounts more than 30 days old to be past due. The Company used the allowance method for recognizing bad debts. When an account was deemed uncollectible, it was written off against the allowance. The Company generally does not require collateral for its accounts receivable. Management deems all accounts receivable to be collectible at February 28, 2017. Management has recorded an allowance for doubtful accounts.
Inventory
Inventory is recorded at the lower of cost or market and the cost of sales are recorded utilizing the first in first out (“FIFO”) method.
Property, Equipment and Depreciation
Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the lease term or the useful life of the leased equipment. Leasehold improvements, if any, would be amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred.
Accounting for Derivatives
The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and short term loans the carrying amounts approximate fair value due to their short maturities.
We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
Revenue Recognition
The Company recognizes revenue for our services in accordance with ASC 605-10, "Revenue Recognition in Financial Statements." Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has four primary revenue streams as follows:
|
·
|
Sales of specialty coffee and complementary food products.
|
|
·
|
Coffee school.
|
|
·
|
Coffee services.
|
|
·
|
Sale of hot sauce products.
|
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.
Advertising
Advertising is expensed as incurred and is included in selling, general and administrative expenses on the accompanying statement of operations. For the six months ended February 28, 2017 and February 29, 2016 advertising expense was $20,409 and $6,125, respectively.
Income Taxes
The Company adopted the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of February 28, 2017, tax years 2014 - 2016 remain open for IRS audit and tax years 2015 – 2016 remain open for HM Revenue & Customs (“HMRC”) audit. The Company has received no notice of audit from the IRS and HMRC for any of the open tax years.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
Company adopted ASC 740-10,
“
Definition of Settlement in FASB Interpretation No. 48,” (“ASC 740-10”), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying financial statements.
Net Earnings (Loss) Per Share
In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common stock shares outstanding during the period.
Foreign Currency Translation and Transactions
The British Pound (“£”) is the functional currency of DEPT-UK whereas the financial statements are reported in United States Dollar (“USD,” “$”). Assets and liabilities are translated based on the exchange rates at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the period. Equity accounts are translated at historical exchange rates. The resulting translation gain and loss adjustments are accumulated as a component of stockholders’ equity and other comprehensive income.
Comprehensive Income (Loss)
The Company reports comprehensive income (loss) and its components in its consolidated financial statements. Comprehensive income (loss) consists of net loss and foreign currency translation adjustments affecting stockholders’ equity that, under U.S. GAAP, are excluded from net loss. As of February 28, 2017, the exchange rate between U.S. Dollars and British Pounds was U.S. $1.245307717 = £1.00, and the weighted average exchange rate for the six months ended February 28, 2017 was U.S. $1.2508972121 = £1.00. As of August 31, 2016, the exchange rate between U.S. Dollars and British Pounds was U.S. $1.43531 = £1.00.
Effect of Recent Accounting Pronouncements
The Company reviews new accounting standards and updates as issued. No new standards or updates had any material effect on these unaudited financial statements. The accounting pronouncements and updates issued subsequent to the date of these unaudited financial statements that were considered significant by management were evaluated for the potential effect on these unaudited financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these unaudited financial statements as presented and does not anticipate the need for any future restatement of these unaudited financial statements because of the retro-active application of any accounting pronouncements issued subsequent to February 28, 2017 through the date these unaudited financial statements were issued.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU on lease accounting. The ASU requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. The ASU is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating the ASU, the Company expects the adoption of the ASU to have a material effect on the Company’s financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect the ASU to have a material effect on the Company’s results of operations, and the ASU will have no effect on cash flows.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
NOTE 2 – ENTRY INTO A DEFINITIVE AGREEMENT
Acquisition of Department of Coffee and Social Affairs Limited
DOCASA, Inc. (f/k/a FWF Holdings, Inc., the “Public Company,” “we,” “us,” “our”) entered into an acquisition agreement (the “Acquisition Agreement”) with Department of Coffee and Social Affairs Limited (the “Private Company”), a United Kingdom corporation. Prior to the acquisition, Pankaj Rajani, an officer and director of the Public Company, through Atlantik, acquired 115,000,000, or 75.8% of the outstanding shares of DOCASA, Inc. (f/k/a FWF Holdings, Inc.), the public company. Stefan Allesch-Taylor, an individual, and the Private Company’s chairman (“Allesch-Taylor,” or “Shareholder”), was the owner of record of 99.8% of the voting shares of the Private Company (the “Private Company Stock”). Pursuant to the Acquisition Agreement, the Private Company Stock was transferred to the Public Company in consideration of the Public Company issuing Shareholder 170,000,000 shares (the “New Shares”) of the Public Company’s common stock to the Shareholder (or his designees) in an initial tranche of 110,000,000 shares and a subsequent tranche of 60,000,000 shares. The Public Company issued Shareholder 110,000,000 fully paid and nonassessable shares of the Public Company’s restricted common stock at the time of the execution of the Agreement. The Public Company shall issue a second tranche of 60,000,000 fully paid and nonassessable shares of the Company’s restricted common stock (the “Deferred Shares”) at a time to be determined by the Public Company’s Board of Directors, but no later than August 31, 2017. The Deferred Shares are not conditional or contingent on any event or action by any party of the Agreement. As a result of the Acquisition Agreement, the Private Company became a subsidiary of the Public Company. See Notes 1, 9, 10 and 11.
Also, in connection with the Acquisition Agreement: (i) Allesch-Taylor and Gill were appointed to serve on DOCASA’s Board of Directors, serving as Chairman and Vice-Chairman, respectively; and (ii) Ashley Lopez (“Lopez”) was appointed Chief Executive Officer and President and Kazi Shahid (“Shahid”) was appointed Chief Financial Officer. Allesch-Taylor, Gill, Lopez and Shahid will maintain the same positions of DEPT-UK.
The transaction was accounted for as a reverse acquisition. As such, the future period equity amounts will be retro-actively restated to reflect the equity instruments of the accounting acquirer.
The following table summarizes the consideration given for DEPT-UK and the fair values of the assets and liabilities assumed at the acquisition date.
Consideration given:
|
|
|
|
|
|
|
|
Common stock given
|
|
$
|
207
|
|
|
|
|
|
|
Total consideration given
|
|
$
|
207
|
|
|
|
|
|
|
Fair value of identifiable assets acquired and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
$
|
731
|
|
Notes payable
|
|
|
(32,547
|
)
|
Accounts payable
|
|
|
(6,043
|
)
|
Accrued expenses
|
|
|
(8,500
|
)
|
Total identifiable net liabilities
|
|
|
(46,359
|
)
|
Goodwill
|
|
|
46,566
|
|
Total consideration
|
|
$
|
207
|
|
The Company has determined that the goodwill of $46,566 is impaired and has been expensed accordingly in the period ended February 28, 2017.
Accounting Treatment of the Merger
For financial reporting purposes, the Share Exchange represents a “reverse merger” rather than a business combination and Private Company is deemed to be the accounting acquirer in the transaction. The Share Exchange is being accounted for as a reverse-merger and recapitalization. Private Company is the acquirer for financial reporting purposes and the Public Company (DOCASA, Inc., f/k/a FWF Holdings, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of the Private Company and will be recorded at the historical cost basis of the Private Company, and the financial statements after completion of the Share Exchange will include the assets and liabilities of the Public Company and the Private Company, and the historical operations of Private Company and operations of both companies from the closing date of the Share Exchange.
Commercial Agreement
On April 29, 2015, the Board of Directors of DOCASA authorized the execution of that certain commercial agreement (the "Agreement") with Alimentos Kamuk Internacional (Costa Rica) S.A. ("AKI"). In accordance with the terms and provisions of the Agreement, the Company has agreed to purchase the hot sauce manufactured by AKI (the "Hot Sauce") with a purchase price (the "Purchase Price") that is subject to a 5%-7% annual price increase based on increases in production costs and raw materials and a potential volume discount starting from 10 pallets of a single product. For the first order, the Purchase Price shall be payable in full in advance and for subsequent orders, the Purchase Price shall be payable 50% in advance and the remaining balance net 30 days. In the event the relationship continues between the Company and AKI and exceeds $100,000 annually, revisions in the payment terms can be negotiated.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
In further accordance with the terms and provisions of the Agreement: (i) all packaging material design will be the Company's property and will be used by AKI for such products; (ii) AKI shall guarantee a one year shelf life and in the event the shelf life is extended by the Company, the Company will indemnify AKI and be responsible for any damages, claims or returns; (iii) the Company shall supply the artwork for the labels; and (iv) the Company shall cover all expenses associated with customs clearance, taxes or charges incurred during importing of the Hot Sauce.
NOTE 3 – GOING CONCERN
The accompanying financial statements and the factors within it, have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and the ability of the Company to continue as a going concern for a reasonable period of time. The Company sustained net losses of $288,788 and cash used in operating activities of $187,527 for the six months ended February 28, 2017. The Company had working capital, stockholders’ equity and accumulated deficit of $68,589, $775,240 and $1,629,390, respectively, at February 28, 2017. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company is in the process of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurance can be given that the Company will be successful in these efforts. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 – RECEIVABLES
As of February 28, 2017 and August 31, 2016, the Company has net receivables of $664,337 and $368,807, respectively. The receivables are as follows:
|
|
February 28,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
Trade receivables
|
|
$
|
675,315
|
|
|
$
|
380,396
|
|
Allowance for doubtful accounts
|
|
|
(10,978
|
)
|
|
|
(11,589
|
)
|
Receivables, net
|
|
$
|
664,337
|
|
|
$
|
368,807
|
|
NOTE 5 – INVENTORY
The Company has inventory of various items used for the sale of coffee and complementary products. As of February 28, 2017 and August 31, 2016, the Company had inventory for the coffee segment of $57,882 and $40,323, respectively. The Company accounts for its inventory using the lower of cost or market and the cost of sales are recorded utilizing the first in first out (“FIFO”) method.
As of February 28, 2017, the Company had 49 cases containing 12 bottles per case (588 bottles) of hot sauce products. As of February 28, 2017 and August 31, 2016, the Company had inventory for the hot sauce segment of $731 and $0 (actual amount was $731 but due to the reverse merger, is not reflected on the August 31, 2016 balance sheet), respectively. Inventory is recorded at the lower of cost or market and the cost of sales are recorded utilizing the FIFO method.
The inventory is as follows:
|
|
February 28,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
Consumable products
|
|
$
|
12,914
|
|
|
$
|
8,500
|
|
Food and drinks
|
|
|
29,399
|
|
|
|
22,858
|
|
Retail products
|
|
|
15,569
|
|
|
|
8,965
|
|
Hot sauce products (1)
|
|
|
731
|
|
|
|
-
|
|
Total inventory
|
|
$
|
58,613
|
|
|
$
|
40,323
|
|
______________________
(1)
|
The hot sauce products were recorded on the books of DOCASA and due to the reverse merger with DEPT-UK, were not reflected as of August 31, 2016 (since the reverse merge did not occur until September 1, 2016).
|
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
NOTE 6 – FIXED ASSETS
The Company has fixed assets including computer equipment, office equipment, site equipment and machinery, site fit out costs, site furniture, fixtures and fittings. As of February 28, 2017 and August 31, 2016, the Company had total fixed assets of $1,542,297 and $1,126,093, respectively, with accumulated depreciation of $524,028 and $451,466, respectively, for net fixed assets of $1,018,269 and $674,627, respectively. Variances between the two reporting periods may be due to the currency translation calculation. The fixed assets are as follows:
|
|
February 28,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
Computer equipment
|
|
$
|
51,656
|
|
|
$
|
36,839
|
|
Office equipment
|
|
|
21,930
|
|
|
|
22,972
|
|
Site equipment and machinery
|
|
|
213,180
|
|
|
|
198,532
|
|
Site fit out costs
|
|
|
1,054,715
|
|
|
|
707,678
|
|
Site furniture, fixtures and fittings
|
|
|
200,816
|
|
|
|
160,072
|
|
Total fixed assets
|
|
|
1,542,297
|
|
|
|
1,126,093
|
|
Less: Accumulated depreciation
|
|
|
524,028
|
|
|
|
451,466
|
|
Fixed assets, net
|
|
$
|
1,018,269
|
|
|
$
|
674,627
|
|
The depreciation expense for the six months ended February 28, 2017 and February 29, 2016 was $72,562 and $71,923, respectively. The variance between the expense and the increase in accumulated depreciation is due to timing of the currency translation calculation.
NOTE 7 – INTANGIBLE ASSETS
The Company has intangible assets related to website development. The amortization of the intangible assets is over a three-year period. As of February 28, 2017 and August 31, 2016, the Company had intangible assets, net of accumulated amortization, of $5,229 and $9,065, respectively. Variances between the two reporting periods are primarily due to the currency translation calculation. The intangible assets are as follows:
|
|
February 28,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
Website development
|
|
$
|
19,977
|
|
|
$
|
21,088
|
|
Total intangible assets
|
|
|
19,977
|
|
|
|
21,088
|
|
Less: Accumulated amortization
|
|
|
14,748
|
|
|
|
12,023
|
|
Intangible assets, net
|
|
$
|
5,229
|
|
|
$
|
9,065
|
|
The amortization expense for the six months ended February 28, 2017, was $2,725.
NOTE 8 – INVESTMENTS
On January 12, 2017, Allesch-Taylor purchased the Company’s original investment of £5,000 for a 5% ownership of Radio Station (f/k/a Soho Radio Ltd.) for £5,000 of his issued preference shares in DEPT-UK. The relationship with Radio Station will continue to provide the Company with intangible benefits. As the Company has previously impaired £4,000 of the investment as of August 31, 2015, the exchange will result in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, will still be applicable. As of February 28, 2017 and August 31, 2016, the balance was $1,243 and $1,318, respectively, with the variance due to currency translations. See Notes 10 and 11.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
NOTE 9 – NOTES PAYABLE
The Company has notes payable as of February 28, 2017 and August 31, 2016 are as follows:
Notes payable - current
|
|
|
February 28, 2017
|
|
|
August 31, 2016
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
Nami Shams (1)
|
|
$
|
2,194
|
|
|
$
|
-
|
|
|
$
|
2,194
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Arch Investments (1)
|
|
|
5,067
|
|
|
|
-
|
|
|
|
5,067
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Nami Shams (1)
|
|
|
5,065
|
|
|
|
-
|
|
|
|
5,065
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Nami Shams (1)
|
|
|
15,873
|
|
|
|
-
|
|
|
|
15,873
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Nami Shams (1)
|
|
|
4,349
|
|
|
|
-
|
|
|
|
4,349
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Deij Capital Limited
|
|
|
7,397
|
|
|
|
-
|
|
|
|
7,397
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
HSBC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,368
|
|
|
|
-
|
|
|
|
18,368
|
|
Total
|
|
$
|
39,945
|
|
|
$
|
-
|
|
|
$
|
39,945
|
|
|
$
|
18,368
|
|
|
$
|
-
|
|
|
$
|
18,368
|
|
______________________
(1)
|
The balance for August 31, 2016 of $32,548 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger.
|
Notes payable - non-current
|
|
|
February 28, 2017
|
|
|
August 31, 2016
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
Deij Capital Limited
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
39,540
|
|
|
$
|
-
|
|
|
$
|
39,540
|
|
HSBC
|
|
|
410,879
|
|
|
|
-
|
|
|
|
410,879
|
|
|
|
170,257
|
|
|
|
-
|
|
|
|
170,257
|
|
Total
|
|
$
|
410,879
|
|
|
$
|
-
|
|
|
$
|
410,879
|
|
|
$
|
209,797
|
|
|
$
|
-
|
|
|
$
|
209,797
|
|
On February 1, 2010, DEPT-UK entered into a business loan with International Capital Corporation (“ICC”), which is controlled by George Raphael (“Raphael”). The loan is for 7 years, with no interest. The imputed interest is deemed immaterial as of February 28, 2017. The loan was for $1,353,645 (£850,000) to be drawn down as and when required. On June 30, 2016, ICC converted the balance due of $719,143 (£542,617) into 542,617 shares of Preference Shares (see Note 11). The outstanding principal as of February 28, 2017 and August 31, 2016 was $0 (£0) and $0 (£0), respectively. See Note 10.
On July 1, 2014, DEPT-UK entered into a business loan with Deij Capital Limited (“Deij Capital”), a company in which Gill is the director and owner. The loan is for 3 years, with an interest rate of 0%. The imputed interest is deemed immaterial as of February 28, 2017. The facility loan was for $171,437 (£100,000) to be drawn down as and when required. On June 30, 2016, Deij Capital converted the balance due of $179,534 (£135,464) into 135,464 shares of Preference Shares (see Note 11). The outstanding principal as of February 28, 2017 and August 31, 2016 was $7,397 (£5,954) and $39,540 (£30,000), respectively. The accrued interest as of February 28, 2017 and August 31, 2016 was $0 (£0) and $0 (£0), respectively. See Note 10.
On July 31, 2014, DOCASA executed a promissory note for $2,194 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. As of February 28, 2017 and August 31, 2016, the principal was $2,194, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger. See Note 5.
On April 30, 2015, DOCASA executed a promissory note for $5,067 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. On July 20, 2016, Arch Investments, LLC acquired this promissory note due to Nami Shams. The imputed interest is deemed immaterial as of February 28, 2017. As of February 28, 2017 and August 31, 2016, the principal was $5,067, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger. See Note 5.
On July 31, 2015, DOCASA executed a promissory note for $5,065 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. As of February 28, 2017 and August 31, 2016, the principal was $5,065, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger. See Note 5.
On October 31, 2015, DOCASA executed a promissory note for $15,873 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. As of February 28, 2017 and August 31, 2016, the principal was $15,873, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger. See Note 5.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
On January 31, 2016, DOCASA executed a promissory note for $4,349 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. As of February 28, 2017 and August 31, 2016, the principal was $4,349, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger. See Note 5.
On July 28, 2016, DEPT-UK entered into a business loan with HSBC. The loan is a development loan drawn down against development invoices. The loan is for 4 years, with an interest rate of 4.5% over the Bank of England base rate. The loan repayment is monthly, interest only payments for the first six months followed by monthly repayments of principal and interest over the remaining forty-two months. The loan was for $437,992 (£352,500) with an initial $115,767 (£93,178) drawn. The outstanding principal and accrued interest as of February 28, 2017 and August 31, 2016 was $410,879 (£330,680) and $170,257 (£129,178), respectively.
As of August 31, 2016, the Company had a temporary loan from HSBC in the amount of $18,368. As of February 28, 2017, the liability was paid off.
On September 1, 2016, DOCASA acquired the 115,000,000 shares of common stock from Atlantik in exchange for a promissory note for $320,000, which is non-interest bearing and terminates in one year. The imputed interest is deemed immaterial as of February 28, 2017. The principal is payable in two tranches; $20,000 due September 30, 2016 and the remaining $300,000 due August 31, 2017. The $20,000 payment was made by a third party and recorded as contributed capital in September 2016. The remaining $300,000 balance was paid on November 30, 2016 to Atlantik by Allesch-Taylor (see Notes 10 and 11). The imputed interest is deemed immaterial as of February 28, 2017. See Notes 1, 2, 5, 6 and 10.
NOTE 10 – RELATED PARTIES TRANSACTIONS
On July 1, 2014, DEPT-UK entered into a business loan with Deij Capital Limited (“Deij Capital”), a company in which Matthew Gill is the director and owner. The loan is for 3 years, with an interest rate of 0%. The facility loan was for $124,253 (£100,000) to be drawn down as and when required. On June 30, 2016, Deij Capital converted the balance due of $179,534 (£135,464) into 135,464 shares of Preference Shares (see Note 11). On February 28, 2017, Deij Capital converted $63,990 (£51,500) into 51,500 shares of Preference Shares (see Note 11). The outstanding principal as of February 28, 2017 and August 31, 2016 and 2015 was $7,398 (£5,941) and $39,540 (£30,000), respectively. The accrued interest as of February 28, 2017 and August 31, 2016 was $0 (£0) and $0 (£0), respectively. See Note 10.
On July 31, 2014, DOCASA executed a promissory note for $2,194 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. See Note 4.
On April 30, 2015, DOCASA executed a promissory note for $5,067 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. On July 20, 2016, Arch Investments, LLC acquired this promissory note due to Nami Shams. See Note 4.
On July 31, 2015, DOCASA executed a promissory note for $5,065 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. See Note 4.
On October 31, 2015, DOCASA executed a promissory note for $15,873 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. See Note 4.
On January 31, 2016, DOCASA executed a promissory note for $4,349 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of February 28, 2017. See Note 4.
On June 30, 2016, Nami Shams, a former officer and director of DOCASA, provided DOCASA with a Forgiveness of Debt for $6,302 for advances made by Nami Shams to the Company.
On June 30, 2016, 192,745 Preference Shares were issued to Allesch-Taylor in exchange for a payable of $255,450 (£192,745). See Note 11.
On July 8, 2016, the majority shareholder of DOCASA, Nami Shams, sold 115,000,000 shares of common stock representing 75.8% of the outstanding shares of the Company to Atlantik for a total purchase price of $200,000. See Notes 2 and 6.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
On September 1, 2016, the Company acquired the 115,000,000 shares of common stock from Atlantik in exchange for a promissory note for $320,000. The principal is payable in two tranches; $20,000, which was paid on September 30, 2016, and the remaining $300,000 due August 29, 2017. See Notes 1, 2, 4, 6 and 10.
On September 1, 2016, the Company acquired DEPT-UK (see Notes 2, 6 and 9) and initially issued 110,000,000 shares of common stock as part of the acquisition to Stefan Allesch-Taylor, the Chairman of the Company.
For the six months ended February 28, 2017 and February 29, 2016, the Company purchased $79,859 (£63,842) and $52,685 (£35,471), respectively, of cakes from Dee Light, a company which Gill, the deputy chairman of the Company, was a 50% shareholder (until November 2016). As of February 28, 2017 and August 31, 2016, the Company owed Dee Light $49,766 (£40,053) and $56,102 (£42,566), respectively. See Note 9.
For the six months ended February 28, 2017 and 2016, the Company made sales of $0 (£0) and $0 (£0), respectively, to The Roastery Department Ltd. (“The Roastery Department”), and purchased £90,636 and £48,873 for the six months ended February 28, 2017 and February 29, 2016, respectively. As of February 28, 2017 and August 31, 2016, the Company has receivables and payables from The Roastery Department, which netted as payables of $469,765 (£378,071) and $66,667 (£50,582), respectively. Gill, the Company’s vice chairman, and Ashley Lopez (“Lopez”), the Company’s chief executive officer, were both unpaid directors of The Roastery Department until they resigned on December 1, 2016. The Company, when purchasing products from The Roastery Department, was provided a discount due to the strategic relationship between the two parties which provided the Company its purchases at cost.
As of February 28, 2017 and August 31, 2016, the Company owed Lopez, the Company’s chief executive officer, payables of $827 (£665) and $2,985 (£2,265), respectively.
As of February 28, 2017 and August 31, 2016, the Company owed Kazi Shadid, the Company’s former chief financial officer, payables of $472 (£380) and $0 (£0), respectively.
As of February 28, 2017 and August 31, 2016, the Company owed Allesch-Taylor, the Company’s chairman, payables of $13,027 (£11,869) and $0 (£0), respectively.
As of February 28, 2017 and August 31, 2016, the Company owed Deij Capital, a company in which Gill, the deputy chairman of the Company, is the director and owner, notes payable of $7,398 (£5,954) and $39,540 (£30,000), respectively.
On November 30, 2016, Allesch-Taylor individually paid the Company’s remaining balance of $300,000 in regards to the promissory note to Atlantik (see Notes 9 and 11). In exchange for the payment on behalf of the Company, the Company will issue Allesch-Taylor 300,000 shares of common stock at a value of $1.00 per share. The last transaction with stock was September 1, 2016, which valued the common stock at $0.0027 per share. The Company’s common stock did not trade during this period therefore the value for the February 28, 2017 transaction was determined to be multiples higher than the last recorded transaction. The Company believes that the value is not beneficial to Allesch-Taylor but does not state that this was an arm’s length transaction. As of February 28, 2017, the stock has not been issued and is recorded as issuable.
On January 12, 2017, Allesch-Taylor purchased the Company’s original investment of £5,000 for a 5% ownership of Radio Station (f/k/a Soho Radio Ltd.) for £5,000 of his issued preference shares in DEPT-UK. The relationship with Radio Station will continue to provide the Company with intangible benefits. As the Company has previously impaired £4,000 of the investment as of August 31, 2015, the exchange will result in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, will still be applicable. As of February 28, 2017 and August 31, 2016, the balance was $1,243 and $1,318, respectively, with the variance due to currency translations. See Notes 10, 11 and 15.
The Company has an employment agreement with Lopez, our CEO, and did have a consulting agreement with Clearbrook Capital Partners LLP, an entity where Kazi Shahid, our former CFO, is a partner and also serves as CFO. The agreement with Clearbrook Capital Partners LLP was terminated on March 15, 2017.
The above related party transactions are not necessarily considered as arm’s length transactions for all circumstances.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
NOTE 11 – STOCKHOLDERS’ EQUITY
Common Stock
The Company was authorized to issue up to 75,000,000 shares of common stock, par value $0.001 per share. On March 26, 2015, the Company increased its authorized common stock to 250,000,000 shares of common stock. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.
On March 26, 2015, the directors of the Company approved a special resolution to undertake a forward split of the common stock of the Company on a basis of 115 new common shares for 1 old common share. The issued and outstanding common stock increased from 1,320,000 to 151,800,000 as of July 31, 2015.
On July 22, 2014, the Company issued 1,150,000,000 (10,000,000 pre-split) common shares at $0.000008695 ($0.001 pre-split) per share to the sole director and President of the Company for cash proceeds of $10,000.
On March 24, 2015, the Company closed of its financing and the Company issued 36,800,000 (320,000 pre-split) common shares to 32 shareholders at $0.000261 ($0.03 pre-split) per share for net cash proceeds of $9,600.
On March 26, 2015, the founding shareholder of the Company returned 1,035,000,000 (9,000,000 pre-split) restricted shares of common stock to treasury and the shares were subsequently cancelled by the Company. The shares were returned to treasury for $0.000000009 per share for a total consideration of $10 to the shareholder.
On July 8, 2016, the majority shareholder of the Company, Nami Shams, sold 115,000,000 shares of common stock representing 75.8% of the outstanding shares of the Company for a total purchase price of $200,000. See Note 5.
As of February 28, 2017, the Company has not granted any stock options and has not recorded any stock-based compensation.
On September 1, 2016, the Company acquired DEPT-UK (see Notes 2, 5 and 10). As a condition of the acquisition, 110,000,000 shares of common stock were issued on September 1, 2016. Additionally, 60,000,000 shares of common stock are issuable at the discretion of the board of directors but no later than August 31, 2017. See Note 15.
On September 1, 2016, the Company acquired the 115,000,000 shares of common stock from Atlantik in exchange for a promissory note for $320,000. The acquired shares were cancelled on September 1, 2016. See Notes 1, 2, 5 and 10.
On November 30, 2016, Allesch-Taylor individually paid the Company’s remaining balance of $300,000 in regards to the promissory note to Atlantik (see Notes 9 and 11). In exchange for the payment on behalf of the Company, the Company issued Allesch-Taylor 300,000 shares of common stock at a value of $1.00 per share. The last transaction with stock was September 1, 2016, which valued the common stock at $0.0027 per share. The Company’s common stock did not trade during this period therefore the value for the November 30, 2016 transaction was determined to be multiples higher than the last recorded transaction. The Company believes that the value is not beneficial to Allesch-Taylor but does not state that this was an arm’s length transaction. As of February 28, 2017, the stock has not been issued and is recorded as issuable.
All references in these financial statements to number of common shares, price per share and weighted average number of shares outstanding prior to the 115:1 forward split have been adjusted to reflect the stock split on a retroactive basis unless otherwise noted.
Preference Shares
The Articles of Association of the DEPT-UK, pursuant to the Companies Act 2006, was authorized to issue up to 25,000,000 preference shares, par value £1.00 per share (such subsidiary preference shares referred to herein as “Preference Shares”). Such Preference Shares have no votes and no dividends. Subject to the provisions of the Companies Act 2006, DEPT-UK shall have the right pursuant to Section 687-688 of the Companies Act 2006 to redeem at par the whole or any part of the Preference Shares at any time or times after the date of issue of the said Preference Shares upon giving to DEPT-UK not less than three months’ previous notice in writing. The Preference Shares can be purchased by DEPT-UK, at the discretion of the board of directors of the Company.
On June 30, 2016, 192,745 Preference Shares were issued to Allesch-Taylor in exchange for payables of $255,450 (£192,745). See Note 10.
On June 30, 2016, 542,617 Preference Shares were issued ICC in exchange for a debt of $719,143 (£542,617). See Note 9.
On June 30, 2016, 135,464 Preference Shares were issued to Deij Capital, a company which is owned and controlled by Gill, a director of the Company, in exchange for a debt of $179,534 (£135,464).
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
On January 12, 2017, Allesch-Taylor purchased the Company’s original investment of £5,000 for Radio Station for £5,000 of his issued preference shares in DEPT-UK. As the Company had impaired £4,000 of the investment as of August 31, 2015, the exchange will result in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, will still be applicable. See Note 8.
On January 23, 2017, Borough Capital subscribed to 300,000 Preference Shares for $374,479 (£300,000).
On February 28, 2017, 51,500 Preference Shares were issued to Deij Capital in exchange for a debt of $63,990 (£51,500).
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this report, there were no pending or threatened lawsuits.
Lease Commitment
We lease office space in Schaumburg, Illinois, pursuant to a lease that is month-to-month. This facility serves as our corporate office.
Future minimum lease payments under leases due to the acquisition of DEPT-UK (see Note 2) and subsequent new leases, are as follows:
2017
|
|
$
|
371,798
|
|
2018
|
|
|
741,897
|
|
2019
|
|
|
744,620
|
|
2020
|
|
|
747,747
|
|
2021
|
|
|
713,947
|
|
Future
|
|
|
1,884,848
|
|
Total
|
|
$
|
5,204,857
|
|
Note: The above table will change in each future filing due to currency translation as applicable.
As a result of the acquisition on September 1, 2016 (see Note 10), for DEPT-UK, 12 leases, of which one is for the UK administrative office, and 11 operational leases. Various leases have break out dates prior to expiration. See Notes 2 and 10.
The Company entered into two leases during this period and one lease subsequent to February 28, 2017 (see Note 15).
Rent expense for the six months ended February 28, 2017 and 2016 was $193,363 (£152,416) and $218,681 (£147,393), respectively.
NOTE 13 – CONCENTRATIONS
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments.
The Company places its temporary cash investments with financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”) for the United States and the Financial Services Compensation Scheme (“FSCS”) for the United Kingdom. No amounts exceeded federally insured limits as of February 28, 2017. There have been no losses in these accounts through February 28, 2017.
Concentration of Customer
The Company has one customer, which, for the six months ended February 28, 2017 and February 29, 2016, had sales of $199,948 (£157,200, 10.9% of total revenue) and $233,493 (£157,200, 11.8% of total revenue), respectively. The Company has a contract that expires in February 2020.
DOCASA, INC.
(f/k/a FWF Holdings, Inc.)
Notes to Condensed Financial Statements
February 28, 2017
(unaudited)
Concentration of Supplier
The Company does not rely on any particular suppliers for its services.
Concentration of Lender
The Company has one lender, a related party, that makes up its notes payable.
Concentration of Intellectual Property
The Company, after the acquisition of DEPT-UK, owns or has filed for the trademarks “Department of Coffee and Social Affairs,” “Coffeesmiths,” and “Elixir Espresso” as filed with in Great Britain and Northern Ireland with the Trade Marks Registry. See Notes 2 and 9.
NOTE 14 – REVENUE CLASSES
Selected financial information for the Company’s operating revenue classes are as follows:
Revenues:
|
|
For the six months ended
|
|
|
For the six months ended
|
|
|
|
February 28, 2017
|
|
|
February 29, 2016
|
|
Coffee and complementary food products
|
|
$
|
1,627,314
|
|
|
£
|
1,282,285
|
|
|
$
|
1,737,935
|
|
|
£
|
1,170,071
|
|
Coffee school
|
|
$
|
10,660
|
|
|
£
|
8,400
|
|
|
$
|
10,892
|
|
|
£
|
7,333
|
|
Management fees
|
|
$
|
199,498
|
|
|
£
|
157,200
|
|
|
$
|
233,493
|
|
|
£
|
157,200
|
|
Hot sauce (a)
|
|
$
|
-
|
|
|
£
|
0
|
|
|
$
|
-
|
|
|
£
|
0
|
|
Total
|
|
$
|
1,837,472
|
|
|
£
|
1,447,885
|
|
|
$
|
1,982,320
|
|
|
£
|
1,334,604
|
|
__________________
(a)
|
For the six months ended February 29, 2016, due to the reverse merger on September 1, 2016, are not reflective on this table.
|
Direct costs of revenue:
|
|
For the six months ended
|
|
|
For the six months ended
|
|
|
|
February 28, 2017
|
|
|
February 29, 2016
|
|
Coffee and complementary food products
|
|
$
|
1,224,733
|
|
|
£
|
963,919
|
|
|
$
|
1,160,273
|
|
|
£
|
781,310
|
|
Coffee school
|
|
$
|
1,131
|
|
|
£
|
940
|
|
|
$
|
1,182
|
|
|
£
|
796
|
|
Management fees
|
|
$
|
63,159
|
|
|
£
|
52,463
|
|
|
$
|
77,313
|
|
|
£
|
52,061
|
|
Hot sauce (a)
|
|
$
|
-
|
|
|
£
|
0
|
|
|
$
|
-
|
|
|
£
|
0
|
|
Total
|
|
$
|
1,289,023
|
|
|
£
|
1,017,322
|
|
|
$
|
1,238,768
|
|
|
£
|
834,167
|
|
__________________
(a)
|
For the six months ended February 29, 2016, due to the reverse merger on September 1, 2016, are not reflective on this table.
|
NOTE 15 – SUBSEQUENT EVENTS
On April 5, 2017, the Company formed a wholly-owned subsidiary, Department of Coffee and Social Affairs IL, Inc., an Illinois corporation. See Note 1.
On April 6, 2017, the Board of Directors approved the issuance of 2,936,000 shares of common stock to Allesch-Taylor, which are part of the 60,000,000 shares to be issued to Allesch-Taylor by August 31, 2017 (see Notes 1, 5, 6 and 9).