Revenue
Our revenue from continuing operations for the year ended April 30, 2017 was $4,777,072 compared to $1,723,421, an increase of $3,053,651 or approximately 277%, from the year ended April 30, 2016.
Revenues consists of $2,327,144 in construction, $1,260,081 in CBD sales, $775,747 in e-Cig sales, $68,652 in cannabis supplies sales, and $345,448 in corporate sales.
Cost of Goods Sold
Our cost of goods sold for the year ended April 30, 2017 was $2,881,043 compared to $1,432,648 for the year ended April 30, 2016. The cost of goods consisted of $2,042,726 in construction cost, $606,892 in resale products, $147,182 in commissions, $84,243 in other fees that include merchant fees and shipping. The increase in cost of goods is primarily due to construction costs and commissions for sales.
Gross Profit
Our gross profit for the year ended April 30, 2017 was $1,896,029 compared to $290,773 for the year ended April 30, 2016. The gross profit of $1,896,029 for the year ended April 30, 2017 represents approximately 39.6% as a percentage of total revenue. The gross profit of $290,773 for the year ended April 30, 2016 represents approximately 16.8% as a percentage of total revenue. This increase in the gross profit is primarily attributed to the CBD sales.
Operating Expenses
Our operating expenses decreased by $732,688 to $967,040 for the year ended April 30, 2017, from $1,699,728 for the year ended April 30, 2016.
The decrease was primarily due to the decrease in stock based compensation of $1,187,383, an increase in research and development of $10,014, an increase in professional fees of $35,417, a decrease in selling, general and administrative expenses of $40,925, an increase in marketing and advertising of $136,227, an increase in amortization and depreciation of $3,829, and an increase in consulting fees of $310,133.
Our total operating expenses for the year ended April 30, 2017 of $967,040 consisted of $151,675 of stock based compensation, $122,324 of selling, general and administrative expenses, $63,862 in professional fees, $465,541 in consulting fees, $136,227 in marketing and advertising, $15,530 in research and development, and $11,881 of amortization and depreciation expenses. Our general and administrative expenses consist of bank charges, telephone expenses, meals and entertainments, computer and internet expenses, postage and delivery, travel, rent, office supplies and other expenses.
Net Income
Our net income increased by $2,337,944 to $929,989 for the year ended April 30, 2017 from a net loss of $1,408,955 for the year ending April 30, 2016. The increase in net income compared to the prior year is a result of the increase in gross profit of $1,605,256 and the decrease in operating expenses of 732,688.
Liquidity and Capital Resources
Introduction
During the year ended April 30, 2017, our operating cash flow was 1,554,120 increasing our cash on hand as of April 30, 2017 to $1,634,662.
Cash Requirements
We had cash available of $1,634,662 as of April 30, 2017. Based on our revenues, cash on hand and current monthly burn rate, the company is positioned to remain a going concern for the upcoming fiscal year. Without stock based compensation and/or the raising of capital, the company projects it has enough capital to sustain operations for a period of approximately the next 12 months.
Sources and Uses of Cash
Operations
We had cash provided in continuing operating activities of $2,442,264 for the year ended April 30, 2017, as compared to net cash used in continuing operation of $46,322 for the year ended April 30, 2016.
Investments
Cash used by investing activities of was $1,133,453 for the year ended April 30, 2017, as compared to $0 for the year ended April 30, 2016.
In the year ended April 30, 2017, the company issued stock in non-cash investing activities of $816,624 in the acquisition of various internet domains, websites, and trademarks, $3,063,635 in the acquisition of 420 Cloud, and $160,008 in the purchase of Agri-Contractors, LLC.
In the year ended April 30, 2017, the company was returned stock in non-cash activities of $653,371 for Vapolution settlement and $166,647 for stock based compensation in which services were not provided.
Financing
We had net cash provided by continuing financing activities of $245,309 for the year ended April 30, 2017, as compared to $24,173 for the year ended April 30, 2016. Our financing activities consisted of borrowings from a related party, notes receivable and notes payable and net proceeds from the issuance and acquisition of stock.
Off-Balance Sheet Arrangements
As of April 30, 2016, the Company owned 230,000,000 of VitaCig, Inc., with a value of $2,300,000. Subsequently to the end of the fiscal year, the Company has reduced its ownership in VitaCig, Inc., by 172,500,000 common shares to 57,500,000 as part of its acquisition of the VitaCig business.
Going Concern
Our financial statements are prepared using generally accepted accounting principles, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because the business is relatively new and has a short history and relatively few sales, no certainty of continuation can be stated. The accompanying consolidated financial statements for the years ended April 30, 2017 and 2016 have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
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