The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
WEST COAST VENTURES GROUP CORP.
Condensed Consolidated Statement of Stockholders Deficit
For the three months ended March 31, 2018
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of Shares
|
|
Par Value
|
|
Additional
Paid-in
|
|
Accumulated
|
|
Total
Stockholders
|
|
Common
|
|
Preferred
|
|
Common
|
|
Preferred
|
|
Capital
|
|
Deficit
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
January 1, 2018
|
30,556,544
|
|
500,000
|
|
$
30,557
|
|
$
500
|
|
$
189,029
|
|
$
(1,905,326)
|
|
$
(1,685,240)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued as debt inducement
|
340,000
|
|
-
|
|
340
|
|
-
|
|
84,660
|
|
-
|
|
85,000
|
Shares issued in settlement of debt
|
1,155,829
|
|
-
|
|
1,155
|
|
-
|
|
214,984
|
|
-
|
|
216,139
|
Shares issued upon warrant exercise
|
50,898
|
|
-
|
|
51
|
|
-
|
|
9,467
|
|
-
|
|
9,518
|
Shares issued for services
|
100,000
|
|
-
|
|
100
|
|
-
|
|
22,500
|
|
-
|
|
22,600
|
Net loss
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(586,295)
|
|
(586,295)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
, March 31, 2018
|
32,203,271
|
|
500,000
|
|
$
32,203
|
|
$
500
|
|
$
520,640
|
|
$
(2,491,621)
|
|
$
(1,938,278)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
F-4
WEST COAST VENTURES GROUP CORP.
Condensed Consolidated Statements of Cash Flows
Three months ended March 31,
(Unaudited)
|
|
| |
|
2019
|
|
2018
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net loss
|
$
(1,122,481)
|
|
$
(586,295)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
Share based compensation for inducement fee
|
90,000
|
|
22,600
|
Depreciation and amortization
|
18,778
|
|
21,591
|
Amortization of debt discounts
|
155,341
|
|
172,443
|
(Gain) loss on debt conversion and extinguishment
|
(17,775)
|
|
225,656
|
Initial and change in fair value of derivative
|
535,343
|
|
(113,852)
|
Cumulative change from implementing new accounting standard
|
(22,178)
|
|
-
|
Changes in operating assets:
|
|
|
|
Increase in receivables
|
(14,059)
|
|
(7,650)
|
Decrease in inventory
|
158
|
|
1,086
|
Increase in deposits and other assets
|
(11,754)
|
|
-
|
Changes in operating liabilities:
|
|
|
|
Increase (decrease) in accounts payable
|
25,656
|
|
(38,588)
|
(Decrease) Increase in accrued expenses
|
(8,770)
|
|
74,742
|
Increase in accrued interest
|
97,621
|
|
-
|
Increase in deferred rent
|
-
|
|
906
|
|
|
|
|
Net cash used in operating activities
|
(274,120)
|
|
(227,361)
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Proceeds from issuance of convertible notes payable for cash
|
424,000
|
|
280,000
|
Repayment of convertible notes payable
|
(100,181)
|
|
-
|
Proceeds from third party advances
|
200,000
|
|
-
|
Payments on stockholder loan payable
|
(81,984)
|
|
(3,573)
|
Payments on third party notes payable
|
(46,378)
|
|
(34,992)
|
|
|
|
|
Net cash provided in financing activities
|
395,457
|
|
241,435
|
|
|
|
|
Net increase in cash
|
121,337
|
|
14,074
|
CASH,
beginning of period
|
9,635
|
|
-
|
CASH,
end of period
|
$
130,972
|
|
$
14,074
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
Cash paid for interest
|
$
7,744
|
|
$
-
|
Cash paid for income taxes
|
$
-
|
|
$
-
|
Non-Cash Financing Activities:
|
|
|
|
Issuance of common stock as inducement fee
|
$
90,000
|
|
$
85,000
|
Issuance of common stock in settlement of debt
|
$
18,567
|
|
$
216,140
|
Issuance of common stock upon warrant exercise
|
$
-
|
|
$
9,518
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
F-5
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(1) NATURE OF OPERATIONS
West Coast Ventures Group Corp. (our, us, we, WCVC or the Company) was originally incorporated as Energizer Tennis, Corp. on June 16, 2011 in the State of Nevada. On October 4, 2017, effective for accounting purposes on June 30, 2017, WCVC entered into an agreement to acquire Nixon Restaurant Group, Inc. in a transaction accounted for as a reverse acquisition. Nixon Restaurant Group, Inc. (NRG) was formed on October 12, 2015, under the laws of the State of Florida. On October 19, 2015, NRG issued 20 million shares of common stock to acquire 100% of the ownership interests in J&F Restaurants, LLC, Illegal Burger, LLC and Illegal Burger Writer Square LLC, Colorado Limited Liability Companies, under common ownership. The transaction was accounted for as a corporate reorganization between entities under common control. These consolidated financial statements reflect the reorganized capital structure retrospectively for all periods presented.
The Company operates 6 restaurants in the Denver, Colorado metro area. El Senor Sol - Evergreen is a Mexican restaurant which was opened in 2011. The Company opened the first Illegal Burger restaurant in August 2013. It is co-located with the El Senor Sol restaurant. The second Illegal Burger was opened in Arvada in April 2014. The third Illegal Burger is located in Writer Square in downtown Denver and opened in January 2016. The fourth Illegal Burger is located in the Capital Hill area of Denver and opened in June 2016.The fifth Illegal Burger is located in Glendale area of Denver and opened in October 2018. The Company will open its first Illegal Pizza restaurant in Lauderhill, Florida at the end of May 2019.
The Company plans to continue opening Illegal Burger restaurants, a quick casual high end restaurant with full liquor licenses. The Company expects to locate in other areas of the country over time.
The accompanying condensed consolidated financial statements include the activities of Nixon Restaurant Group, Inc., J&F Restaurant, LLC (El Senor and Illegal Burger Evergreen), Illegal Burger, LLC (Arvada), Illegal Burger Writer Square, LLC, Illegal Burger Capital Hill, LLC and Illegal Burger CitiSet, LLC, its wholly owned subsidiaries.
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES
a) Basis of Presentation
The comparative amounts presented in these condensed consolidated financial statements are the historical results of West Coast Ventures Group, Corp. inclusive of its wholly owned subsidiaries Nixon Restaurant Group, Inc.; J&F Restaurant, LLC; Illegal Burger, LLC; Illegal Burger Writer Square, LLC, Illegal Burger Capital Hill, LLC and Illegal Burger CitiSet, LLC. The Company has reflected the pre-acquisition results on a consolidated basis for all periods presented. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America ("U.S.") as promulgated by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In our opinion, the accompanying unaudited interim financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 condensed unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates in the accompanying unaudited condensed consolidated financial statements involved the valuation of share-based compensation.
F-6
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
c) Accounts Receivable
Accounts receivable is primarily the amount due from the merchant account processor of debit and credit card payments and amounts due from online delivery services; such as, UberEats, Door Dash, etc.
d) Property and Equipment
All property and equipment are recorded at cost and depreciated over their estimated useful lives, generally three, five or seven years, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
e) Pre-opening Expenses
The Company accumulates the non-capitalizable expenses, such as rent, staffing and training, prior to opening a new location and reports them on a separate line item in the Condensed Consolidated Statement of Operations such that these costs do not skew results from ongoing restaurant operations. In the month in which a new location opens all ongoing expenses are then included with ongoing restaurant operations.
f) Operating Leases
Effective January 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) which supersedes the lease accounting requirements in Accounting Standards Codification (ASC) 840,
Leases
(Topic 840). Please refer to Recent Accounting Pronouncements below for additional information on the adoption of Topic 842 and the impact upon adoption to the Companys condensed consolidated financial statements.
Under Topic 842, we applied a dual approach to all leases whereby we are a lessee and classifies leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the Company. Lease classification is evaluated at the inception of the lease agreement. Regardless of classification, we record a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Our leases, for the premises we occupy for the Illegal Burger Arvada, Illegal Burger Writer Square, Illegal Burger Capital Hill and Illegal Burger CitiSet were classified as operating leases as of March 31, 2019. Operating lease expense is recognized on a straight-line basis over the term of the lease.
We identify leases in our contracts if the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. We do not allocate lease consideration between lease and non-lease components and record a lease liability equal to the present value of the remaining fixed consideration under the lease. Any interest rate implicit in our leases are generally not readily determinable. Accordingly, we use our estimated incremental borrowing rate at the commencement date of the lease to determine the present value discount of the lease liability. We estimate the incremental borrowing rate for each lease based on an evaluation of our expected credit rating and the prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the term of the lease. The right-of-use asset for each lease is equal to the lease liability, adjusted for unamortized initial direct costs and lease incentives. We exclude options to extend or terminate leases from the calculation of the lease liability unless it is reasonably certain the option will be exercised.
F-7
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
g) Net Loss Per Share
Basic loss per share excludes dilution and is computed by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless consideration of such dilutive potential shares would result in anti-dilution. There were no dilutive common stock equivalents for the periods ended March 31, 2019 and 2018.
h) Income Taxes
The Company follows 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 consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The tax years 2017, 2016, and 2015 for the Company remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
i) Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no financial instruments that qualified as cash equivalents.
j) Financial Instruments and Fair Value Measurements
ASC 825-10 Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
ASC 825 also requires disclosures of the fair value of financial instruments. The carrying value of the Companys current financial instruments, which include cash and cash equivalents, accounts payable and accrued liabilities approximates their fair values because of the short-term maturities of these instruments.
FASB ASC 820 Fair Value Measurement clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
F-8
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
j) Financial Instruments and Fair Value Measurements, continued
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following is the Companys assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2019 and December 31, 2018, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):
|
|
|
|
| |
|
March 31, 2019
|
|
December 31, 2018
|
Level 3 - Embedded Derivative Liability
|
$
|
1,101,625
|
|
$
|
201,891
|
Changes in Level 3 assets measured at fair value for the three months ended March 31, 2019 were as follows:
|
| |
Balance, December 31, 2018
|
$
|
201,891
|
Portion of initial valuation recorded as debt discount
|
|
417,348
|
Amortization to loss on extinguishment upon conversion or payment
|
|
(17,775)
|
Change in fair value of derivative
|
|
500,161
|
Balance, March 31, 2019
|
$
|
1,101,625
|
k) 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, payment or exercise of a convertible note containing an embedded derivative instrument, the instrument is marked to fair value at the conversion date and the debt and derivative are removed from the balance sheet, The shares issued upon conversion of the note are recorded at their fair value and a gain or loss on extinguishment is recognized, as applicable.
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.
F-9
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
l) Impairment of Long-Lived Assets
A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying value amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long-lived assets exceeds its fair value.
m) Related Party Transactions
All transactions with related parties are in the normal course of operations and are measured at the exchange amount.
n)
Adoption of ASC Topic 842, Leases
On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The Companys leases consists of operating leases that relate to real estate rental agreements. All of the value of the Companys lease portfolio relates to real estate lease agreements that were entered into starting May 2014.
o) Recent Accounting Pronouncements Not Yet Adopted
In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if any. This guidance is effective prospectively and is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our unaudited condensed consolidated financial statements.
p) Revenue Recognition
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 606, Revenue From Contracts With Customers, effective for public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard (new guidance)has a five step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Companys initial application of ASC 606 did not have a material impact on its financial statements and disclosures.
The Companys condensed consolidated financial statements are prepared under the accrual method of accounting. Revenues are recognized when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. This occurs only when the product is ordered and subsequently delivered.
q) Inventories
Inventories consist of food, beverages, and supplies valued at the lower of cost (first-in, first-out method) or market.
r) Intangible Assets
Intangible assets are being amortized using straight line method over the remaining life of the location lease term, generally five, seven or ten years.
F-10
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(3) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
Our condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained a net loss of approximately $1.1 million for the three months ended March 31, 2019 and have an accumulated deficit of approximately $4.8 million and a negative working capital of approximately $3.9 million at March 31, 2019, inclusive of indebtedness. These conditions raise substantial doubt about our ability to continue as a going concern.
Failure to successfully continue to grow restaurant operation revenues could harm our profitability and materially adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, managements potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing and opening restaurant operations.
We are continuing our plan to further grow and expand restaurant operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
The independent auditors report on our consolidated financial statements for the year ended December 31, 2018 contained an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern.
(4) FIXED ASSETS
Fixed assets consisted of the following:
|
|
|
| |
|
|
March 31, 2019
(unaudited)
|
|
December 31, 2018
|
Beginning balance
|
|
$
484,842
|
|
$
408,325
|
Additions: Equipment
|
|
-
|
|
95,558
|
Additions: Leasehold improvements
|
|
-
|
|
34,959
|
Landlord reimbursements
|
|
-
|
|
(54,000)
|
Depreciation
|
|
(265,700)
|
|
(250,394)
|
|
|
|
|
|
Ending Balance
|
|
$
219,142
|
|
$
234,448
|
Depreciation expense was $15,306 and $15,126 for the three months ended March 31, 2019 and 2018, respectively.
F-11
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(5) INTANGIBLE ASSETS
In March 2015, as part of the acquisition of the Writer Square downtown location, the Company purchased the rights to negotiate a lease from the landlord for $125,000 in cash. The Company is amortizing this value over the remaining term of the lease.
In March 2016, as part of the acquisition of the Capital Hill location, the Company purchased the existing liquor license for $4,300 in cash. The Company is amortizing this value of the remaining term of the lease.
In September 2018, as part of the development of the CitiSet location, the Company acquired a liquor license for $5,286 in cash.
The Company is amortizing this value of the remaining term of the lease.
Amortization expense was $3,472 and $6,465 for the three months ended March 31, 2019 and 2018, respectively.
(6) NET ACQUIRED LIABILITIES OF DISCONTINUED OPERATIONS
As a result of the reverse acquisition on October 4, 2017, we acquired approximately $0.5 million of liabilities, net of assets, of the former operations of West Coast Ventures Group Corp. (which have been discontinued). During 2017 we issued 3,000,000 shares of our common stock to extinguish $30,000 of indebtedness. We are evaluating the means to relieve the Company of these liabilities.
(7) STOCKHOLDER LOAN
The principal stockholder of the Company has loaned the Company funds at various times on an undocumented loan basis with no stated interest rate. These loans were made principally to complete the conversion of the Illegal Burger - Arvada (2014) and Illegal Burger - Writer Square (2015 and 2016), Illegal Burger Capital Hill (2016) and Illegal Burger CitiSet (2018) locations. This stockholder loan balance was $124,188 and $206,434 at March 31, 2019 and December 31, 2018, respectively.
(8) NOTES PAYABLE TO THIRD PARTIES
a) Future Receivables Sale Agreements
During 2018, 2017, 2016 and 2015, the Company entered into several agreements to obtain advances against future restaurant credit/debit card sales. The agreements provide for funding of various percentages of future qualified credit/debit merchant card receivables. Proceeds received from sales of future receivables during 2018 and 2017 totaled $140,000 and $166,082, respectively. At March 31, 2019 and December 31, 2018, the total payable balances inclusive of interest under the factoring agreements were $100,819 and $154,770, respectively.
b) One Year Note
In February 2016, the Company entered into a one year note with a third party for a loan of $88,000. This note was payable daily in the amount of $377 paid via ACH draft from the J&F Restaurants, LLC - El Senor Sol Evergreen bank account. This note carries interest at a 7% rate. This note was renewed on December 30, 2016, and the Company received $74,548 in cash, which is net of the $10,452 remaining balance. The new note is payable as a percentage of future qualified credit/debit merchant card receivables. The loan balance was $17,985 and $28,038 at March 31, 2019 and December 31, 2018, respectively.
F-12
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(8) NOTES PAYABLE TO THIRD PARTIES
, continued
c) Convertible Notes - Variable Conversion
In the first quarter 2019 the Company entered into five convertible notes in exchange for $424,000 in cash. These notes mature one in nine months and four in one year and carry 12%, 10% and 8% interest rates. The notes convert into shares of the Companys common stock at a price of 55% and 50% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 20 and 25 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes were recorded as a derivative liability in the amount of $467,348 with a related debt discount of $432,166, and an immediate loss of $35,182.
In the fourth quarter 2018, the Company entered into a convertible note in exchange for $138,000 in cash. This note matures in nine months and carries a 12% interest rate. The note converts into shares of the Companys common stock at a price of 61% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $189,380, with a related debt discount of $138,000, and an immediate loss of $51,380.
In the third quarter 2018, the Company entered into two convertible notes in exchange for $68,000 in cash. These notes mature in nine months and carry a 12% interest rate. These notes convert into shares of the Companys common stock at a price of 61% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $151,769, with a related debt discount of $68,000, and an immediate loss of $83,763.
In the first quarter 2018, the Company entered into three convertible notes in exchange for $280,000 in cash. These notes mature two in nine months and one in six months and carry 12% and 8% interest rates. The notes convert into shares of the Companys common stock at a price of 61% and 60% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 and 20 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $306,000, with a related debt discount of $306,000, and an immediate loss of $0.
d) Convertible Notes - Fixed Conversion
During the fourth quarter of 2018, one of the parties that purchased one of the variable conversion price convertible notes assigned $50,000 of their note to a third party for $50,000 in cash. This new party immediately amended the assigned note portion to a fixed conversion rate of $0.01 per share of the Companys common stock. The maturity date of this note was extended to December 31, 2021. The Company recognized no gain or loss associated with this modification.
In the fourth quarter 2018, the Company entered into a convertible note in exchange for $100,000 in cash. This note matures in one year and carries a 10% Original Issue Discount (OID). The note converts into shares of the Companys common stock at a price of $0.05 per share.
F-13
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(8) NOTES PAYABLE TO THIRD PARTIES
, continued
d) Convertible Notes - Fixed Conversion
, continued
During the third quarter of 2018, two parties related to each other purchased, through assignment, three of the variable conversion price convertible notes then outstanding. These parties immediately amended the notes to replace the variable conversion rate with a fixed conversion rate of $0.0035 per share of the Companys common stock. The maturity dates of the three notes were extended to 2020 and 2021.
e) Third Party Note Payable
In March 2015, the Company entered into an agreement with a third party lender, who extended a $3,000,000 Senior Secured Note. Under the terms of this agreement a first draw was entered into in the amount of $375,000 as a Revolving Note. The lender retained $59,713 of this draw as fees. Under the terms of this Note, the Company was required to replace their credit card/debit card merchant processing to the lender. The lender retained 100% of the credit card/debit card transactions, and forwarded four wire transfers to the Company over a six week period. The credit card/debit card transactions for this six week period amounted to $84,534. The lender remitted $42,379 of this amount to the Company. Of the $42,155 retained by the lender, $14,861 was applied as principal reduction, $7,088 was applied to interest expense and the remaining $20,206 was charged as fees. The Senior Secured Note also called for the payment of a $75,000 investment banking fee.
In May 2015, when it was determined that this repayment structure was not practical for a restaurant operation, the lender agreed to restructure the Revolving Note into a Replacement Promissory Note. This Replacement Promissory Note carries interest at a stated rate of 18% with a maturity of June 1, 2016. The lender charged the Company a $25,000 penalty to convert the Revolving Note into a Replacement Promissory Note. The Replacement Promissory Note called for interest only payments in June, July and August 2015. Starting in September the terms called for the payment of interest, principal starting at $33,649 increasing monthly to $38,474 in June 2016, as the interest on the then outstanding balance fell. In addition, the Replacement Promissory Note called for the payment of a $106,000 Redemption Premium as part of the total monthly payment of $49,651.
As a direct result of delays in opening the new Writer Square location, the lender agreed to interest only payments via ACH draft every Monday. In June 2015, the Company paid $1,080 per week, which was increased to $1,200 per week for July 1 through October 15, 2015. It was then increased to $1,500 per week from October 16, 2015 through the third week of March 2016, when it was increased to $2,000 per week.
At both March 31, 2019 and December 31, 2018 the principal balance of the loan was $322,220. The Company also accrued the $25,000 conversion penalty, the $75,000 investment banking fee and the $106,000 redemption premiums as accrued interest because the Replacement Promissory Note allows for prepayment but all these fees are due upon prepayment.
Certain third parties have advanced funds to WCVC to fund its ongoing operations. These advances have been formalized into demand notes payable, which, at September 30, 2017, amount to $54,039 and carry a 5% interest rate. WCVC has a $250,000 note payable which is due in April 2018 and carries a 5% interest rate. These liabilities have been incorporated into liabilities from discontinued operations.
F-14
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) OPERATING LEASES
Practical Expedients and Elections
The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract is or contains a lease, and our initial direct costs for any leases that exist prior to adoption of the new standard. We also elected the short-term lease recognition exemption for all leases that qualify.
Discount Rate Applied to Property Operating Lease
To determine the present value of minimum future lease payments for operating leases at January 1, 2019, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the incremental borrowing rate or IBR). The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the average interest rate for its latest borrowings.
Right of Use Assets
Right of use assets are included in the unaudited condensed consolidated Balance Sheet as follows:
Non-current assets
Right of use assets, net of amortization - $1,212,398
Total operating lease cost
Individual components of the total lease cost incurred by the Company is as follows:
| |
|
Three Months Ended March 31, 2019
|
|
|
Operating lease expense
|
$113,682
|
Minimum rental payments under operating leases are recognized on a straight light basis over the term of the lease.
F-15
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) OPERATING LEASES
, continued
Maturity of operating leases
The amount of future minimum lease payments under operating at March 31, 2019 are as follows:
| |
|
Operating Lease
|
Undiscounted future minimum lease payments:
|
|
2019 (9 months remaining)
|
$
265,386
|
2020
|
314,582
|
2021
|
219,168
|
2022
|
173,354
|
2023
|
183,708
|
Thereafter
|
560,997
|
|
|
Total
|
1,717,195
|
Amount representing imputed interest
|
(462,152)
|
|
|
Total operating lease liability
|
$
1,255,043
|
Current portion of operating lease liability
|
$
194,920
|
Operating lease liability, non-current
|
$
1,060,223
|
(10) STOCKHOLDERS DEFICIT
At March 31, 2019 and December 31, 2018, the Company has 650,000,000 and 250,000,000 shares of par value $0.001 common stock authorized and 40,924,839 and 33,906,532 issued and outstanding, respectively. At March 31, 2019 and December 31, 2018, the Company has 10,000,000 shares of par value $0.001 preferred stock authorized and 500,000 issued and outstanding.
In the first quarter 2019 the Company issued 1,713,307 shares of common stock as a commitment fee for its equity line of credit, valued at $90,000. The Company issued 5,305,000 shares of common stock valued at $300,885 to settle $18,567 of convertible debt and recorded a loss of $0 because the loss was recorded in 2018 when the debt was assigned and converted from variable conversion rate to fixed conversion rate.
In the fourth quarter 2018 the Company issued 10,000,000 shares of common stock to the Companys principal officer to settle $100,000 of accrued payroll for him. The Company issued 4,625,000 shares of common stock valued at $289,375 to settle $16,187 of convertible debt and recorded a loss of $273,188.
In the third quarter 2018 the Company issued 750,000 shares of common stock in exchange for services valued at $18,750. The Company issued 764,205 shares of common stock valued at $19,769 to settle $7,102 of convertible debt and recorded a loss of $12,767. The Company issued 5,111,000 shares of common stock in exchange for $27,220 in cash.
F-16
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(10) STOCKHOLDERS DEFICIT
, continued
In the third quarter 2018 the Company repurchased and retired 1,546,727 shares of common stock for $34,000 in cash under a settlement agreement with a convertible note holder.
In the second quarter 2018 the Company issued 650,000 shares of common stock in exchange for services valued at $59,000. The Company issued 3,349,783 shares of common stock valued at $266,729 to settle $94,226 of convertible debt. The CEO of the Company and his spouse contributed 22,000,000 shares of common stock valued at $3,140,000 to the Company which cancelled the shares, pursuant to a request from OTC Markets as part of the approval to list the common stock on the OTCQB.
In the first quarter 2018 the Company issued 100,000 shares of common stock in exchange for services valued at $22,600. The Company issued 340,000 shares of common stock valued at $85,000 as a debt inducement. The Company issued 1,155,829 shares of common stock valued at $216,140 to settle $16,528 of convertible debt and 50,898 shares of common stock valued at $9,518 upon the cash-less exercise of a warrant.
The rights and privileges of the Series A preferred stock are solely as a super voting stock, whereby each one share of Series A holds votes amounting to the equivalent of 100,000 shares of common stock. Therefore, the 500,000 shares of Series A issued and outstanding hold an aggregate votes equal to 500,000,000 common shares. The Series A shares have no dividend rights, no liquidation preferences, are not transferable and can be redeemed by the holder for $5,000 in cash from the Company for the entire 500,000 share block at the holders option.
(11) COMMITMENTS AND CONTINGENCIES
a) Real Property Leases
The Company leases 6 (six) restaurant spaces from unrelated parties. Rent expense paid was $113,682 and $109,106 for the three months ended March 31, 2019 and 2018.
Future minimum lease payments under these real property lease agreements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the Year Ending December 31,
|
|
ESSE
|
|
IBE
|
|
IBA
|
|
IBWS
|
|
IBCH
|
|
IBCS
|
|
Total
|
2019 (9 months)
|
|
$
20,000
|
|
$
14,000
|
|
$
56,096
|
|
$
76,982
|
|
$
50,608
|
|
$
47,700
|
|
$
265,386
|
2020
|
|
$
-
|
|
$
-
|
|
$
77,038
|
|
$
102,643
|
|
$
69,501
|
|
$
65,400
|
|
$
314,582
|
2021
|
|
$
-
|
|
$
-
|
|
$
25,931
|
|
$
102,643
|
|
$
23,394
|
|
$
67,200
|
|
$
219,168
|
2022
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
104,354
|
|
$
-
|
|
$
69,000
|
|
$
173,354
|
2023
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
112,908
|
|
$
-
|
|
$
70,800
|
|
$
183,708
|
Thereafter
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
206,997
|
|
$
-
|
|
$
354,000
|
|
$
560,997
|
Total minimum lease payments
|
|
$
20,000
|
|
$
14,000
|
|
$
159,065
|
|
$
706,527
|
|
$
143,503
|
|
$
674,100
|
|
$
1,717,195
|
ESSE: El Senor Sol - Evergreen; IBE: Illegal Burger - Evergreen; IBA: Illegal Burger - Arvada; IBWS - Illegal Burger - Writer Square; IBCH - Illegal Burger - Capital Hill; IBCS - Illegal Burger - CitiSet
The Companys leases for El Senor Sol - Evergreen locations expire on August 31, 2019.
F-17
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(11) COMMITMENTS AND CONTINGENCIES, continued
b) Other
The Company is subject to asserted claims and liabilities that arise in the ordinary course of business. The Company maintains insurance policies to mitigate potential losses from these actions. In the opinion of management, the amount of the ultimate liability with respect to those actions will not materially affect the Companys financial position or results of operations.
c) Litigation
On October 8, 2018, the creditor holding the First Amended Senior Secured Note from Illegal Burger, LLC filed suit in Broward County, Florida. The creditor is demanding $565,267 plus interest, costs and attorney fees. The Company expects to either negotiate a settlement agreement or to vigorously defend this action.
(12) CONCENTRATIONS OF CREDIT RISK
a) Cash
The Company maintains its cash in bank deposit accounts, which may, at times, may exceed federally insured limits. The Company had no cash balance in excess of FDIC insured limits at March 31, 2019 and December 31, 2018.
(13) SUBSEQUENT EVENTS
a) Convertible Notes - Variable Conversion
In the second quarter 2019 the Company entered into four convertible notes in exchange for $215,000. These notes mature in 9 months. These notes carry an interest rate of 12% and 3 have a 10% Original issue Discount (OID). The OID will be recorded as a debt discount and amortized over the life of the loan. The notes convert into shares of the Companys common stock at a price of 55% and 65% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 20 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $359,504, with a related debt discount of $233,000, and an immediate loss of $126,504.
b) Third Party Note Payable
In the second quarter 2019 the Company entered into a note in exchange for $200,000. This note matures in one year and carries a 20% interest rate. 50% of this loan is secured as a second mortgage on the CEOs personal residence and the second 50% is personally guaranteed by the CEO. The Company is required to issue 2,500,000 shares of common stock valued at $156,250 as an inducement for this loan.
c) Stockholders Deficit
In the second quarter 2019 the Company issued 5,000,000 shares of common stock valued at $332,500 in exchange for $279,990 fixed assets at its new location in Lauderhill, Florida plus $50,000 in cash. The Company issued 2,500,000 shares of common stock valued at $156,250 as a debt inducement fee. The Company issued 300,000 shares of common stock valued at $18,420 as a debt inducement fee. The Company issued 1,666,666 shares of common stock valued at $125,000 for services. The Company issued 1,900,000 shares of common stock valued at $140,600 to settle $19,000 of debt. The Company issued 312,000 shares of common stock valued at $26,520 for one-half of the first year rent for the Companys new corporate office space.
F-18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of West Coast Ventures Group Corp.
Arvada, Colorado
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of West Coast Ventures Group Corp. (the Company) at December 31, 2018 and 2017, and the related consolidated statements of operations, changes in stockholders deficit, and cash flows for each of the years in the two-year period ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the consolidated financial statements, the Company had accumulated losses of approximately $3.7 million and negative working capital of approximately $2.7 million at December 31, 2018, which raises substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| |
/s/ Daszkal Bolton LLP
|
|
|
We have served as the Companys auditor since 2015.
|
|
|
Fort Lauderdale, Florida
|
|
|
April 16, 2019
|
|
|
|
F-19
WEST COAST VENTURES GROUP CORP.
Consolidated Balance Sheets
December 31,
|
|
| |
ASSETS
|
2018
|
|
2017
|
CURRENT ASSETS
|
|
|
|
Cash
|
$
9,635
|
|
$
-
|
Receivables
|
32,303
|
|
32,020
|
Inventory
|
19,984
|
|
17,163
|
Prepaid expenses
|
30,605
|
|
18,245
|
Assets of discontinued operations
|
2,461
|
|
2,461
|
Total current assets
|
94,988
|
|
69,889
|
FIXED ASSETS
|
|
|
|
Equipment
|
277,296
|
|
235,738
|
Leasehold improvements
|
207,546
|
|
172,587
|
Total fixed assets
|
484,842
|
|
408,325
|
Less: accumulated depreciation
|
(250,394)
|
|
(171,267)
|
Net total fixed assets
|
234,448
|
|
237,058
|
OTHER ASSETS
|
|
|
|
Deposits and other assets
|
43,314
|
|
29,347
|
Intangible assets, net
|
87,556
|
|
121,760
|
Total other assets
|
130,870
|
|
151,107
|
Total Assets
|
$
460,306
|
|
$
458,054
|
LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
Accounts payable
|
$
60,222
|
|
$
128,312
|
Accrued expenses
|
607,525
|
|
433,534
|
Deferred rent
|
64,661
|
|
50,688
|
Stockholder loans
|
206,434
|
|
90,675
|
Third party advances
|
265,500
|
|
-
|
Notes payable to third parties
|
692,879
|
|
661,858
|
Convertible notes payable to third parties, net of discounts
|
250,276
|
|
45,231
|
Fair value of derivative liabilities
|
201,891
|
|
251,438
|
Liabilities of discontinued operations
|
481,558
|
|
481,558
|
Total current liabilities
|
2,830,946
|
|
2,143,294
|
Total Liabilities
|
2,830,946
|
|
2,143,294
|
STOCKHOLDERS DEFICIT
|
|
|
|
Series A Preferred stock, $0.001 par value, 10,000,000 shares authorized,
500,000 and 500,000 shares issued and outstanding
|
500
|
|
500
|
Common stock, $0.001 par value, authorized 250,000,000 shares; 33,906,532
and 30,556,544 shares issued and outstanding
|
33,907
|
|
30,557
|
Additional paid-in capital
|
1,256,827
|
|
189,029
|
Accumulated deficit
|
(3,661,874)
|
|
(1,905,326)
|
Total stockholders deficit
|
(2,370,640)
|
|
(1,685,240)
|
Total Liabilities and Stockholders Deficit
|
$
460,306
|
|
$
458,054
|
The accompanying notes are an integral part of the consolidated financial statements
F-20
WEST COAST VENTURES GROUP CORP.
Consolidated Statements of Operations
Year ended December 31,
|
|
| |
|
2018
|
|
2017
|
|
|
|
|
REVENUES
|
|
|
|
Restaurant revenue, net of discounts
|
$
3,054,623
|
|
$
2,724,713
|
COST AND EXPENSES
|
|
|
|
Restaurant operating costs:
|
|
|
|
Cost of sales - food and beverage
|
947,927
|
|
903,554
|
Wages and payroll taxes
|
1,029,896
|
|
828,442
|
Occupancy
|
545,733
|
|
507,438
|
Other restaurant costs
|
398,110
|
|
295,582
|
Depreciation and amortization
|
118,617
|
|
66,105
|
General and administrative expenses
|
919,540
|
|
500,096
|
Total costs and expenses
|
3,959,823
|
|
3,101,217
|
Loss from operations
|
(905,200)
|
|
(376,504)
|
Other expenses
|
|
|
|
Pre-opening expenses
|
9,550
|
|
-
|
Initial and change in fair value of derivative
|
(233,714)
|
|
121,438
|
Loss on debt conversion
|
417,088
|
|
-
|
Gain on extinguishment of debt
|
(144,054)
|
|
-
|
Interest expense
|
802,478
|
|
139,452
|
Total other expenses
|
851,348
|
|
260,890
|
|
|
|
|
Loss before income taxes
|
(1,756,548)
|
|
(637,394)
|
Provision for income taxes
|
0
|
|
0
|
Net loss
|
$
(1,756,548)
|
|
$
(637,394)
|
|
|
|
|
Basic and diluted net loss per share
|
$
(0.07)
|
|
$
(0.03)
|
|
|
|
|
Weighted average shares outstanding
|
24,334,196
|
|
19,444,040
|
The accompanying notes are an integral part of the consolidated financial statements
F-21
WEST COAST VENTURES GROUP CORP.
Consolidated Statement of Stockholders Deficit
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of
Shares
|
|
Par
Value
|
|
Additional
Paid-in
|
|
Accumulated
|
|
Total
Stockholders
|
|
Common
|
|
Preferred
|
|
Common
|
|
Preferred
|
|
Capital
|
|
Deficit
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
January 1, 2017
|
14,976,544
|
|
-
|
|
$
14,977
|
|
$
-
|
|
$
619,362
|
|
$
(1,267,932)
|
|
$
(633,593)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
7,112,000
|
|
-
|
|
7,112
|
|
-
|
|
47,521
|
|
-
|
|
54,633
|
Shares issued in settlement of debt
|
3,000,000
|
|
-
|
|
3,000
|
|
-
|
|
27,000
|
|
-
|
|
30,000
|
Shares issued to effect acquisition
|
5,418,000
|
|
500,000
|
|
5,418
|
|
500
|
|
(515,804)
|
|
-
|
|
(509,886)
|
Shares issued for services
|
50,000
|
|
-
|
|
50
|
|
-
|
|
10,950
|
|
-
|
|
11,000
|
Net loss
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(637,394)
|
|
(637,394)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
December 31, 2017
|
30,556,544
|
|
500,000
|
|
30,557
|
|
500
|
|
189,029
|
|
(1,905,326)
|
|
(1,685,240)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
5,111,000
|
|
-
|
|
5,111
|
|
-
|
|
22,109
|
|
-
|
|
27,220
|
Shares issued in settlement of debt
|
9,894,817
|
|
-
|
|
9,895
|
|
-
|
|
509,031
|
|
-
|
|
518,226
|
Shares issued in settlement of accrued compensation
|
10,000,000
|
|
-
|
|
10,000
|
|
-
|
|
90,000
|
|
-
|
|
100,000
|
Shares issued for services
|
1,500,000
|
|
-
|
|
1,500
|
|
-
|
|
98,850
|
|
-
|
|
100,350
|
Shares issued as debt inducement
|
340,000
|
|
-
|
|
340
|
|
-
|
|
84,660
|
|
-
|
|
85,000
|
Shares issued at warrant exercise
|
50,898
|
|
-
|
|
51
|
|
-
|
|
9,467
|
|
-
|
|
9,518
|
Shares cancelled
|
(22,000,000)
|
|
-
|
|
(22,000)
|
|
-
|
|
22,000
|
|
-
|
|
-
|
Shares repurchased and cancelled
|
(1,546,727)
|
|
-
|
|
(1,547)
|
|
-
|
|
(26,294)
|
|
-
|
|
(27,841)
|
Beneficial Conversion feature
|
-
|
|
-
|
|
-
|
|
-
|
|
257,975
|
|
|
|
257,975
|
Net loss
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,756,548)
|
|
(1,756,548)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
, December 31, 2018
|
33,906,532
|
|
500,000
|
|
$
33,907
|
|
$
500
|
|
$
1,256,827
|
|
$
(3,661,874)
|
|
$
(2,370,640)
|
The accompanying notes are an integral part of the consolidated financial statements
F-22
WEST COAST VENTURES GROUP CORP.
Consolidated Statements of Cash Flows
Year ended December 31,
|
|
| |
|
2018
|
|
2017
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net loss
|
$
(1,756,548)
|
|
$
(637,394)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
Share based compensation for services
|
200,350
|
|
11,000
|
Depreciation and amortization
|
118,617
|
|
66,105
|
Initial and change in fair value of derivative
|
(233,714)
|
|
121,438
|
Loss on debt conversion
|
417,088
|
|
-
|
Gain on debt extinguishment
|
(144,054)
|
|
-
|
Amortization of debt discounts
|
529,061
|
|
-
|
Vendor incentive
|
44,000
|
|
-
|
Amortization of deferred rent
|
5,977
|
|
-
|
Changes in operating assets:
|
|
|
|
Increase in receivables
|
(283)
|
|
(32,020)
|
Increase in inventory
|
(2,821)
|
|
(1,622)
|
(Increase) decrease in prepaid expenses
|
(12,359)
|
|
7,818
|
Increase in deposits and other assets
|
(13,967)
|
|
(12,600)
|
Changes in operating liabilities:
|
|
|
|
(Decrease) increase in accounts payable
|
(68,091)
|
|
103,216
|
Increase in accrued expenses
|
73,991
|
|
172,827
|
Increase in deferred rent
|
17,993
|
|
3,865
|
Net cash used in operating activities
|
(824,760)
|
|
(197,367)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Purchase of fixed assets
|
(71,156)
|
|
(13,800)
|
Reimbursement from landlord
|
54,000
|
|
-
|
Purchase of intangible assets
|
(5,286)
|
|
-
|
Net cash used in investing activities
|
(22,442)
|
|
(13,800)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Proceeds from issuance of common stock for cash
|
27,220
|
|
50,000
|
Repurchase of common stock under settlement agreement
|
(34,000)
|
|
-
|
Proceeds from issuance of convertible notes payable for cash
|
698,000
|
|
160,000
|
Payments on settlement agreement
|
(200,000)
|
|
-
|
Proceeds from stockholder loan payable
|
115,759
|
|
17,874
|
Proceeds from third party notes payable and advances
|
421,545
|
|
166,082
|
Payments on third party notes payable
|
(171,687)
|
|
(259,277)
|
Net cash provided in financing activities
|
856,837
|
|
134,679
|
Net increase (decrease) in cash
|
9,635
|
|
(76,488)
|
CASH,
beginning of year
|
-
|
|
76,487
|
CASH,
end of year
|
$
9,635
|
|
$
-
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
Cash paid for interest
|
$
67,455
|
|
$
79,109
|
Cash paid for income taxes
|
$
-
|
|
$
-
|
Non-Cash Financing Activities:
|
|
|
|
Issuance of common stock upon conversion of debt
|
$
518,926
|
|
$
30,000
|
Issuance of note payable for fixed assets
|
$
60,704
|
|
$
-
|
Issuance of common stock as debt inducement
|
$
85,000
|
|
$
-
|
Issuance of common stock upon warrant exercise
|
$
9,518
|
|
$
-
|
Issuance of common stock in reverse acquisition
|
$
-
|
|
$
(508,986)
|
The accompanying notes are an integral part of the consolidated financial statements
F-23
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(1) NATURE OF OPERATIONS
West Coast Ventures Group Corp. (our, us, we, WCVC or the Company) was originally incorporated as Energizer Tennis, Corp. on June 16, 2011 in the State of Nevada. On October 4, 2017, effective for accounting purposes on June 30, 2017, WCVC entered into an agreement to acquire Nixon Restaurant Group, Inc. in a transaction accounted for as a reverse acquisition. Nixon Restaurant Group, Inc. (NRG) was formed on October 12, 2015, under the laws of the State of Florida. On October 19, 2015, NRG issued 20 million shares of common stock to acquire 100% of the ownership interests in J&F Restaurants, LLC, Illegal Burger, LLC and Illegal Burger Writer Square LLC, Colorado Limited Liability Companies, under common ownership. The transaction was accounted for as a corporate reorganization between entities under common control. These consolidated financial statements reflect the reorganized capital structure retrospectively for all periods presented.
The Company operates 6 restaurants in the Denver, Colorado metro area. El Senor Sol - Evergreen is a Mexican restaurant which has been in operation for in excess of five full years. The Company opened the first Illegal Burger restaurant in August 2013. It is co-located with the El Senor Sol restaurant. The second Illegal Burger was opened in Arvada in April 2014. The third Illegal Burger is located in Writer Square in downtown Denver and opened in late January 2016. The fourth Illegal Burger is located in the Capital Hill area of Denver and opened in late June 2016. The fifth Illegal Burger is located in Glendale and opened in early October 2018.
The Company plans to continue opening Illegal Burger restaurants, a quick casual high end restaurant with full liquor licenses. The Company expects to locate in other areas of the country over time.
The accompanying consolidated financial statements include the activities of Nixon Restaurant Group, Inc., J&F Restaurant, LLC (El Senor and Illegal Burger Evergreen), Illegal Burger, LLC (Arvada), Illegal Burger Writer Square, LLC, Illegal Burger Capital Hill, LLC, and Illegal Burger CitiSet, LLC, its wholly owned subsidiaries.
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES
a) Basis of Presentation
The comparative amounts presented in these consolidated financial statements are the historical results of West Coast Ventures Group, Corp. inclusive of its wholly owned subsidiaries Nixon Restaurant Group, Inc.; J&F Restaurant, LLC; Illegal Burger, LLC; Illegal Burger Writer Square, LLC; Illegal Burger Capital Hill, LLC and Illegal Burger CitiSet, LLC. The Company has reflected the pre-acquisition results on a consolidated basis for all periods presented. All intercompany balances and transactions have been eliminated in consolidation
b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 these estimates. Significant estimates in the accompanying consolidated financial statements involved the valuation of share-based compensation.
c) Accounts Receivable
Accounts receivable is primarily the amount due from the merchant account processor of debit and credit card payments.
d) Fixed Assets
Equipment is recorded at cost and depreciated over their estimated useful lives, generally three, five or seven years, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
F-24
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
e) Pre-opening Expenses
The Company accumulates the non-capitalizable expenses, such as rent, staffing and training, prior to opening a new location and reports them on a separate line item in the Consolidated Statement of Operations such that these costs do not skew results from ongoing restaurant operations. Beginning in the month in which a new location opens all ongoing expenses are then included with ongoing restaurant operations.
f) Rent
The Companys leases generally contain escalating rent payments over the lease term as well as optional renewal periods. The Company accounts for its leases by recognizing rent expense on a straight-line basis over the lease term, which includes reasonably assured renewal periods. The lease term begins when the Company has the right to control the use of the property, which is typically before rent payments are due under the lease agreement. The difference between the rent expense and rent paid is recorded as deferred rent in the consolidated balance sheet. Rent expense for the period prior to the restaurant opening is expensed in pre-opening costs.
g) Net Loss Per Share
Basic loss per share excludes dilution and is computed by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless consideration of such dilutive potential shares would result in anti-dilution. There were no dilutive common stock equivalents for the periods ended December 31, 2018 and 2017.
h) Income Taxes
The Company follows 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 consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The tax years 2017, 2016 and 2015 for the Company remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
i) Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no financial instruments that qualified as cash equivalents.
F-25
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
j) Financial Instruments and Fair Value Measurements
ASC 825-10 Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
ASC 825 also requires disclosures of the fair value of financial instruments. The carrying value of the Companys current financial instruments, which include cash and cash equivalents, accounts payable and accrued liabilities approximates their fair values because of the short-term maturities of these instruments.
FASB ASC 820 Fair Value Measurement clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following is the Companys assets and liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2018 and 2017, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):
|
|
|
|
| |
|
2018
|
|
2017
|
Level 3 - Embedded Derivative Liability
|
$
|
196,009
|
|
$
|
251,438
|
Changes in Level 3 assets measured at fair value for the year ended December 31, 2018 were as follows:
|
| |
Balance, December 31, 2017
|
$
|
251,438
|
Portion of initial valuation recorded as debt discount
|
|
567,645
|
Reduction upon conversion, assignment or settlement
|
|
(310,491)
|
Change in fair value of derivative
|
|
(312,583)
|
Balance, December 31, 2018
|
$
|
196,009
|
F-26
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
k) 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, payment or exercise of a convertible note containing an embedded derivative instrument, the instrument is marked to fair value at the conversion date and the debt and derivative are removed from the balance sheet, The shares issued upon conversion of the note are recorded at their fair value and a gain or loss on extinguishment is recognized, as applicable.
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.
l) Impairment of Long-Lived Assets
A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying value amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long-lived assets exceeds its fair value. There were no impairment losses recorded in 2018 and 2017.
m) Related Party Transactions
All transactions with related parties are in the normal course of operations and are measured at the exchange amount
n) Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2016-02 is expected to result in the recognition of right to use assets and associated obligations on its consolidated balance sheet.
o) Revenue Recognition
In May 2014, the Financial Accounting Standards Board, (FASB), issued Accounting Standards Codification, (ASC), 606, Revenue from Contracts with Customer effective for public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Companys initial application of ASC 606 did not have a material impact on its consolidated financial statements and disclosures.
The Companys consolidated financial statements are prepared under the accrual method of accounting. Revenues are recognized when pervasive evidence of an arrangement exists, services have been rendered (product delivered), the sales price is fixed or determinable, and collectability is reasonably assured. This occurs only when the product(s) is ordered and subsequently delivered.
F-27
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(2) BASIS OF PRESENTATION AND USE OF ESTIMATES, continued
p) Inventories
Inventories consist of food, beverages, and supplies valued at the lower of cost (first-in, first-out method) or market.
q) Intangible Assets
Intangible assets are being amortized using straight line method over the remaining life of the location lease term, generally five, seven or ten years.
(3) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained a net loss of approximately $1.8 million for the year ended December 31, 2018 and have an accumulated deficit of approximately $3.7 million and a negative working capital of approximately $2.7 million at December 31, 2018, inclusive of indebtedness. These conditions raise substantial doubt about our ability to continue as a going concern.
Failure to successfully continue to grow restaurant operation revenues could harm our profitability and materially adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, managements potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with establishing and opening restaurant operations.
We are continuing our plan to further grow and expand restaurant operations and seek sources of capital to pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
The independent auditors report on our consolidated financial statements for the years ended December 31, 2018 contained an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern.
(4) FIXED ASSETS
Fixed assets consisted of the following:
|
|
|
| |
December 31,
|
|
2018
|
|
2017
|
Beginning balance
|
|
$
408,325
|
|
$
394,524
|
Additions: Equipment
|
|
95,558
|
|
-
|
Additions: Leasehold improvements
|
|
34,959
|
|
13,801
|
Landlord reimbursement
|
|
(54,000)
|
|
-
|
Depreciation
|
|
(250,394)
|
|
(171,267)
|
Ending Balance
|
|
$
234,448
|
|
$
237,058
|
Depreciation expense was $79,127 and $58,995 for the years ended December 31, 2018 and 2017, respectively.
F-28
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(5) INTANGIBLE ASSETS
In March 2015, as part of the acquisition of the Writer Square downtown location, the Company purchased the rights to negotiate a lease from the landlord for $125,000 in cash. The Company is amortizing this value over the remaining term of the lease.
In March 2016, as part of the acquisition of the Capital Hill location, the Company purchased the existing liquor license for $4,300 in cash. The Company is amortizing this value of the remaining term of the lease.
In September 2018, as part of the acquisition of the CitiSet location, the Company acquired a liquor license for $5,286 in cash. The Company is amortizing this value of the remaining term of the lease.
Amortization expense was $39,490 and $7,110 for the years ended December 31, 2018 and 2017, respectively.
Amortization expense will be $13,712 each year for the next five years, or a total of $68,562.
(6) NET ACQUIRED LIABILITIES OF DISCONTINUED OPERATIONS
As a result of the reverse acquisition on October 4, 2017, we acquired approximately $0.5 million of liabilities, net of assets, of the former operations of West Coast Ventures Group Corp. (which have been discontinued). During 2017 we issued 3,000,000 shares of our common stock to extinguish $30,000 of indebtedness. We are evaluating the means to relieve the Company of these liabilities.
(7) SHORT-TERM BANK REVOLVING LINES OF CREDIT
In 2016 the Company opened three short term revolving lines of credit with its bank to be utilized as overdraft protection and to cover short-term cash shortfalls. These lines were entered into by J&F Restaurants, LLC, with the two separate lines being tied to the bank accounts of El Senor Sol - Evergreen and Illegal Burger - Evergreen, and Illegal Burger, LLC - Arvada. In February 2017 the principal stockholder converted these lines to a personal line of credit collateralized as an equity line on his personal residence. The lines carried a variable interest rate of Wall Street Prime Index Rate plus 2.00% and matured in March 2021. In February 2017, the principal stockholder converted these lines to a personal line of credit collateralized as an equity line on his personal residence. At December 31, 2018 and 2017 the balances of each of these lines were $0.
(8) STOCKHOLDER LOAN
The principal stockholder of the Company has loaned the Company funds at various times on an undocumented loan basis with no stated interest rate. These loans were made principally to complete the conversion of the Illegal Burger - Arvada (2014), Illegal Burger - Writer Square (2015 and 2016), Illegal Burger Capital Hill (2016) and Illegal Burger CitiSet (2018) locations. This stockholder loan balance was $206,434 and $94,509 at December 31, 2018 and 2017, respectively. In February 2017 the principal stockholder converted the three short-term bank revolving line of credits to a personal line of credit collateralized as an equity line on his personal residence.
(9) NOTES PAYABLE TO THIRD PARTIES
a) Future Receivables Sale Agreements
The Company, through Nixon Restaurant Group, Inc., J&F Restaurants, LLC, Illegal Burger, LLC, Illegal Burger Writer Square, LLC and Illegal Burger Capitol Hill, LLC entered into several agreements at various times to obtain advances against future restaurant credit/debit card sales. The agreements provides for funding of various percentages of future qualified credit/debit merchant card receivables. Proceeds received from sales of future receivables during 2018 and 2017 totaled $140,000 and $166,082, respectively. At December 31, 2018 and 2017, the total payable balances inclusive of interest under the factoring agreements were $154,770 and $248,883, respectively. During the first quarter 2018, we negotiated settlement agreements with two of these lenders to pay off the balances owed at the rate of $8,000 per month over two years and $4,000 per month over one year.
F-29
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
a) Future Receivables Sale Agreements,
continued
In October 2018 the principal stockholder paid off one of these balances with a $35,000 settlement. The balance of the remaining settlement agreement is $3,644 at December 31, 2018.
b) One Year Note
In February 2016, the Company entered into a one year note with a third party for a loan of $88,000. This note was payable daily in the amount of $377 paid via ACH draft from the J&F Restaurants, LLC - El Senor Sol Evergreen bank account. This note carries interest at a 7% rate. This note was renewed on December 30, 2016, and the Company received $74,548 in cash, which was net of the $10,452 remaining balance. The new note is payable as a percentage of future qualified credit/debit merchant card receivables. The loan balance was $28,038 and $42,217 at December 31, 2018 and 2017, respectively.
c) Convertible Notes - Variable Conversion
In the fourth quarter 2018, the Company entered into a convertible note in exchange for $138,000 in cash. This note matures in nine months and carries a 12% interest rate. The note converts into shares of the Companys common stock at a price of 61% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $189,380, with a related debt discount of $138,000, and an immediate loss of $51,380.
In the third quarter 2018, the Company entered into two convertible notes in exchange for $68,000 in cash. These notes mature in nine months and carries a 12% interest rate. These notes convert into shares of the Companys common stock at a price of 61% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $151,769, with a related debt discount of $68,000, and an immediate loss of $83,763.
The Company entered into a settlement agreement with the holder of one of the convertible notes which required the Company to pay installments of $15,000 on August 31, $35,000 on October 31, $50,000 on November 30 and $100,000 on December 31, 2018. This agreement did not allow for the lender to convert any of the then remaining debt. This agreement included a penalty of $40,528 as a portion of the $200,000 total settlement of which $0 is outstanding at December 31, 2018.
In the first quarter 2018, the Company entered into three convertible notes in exchange for $280,000 in cash. These notes mature two in nine months and one in six months and carry 12% and 8% interest rates. The notes convert into shares of the Companys common stock at a price of 61% and 60% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 and 20 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $306,000, with a related debt discount of $306,000, and an immediate loss of $0.
In 2017 the Company entered into two convertible notes in exchange for $130,000 in cash. These notes mature in nine months and one year and carry 12% and 8% interest rates. The notes convert into shares of the Companys common stock at a price of 61% and 55% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 and 20 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $218,686, with a related debt discount of $130,000, and an immediate loss of $88,686.
F-30
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
c) Convertible Notes - Variable Conversion,
continued
In 2017, the Company, through a subsidiary, issued a Convertible Promissory Note in exchange for $30,000 in cash. This note matures in one year from issuance and carried a 10% interest rate. The note converts into shares of the Companys common stock at a price of 65% of the average closing price for the Common Stock during the three (3) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Because this note was entered into in a non-trading subsidiary no derivative was recognized.
d) Convertible Notes - Fixed Conversion
During the third quarter of 2018, two related parties purchased, through assignment, three of the variable conversion price convertible notes then outstanding. These parties immediately amended the notes to replace the variable conversion rate with a fixed conversion rate of $0.0035 per share of the Companys common stock. The maturity dates of the three notes was extended to 2020 and 2021.immediately amended the notes
During the fourth quarter of 2018, one of the parties that purchased one of the variable conversion price convertible notes assigned $50,000 of their note to a third party for $50,000 in cash. This new party immediately amended the assigned note portion to a fixed conversion rate of $0.01 per share of the Companys common stock. The maturity date of this note was extended to December 31, 2021. The Company recognized no gain or loss associated with this modification.
In the fourth quarter 2018, the Company entered into a convertible note in exchange for $100,000 in cash. This note matures in one year and carries a 10% Original Issue Discount (OID). The note converts into shares of the Companys common stock at a price of $0.05 per share.
e) Third Party Note Payable
In March 2015, the Company entered into an agreement with a third party lender, who extended a $3,000,000 Senior Secured Note. Under the terms of this agreement a first draw was entered into in the amount of $375,000 as a Revolving Note. The lender retained $59,713 of this draw as fees. Under the terms of this Note, the Company was required to replace their credit card/debit card merchant processing to the lender. The lender retained 100% of the credit card/debit card transactions, and forwarded four wire transfers to the Company over a six week period. The credit card/debit card transactions for this six week period amounted to $84,534. The lender remitted $42,379 of this amount to the Company. Of the $42,155 retained by the lender, $14,861 was applied as principal reduction, $7,088 was applied to interest expense and the remaining $20,206 was charged as fees. The Senior Secured Note also called for the payment of a $75,000 investment banking fee.
In May 2015, when it was determined that this repayment structure was not practical for a restaurant operation, the lender agreed to restructure the Revolving Note into a Replacement Promissory Note. This Replacement Promissory Note carries interest at a stated rate of 18% with a maturity of June 1, 2016. The lender charged the Company a $25,000 penalty to convert the Revolving Note into a Replacement Promissory Note. The Replacement Promissory Note called for interest only payments in June, July and August 2015. Starting in September the terms called for the payment of interest, principal starting at $33,649 increasing monthly to $38,474 in June 2016, as the interest on the then outstanding balance fell. In addition, the Replacement Promissory Note called for the payment of a $106,000 Redemption Premium as part of the total monthly payment of $49,651. As a direct result of delays in opening the new Writer Square location, the lender agreed to interest only payments via ACH draft every Monday. In June 2015, the Company paid $1,080 per week, which was increased to $1,200 per week for July 1 through October 15, 2015. It was then increased to $1,500 per week from October 16, 2015 through the third week of March 2016, when it was increased to $2,000 per week. At both December 31, 2018 and 2017 the principal balance of the loan was $322,220. The Company also accrued the $25,000 conversion penalty, the $75,000 investment banking fee and the $106,000 redemption premiums as accrued interest because the Replacement Promissory Note allows for prepayment but all these fees are due upon prepayment. The creditor filed a claim demanding repayment of all amounts outstanding in the amount of $565,267 plus interest, costs and attorney fees.
F-31
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
e) Third Party Note Payable
, continued
Certain third parties have advanced funds to WCVC to fund its ongoing operations. These advances have been formalized into demand notes payable, which, at September 30, 2017, amount to $54,039 and carry a 5% interest rate. WCVC has a $250,000 note payable which is due in April 2018 and carries a 5% interest rate. These liabilities have been incorporated into liabilities from discontinued operations.
(10) STOCKHOLDERS DEFICIT
At December 31, 2018 and 2017, the Company has 250,000,000 shares of par value $0.001 common stock authorized and 33,906,532 and 30,556,544 issued and outstanding, respectively. At December 31, 2018 and 2017, the Company has 10,000,000 shares of par value $0.001 preferred stock authorized and 500,000 and 500,000 issued and outstanding, respectively.
In the first quarter 2018 the Company issued 100,000 shares of common stock in exchange for services valued at $22,600. The Company issued 340,000 shares of common stock valued at $85,000 as a debt inducement. The Company issued 1,155,829 shares of common stock valued at $216,140 to settle $16,528 of convertible debt and 50,898 shares of common stock valued at $9,518 upon the cash-less exercise of a warrant.
In the second quarter 2018 the Company issued 650,000 shares of common stock in exchange for services valued at $59,000. The Company issued 3,349,783 shares of common stock valued at $266,729 to settle $94,226 of convertible debt. The CEO of the Company and his spouse contributed 22,000,000 shares of common stock valued at $3,140,000 to the Company which cancelled the shares, pursuant to a request from OTC Markets as part of the approval to list the common stock on the OTCQB.
In the third quarter 2018 the Company issued 750,000 shares of common stock in exchange for services valued at $18,750. The Company issued 764,205 shares of common stock valued at $19,769 to settle $7,102 of convertible debt and recorded a loss of $12,767. The Company issued 5,111,000 shares of common stock in exchange for $27,220 in cash. The Company repurchased and retired 1,546,727 shares of common stock for $34,000 in cash under a settlement agreement with a convertible note holder.
In the fourth quarter 2018 the Company issued 10,000,000 shares of common stock to the Companys principal officer to settle $100,000 of accrued payroll for him. The Company issued 4,625,000 shares of common stock valued at $289,375 to settle $16,187 of convertible debt and recorded a loss of $273,188.
During 2017 the Company through a subsidiary issued 112,000 shares in exchange for $50,000 in cash. During 2017 the Company issued 500,000 shares of Series A preferred stock and 5,418,000 shares of common stock in connection with the reverse acquisition of Nixon Restaurant Group, Inc.
The rights and privileges of the Series A preferred stock are solely as a super voting stock, whereby each one share of Series A holds votes amounting to the equivalent of 100,000 shares of common stock. Therefore, the 500,000 shares of Series A issued and outstanding hold aggregate votes equal to 500,000,000 common shares. The Series A shares have no dividend rights, no liquidation preferences, are not transferable and can be redeemed by the holder for $5,000 in cash from the Company for the entire 500,000 share block at the holders option.
(11) INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statements and tax basis of assets and liabilities. A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.
F-32
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(11) INCOME TAXES, continued
The components of income tax provision (benefit) related to continuing operations are as follows at December 31:
|
|
| |
|
2018
|
|
2017
|
Current
|
$
-
|
|
$
-
|
Deferred
|
$
-
|
|
$
-
|
Total tax provisions
|
$
-
|
|
$
-
|
The following is a reconciliation of the effective income tax rate with the statutory income tax rate at December 31:
|
|
| |
|
2018
|
|
2017
|
U.S. Federal statutory income tax rate
|
(21)%
|
|
(34)%
|
State income tax, net of federal benefit
|
(1.6)%
|
|
(1.6)%
|
Other temporary differences, net
|
-
|
|
-
|
Valuation allowance
|
22.6%
|
|
35.6%
|
|
0.0%
|
|
0.0%
|
The net deferred tax assets and liabilities included in the financial statements consist of the following amounts at
December 31:
|
|
| |
|
2018
|
|
2017
|
Deferred tax assets:
|
|
|
|
Net operating loss carry forwards
|
$
886,073
|
|
$
610,016
|
Deferred compensation
|
131,416
|
|
66,416
|
Stock based compensation
|
56,302
|
|
17,610
|
Other
|
10,531
|
|
7,461
|
Total
|
-
|
|
-
|
Deferred tax liabilities:
|
-
|
|
-
|
Less: valuation allowance
|
(1,084,302)
|
|
(824,576)
|
Net deferred tax assets
|
$
-
|
|
$
-
|
The change in valuation allowance was $259,746 and $365,970 for the years ended December 31, 2018 and 2017, respectively. We have recorded a 100% valuation allowance related to the deferred tax asset for the loss from operations. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which temporary differences become deductible.
F-33
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(11) INCOME TAXES, continued
In accordance with the provisions of ASC 740: Income Taxes, we record a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. At December 31, 2018 and 2017, we have no liabilities for uncertain tax positions. We continually evaluate expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.
(12) COMMITMENTS AND CONTINGENCIES
a) Real Property Leases
The Company leases six (6) restaurant spaces from unrelated parties. Rent expense paid was $462,075 and $421,392 for the years ended December 31, 2018 and 2017.
Future minimum lease payments under these real property lease agreements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the Year Ending December 31,
|
|
ESSE
|
|
IBE
|
|
IBA
|
|
IBWS
|
|
IBCH
|
|
IBCS
|
|
Total
|
2019
|
|
$
36,000
|
|
$
25,200
|
|
$
74,795
|
|
$
102,643
|
|
$
67,477
|
|
$
63,600
|
|
$
369,715
|
2020
|
|
$
-
|
|
$
-
|
|
$
77,038
|
|
$
102,643
|
|
$
69,501
|
|
$
65,400
|
|
$
314,582
|
2021
|
|
$
-
|
|
$
-
|
|
$
25,931
|
|
$
102,643
|
|
$
23,394
|
|
$
67,200
|
|
$
219,168
|
2022
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
104,354
|
|
$
-
|
|
$
69,000
|
|
$
173,354
|
2023
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
112,908
|
|
$
-
|
|
$
70,800
|
|
$
183,708
|
Thereafter
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
206,997
|
|
$
-
|
|
$
354,000
|
|
$
560,997
|
Total minimum lease payments
|
|
$
36,000
|
|
$
25,200
|
|
$
177,764
|
|
$
732,188
|
|
$
160,372
|
|
$
690,000
|
|
$
1,821,524
|
ESSE: El Senor Sol - Evergreen; IBE: Illegal Burger - Evergreen; IBA: Illegal Burger - Arvada;
IBWS - Illegal Burger - Writer Square; IBCH - Illegal Burger - Capital Hill; IBCS - Illegal Burger - CitiSet
The Companys leases for El Senor Sol - Evergreen locations expire on August 31, 2019.
b) Other
The Company is subject to asserted claims and liabilities that arise in the ordinary course of business. The Company maintains insurance policies to mitigate potential losses from these actions. In the opinion of management, the amount of the ultimate liability with respect to those actions will not materially affect the Companys financial position or results of operations.
c) Litigation
On October 8, 2018, the creditor holding the First Amended Senior Secured Note from Illegal Burger, LLC filed suit in Broward County, Florida. The creditor is demanding $565,267 plus interest, costs and attorney fees. The Company expects to either negotiate a settlement agreement or to vigorously defend this action.
F-34
WEST COAST VENTURES GROUP CORP.
Notes to Consolidated Financial Statements
(13) CONCENTRATIONS OF CREDIT RISK
a) Cash
The Company maintains its cash in bank deposit accounts, which may, at times, may exceed federally insured limits. The Company had no cash balance in excess of FDIC insured limits at December 31, 2018 and 2017.
(14) SUBSEQUENT EVENTS
a) Convertible Notes - Variable Conversion
In the first quarter 2019 the Company entered into five convertible notes in exchange for $484,000. These notes mature in 6 months and 9 months. These notes carry an interest rate of 12% and a 10% Original issue Discount (OID). The OID will be recorded as a debt discount and amortized over the life of the loan. The notes convert into shares of the Companys common stock at a price of 61% and 65% of the average of the two lowest trade prices and the lowest trade price for the Common Stock during the 15 and 20 Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $473,415, with a related debt discount of $437,136, and an immediate loss of $36,259.
b) Stockholders Equity
During the first quarter 2019 the Company increased its authorized common shares from 250,000,000 to 650,000,000 shares with no change to the par value.
During the first quarter 2019 the Company 5,305,000 shares of common stock valued at $300,885 to settle $18,568 of convertible debt.
c) Acquisition of New Locations
In April 2019, the Company has entered into agreements to acquire a new location that is a pizza quick casual restaurant. The Company expects to re-brand it into the Companys new concept - Illegal Pizza.
The restaurant is located in Lauderhill, Florida. The Company issued 5,000,000 shares of common stock to purchase $313,575 in existing fixed assets and received an additional $50,000 in cash.
F-35
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution
The following table is an itemization of all expenses, without consideration to future contingencies, incurred or expected to be incurred by our Corporation in connection with the issuance and distribution of the common shares being offered by this Prospectus. Items marked with an asterisk (*) represent estimated expenses. We have agreed to pay all the costs and expenses of this offering except the GCI has agreed to pay the legal fees associated with the preparation of this registration statement.
|
|
|
| |
Item
|
|
Amount
|
|
SEC Registration Fee
|
|
$
|
88
|
|
Legal Fees and Expenses*
|
|
$
|
20,000
|
|
Accounting Fees and Expenses*
|
|
$
|
5,000
|
|
Miscellaneous*
|
|
$
|
5,000
|
|
Total*
|
|
$
|
30,088
|
|
Indemnification of Officers and Directors
Pursuant to Section 78.7502 of the Nevada Revised Statutes, we have the power to indemnify any person made a party to any lawsuit by reason of being a director or officer of the Registrant, or serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Our Bylaws provide that the Registrant shall indemnify its directors and officers to the fullest extent permitted by Nevada law.
With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the common shares being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
Recent Sales of Unregistered Securities
In the first quarter 2018 the Company issued 100,000 shares of common stock in exchange for services valued at $22,600. The Company issued 340,000 shares of common stock valued at $85,000 as a debt inducement. The Company also issued 1,155,829 shares of common stock valued at $216,140 to settle $16,528 of convertible debt and 50,898 shares of common stock valued at $9,518 upon the cashless exercise of a warrant.
In the second quarter 2018 the Company issued 650,000 shares of common stock in exchange for services valued at $59,000. The Company also issued 3,349,783 shares of common stock valued at $266,729 to settle $94,226 of convertible debt.
In the third quarter 2018 the Company issued 750,000 shares of common stock in exchange for services valued at $18,750. The Company issued 764,205 shares of common stock valued at $19,769 to settle $7,102 of convertible debt and recorded a loss of $12,767. The Company issued 5,111,000 shares of common stock in exchange for $27,220 in cash.
In the fourth quarter 2018 the Company issued 10,000,000 shares to the Companys principal officer to settle $100,000 of accrued payroll for him. The Company issued 4,625,000 shares of common stock valued at $289,375 to settle $16,187 of convertible debt and recorded a loss of $273,188.
In the first quarter 2019 the Company issued 5,305,000 shares of common stock valued at $300,885 to settle $18,568 of convertible debt.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
In April and May 2018, the Companys CEO and his spouse contributed 22,000,000 shares of the Companys common stock
29
valued at $3,140,000 to the Company which cancelled the shares, pursuant to a request from OTC Markets as part of the approval to list the Companys common stock on the OTCQB.
In September 2018, the Company repurchased and retired 1,546,727 shares of common stock for $34,000 in cash under a settlement agreement with a convertible note holder.
In the fourth quarter 2018 the Company issued 10,000,000 shares to the Companys principal officer to settle $100,000 of accrued compensation.
Exhibits and Financial Statement Schedules.
The following exhibits are included as part of this Form S-1.
Exhibit No.
Description
3.1.1
Articles of Incorporation (Incorporated herein by reference to Exhibit 3.1 on Form S-1 filed with the Securities and Exchange Commission on June 18, 2012)
3.1.2
Articles of Merger by and between the Company and its wholly owned subsidiary, West Coast Ventures Group Corp. filed with the Nevada Secretary of State on February 4, 2016. (Incorporated herein by reference to Exhibit 3.1 on Form 10-K filed with the Securities and Exchange Commission on May 12, 2017)
3.1.3
Certificate of Amendment of Articles of Incorporation, field with the Nevada Secretary of State on February 4, 2016 (Incorporated herein by reference to Exhibit 3.2 on Form 10-K filed with the Securities and Exchange Commission on May 12, 2017)
3.2
Bylaws (incorporated herein by reference to Exhibit 3.2 on Form S-1 filed with the Securities and Exchange Commission on June 18, 2012)
5.1
Opinion of Counsel (incorporated herein by reference to Exhibit 5.1 on Form S-1/A filed with the Securities and Exchange Commission on May 31, 2019)
10.1
Standby Equity Commitment Agreement between the Company and GC Investments I, LLC dated as of April 25, 2019 (incorporated herein by reference to Exhibit 10.1 on Form S-1/A filed with the Securities and Exchange Commission on May 31, 2019)
23.1
Consent of Daszkal Bolton LLP (incorporated herein by reference to Exhibit 23.1 on Form S-1/A filed with the Securities and Exchange Commission on May 31, 2019)
Undertakings
The undersigned registrant hereby undertakes
|
|
|
|
|
|
| |
|
1.
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
|
|
|
i.
|
To include any Prospectus required by section 10(a)(3) of the Securities Act of 1933;
|
|
|
|
|
ii.
|
To reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement.
|
|
iii.
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
|
|
|
|
|
2.
|
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
3.
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
|
|
30
|
|
|
|
|
|
| |
|
4.
|
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
|
|
|
i.
|
Any Preliminary Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
ii.
|
Any free writing Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
iii.
|
The portion of any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
iv.
|
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
|
5.
|
|
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: Each Prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or Prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized on June 11, 2019.
| |
|
West Coast Ventures Group Corp.
|
|
|
|
/s/ James M. Nixon
|
|
By: James M. Nixon
|
|
Its: CEO
|
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated:
|
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Name
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Title
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Date
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/s/ James M. Nixon
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President, CEO, CFO, Secretary and Director
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June 11, 2019
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By: James M. Nixon
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