Notes to Financial Statements
January 31, 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS
Organization and Description of Business
Cannagistics, Inc. (Formerly FIGO Ventures,
Inc., formerly Precious Investments, Inc.) (‘The Company’) was incorporated under the laws of the State of Nevada on
May 26, 2004. The Company was an Exploration Stage Company with the principle business being the acquisition and exploration of
resource properties.
The Company had allowed its charter with the
state of Nevada to be revoked by the Secretary of State for failure to file the required annual lists and pay the required annual
fees. Its last known officers and directors reflected in the records of the Secretary of State were unresponsive or stated they
were no longer involved with the Company. The purported replacement officers and directors were unresponsive.
On September 14, 2012, NPNC Management, LLC
filed a petition in the Eighth Judicial District Court in Clark County, Nevada and was appointed custodian of the Company on January
15, 2012.
On October 24, 2012, the interim board authorized
the sale of 55,000,000 (2,200,000 split adjusted) shares of common stock for $6,000 to NPNC Management, LLC, in a private placement
transaction exempt from the Securities Act of 1933, as amended, pursuant to section 4(2) thereof and the rules and regulations
promulgated there under.
On March 1, 2017, the Company then entered
into a joint venture agreement with Eddeb Management (“Eddeb”). The purpose of the joint venture is to build a fund
for the purpose of trading in precious gems, notably, colored diamonds.
On November 16, 2017, the Company entered
into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with American Freight Xchange, Inc.,
a privately held New York corporation (“American Freight”), and Shipzooka Acquisition Corp. (“Shipzooka Sub”),
a newly formed wholly-owned Nevada subsidiary of Precious Investments, Inc. In connection with the closing of this merger transaction,
Shipzooka Sub merged with and into American Freight (the “Merger”) on December 5, 2017, with the filing of Articles
of Merger with the Nevada Secretary of State and Certificate of Merger with the New York Division of Corporations.
The transaction resulted in the Company acquiring
Subsidiary by the exchange of all of the outstanding shares of Subsidiary for 1,000,000 newly issued Series C Preferred shares
of stock, $0.001 par value (the “Preferred Stock”) of Parent which have conversion and voting rights of 72.5 votes
for each share, representing approximately 90.2% of the voting rights
For accounting purposes, the transaction was
treated as a reverse merger since the acquired entity now forms the basis for operations and the transaction resulted in a change
in control, with the acquired company electing to become the successor issuer for reporting purposes. The accompanying financial
statements have been prepared to reflect the assets, liabilities and operations of American Freight Xchange, Inc. exclusive of
Precious Investments, Inc since all predecessor operations were discontinued.
As part of the transaction, amounts due to
former officers were forgiven, with the balances recorded as Contributed Capital. For equity purposes, accumulated deficit shown
are those American Freight Xchange, Inc. Shipzooka Acquisition Corp. is a dormant corporation.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
On July 23, 2018 the Company amended the name
of its subsidiary, KRG Logistics, Inc., to Global3pl, Inc. (an Ontario corporation).
On September 4, 2018 the Company incorporated
Cannagistics, Inc., in the province of Ontario, Canada. This is intended to be a possible new line of business for the Company
but is dormant at this time.
On April 17, 2019, we filed Articles of Merger
with the Secretary of State of Nevada in order to effectuate a merger with our wholly owned subsidiary, Cannagistics, Inc. Shareholder
approval was not required under Section 92A.180 of the Nevada Revised Statutes. As part of the merger, our board of directors authorized
a change in our name to “Cannagistics, Inc.” and our Articles of Incorporation have been amended to reflect this name
change.
On September 26, 2019, the Board of Directors
approved the registered spinout of its Global3pl, Inc., (a New York corporation) (“Global3pl”) subsidiary. Global3pl
is to be a logistics technology provider, along with the American Freight Xchange and UrbanX Platforms that have been under development
by the Company.
The Board of Directors also declared a stock
dividend for all shareholders, with a record date of October 10, 2019. For every 50 shares of common stock of the Company, all
shareholders of record on the record date will receive one share of common stock in Global3pl. Global3pl will also file a registration
statement as part of its raise of capital to complete the development of American Freight Xchange, a North American freight broker-driven
3pl network to handle the management of long haul LTL (less than truckload), and specialty freight (white glove) services and Urbanx,
a North American network of rush-messenger local trucking services for forward and reverse last mile delivery (including white
glove service).
Effective October 1, 2019, the Company suspended operations of its
subsidiary Global3pl, Inc., formerly known as KRG Logistics, Inc., (an Ontario corporation), suspended future operations related
to the operations in Mississauga, Ontario. It is in the process of collecting accounts receivables still due and working on a plan
to pay its payables. It has entered into an agreement with 10451029 Canada Inc., d/b/a Reliable Logistics, for the assignment and
of the assets of Global3pl, Inc., (an Ontario Corporation). The transaction was completed on November 6, 2019. The Company anticipates
formally liquidating and dissolving the subsidiary in the next fiscal Quarter. This is a separate corporation from Global3pl, Inc.
(A New York corporation).
Current Projects in Development
Malta Project
Cannagistics Lab Malta, is an emerging
biotech lab with an intrinsic knowledge in the medicinal cannabis industry. With a solid team of a multidisciplinary professionals
in the pharmaceutical industry, complex supply chain and logistics management, unique technology and intellectual property, Cannagistics
Lab purpose is to add value and offer a progress proposal to Malta medicinal cannabis industry, based on its interest to support,
educate, take advantage of and focus on the development of breakthrough medicinal cannabis products with different therapeutic
uses in patients around the world to whom science and traditional medicine simply could not reach; our vision and knowledge allows
us to focus on GMP biopharmaceutical cannabis based medicines, -with the highest standards starting from the raw material- for
multiple applications in patients, using latest technology, ancestral knowledge, scientific studies, with an exceptional team of
research and development following the strictest standards and good distribution practices for export and national use.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
Manufacturing areas description:
The factory will have the following areas for
the production process, which will implement the safety protocols and the project will be developed.
Area of receipt: Area of the property that
has been destined for the receipt of the raw material and supplies that arrives for the manufacturing process.
Raw material area: Warehouse equipped with
the security measures required for the storage of the raw material.
Production and manufacturing area: Sector where
the manufacturing process will be carried out in which the transforming plant will be in order to obtain the final product.
Reagents and supplies area: Warehouse equipped
with the security measures required for the storage of reagents and supplies.
Solid waste area: Sector destined for the storage
of solid waste produced during the manufacturing process.
Finished product area: Warehouse equipped with
the security measures required for the storage of the finished product.
Dispatch area: Sector from where the process
of dispatch and delivery of the finished product to its final recipient will take place
Administrative area: Sector of the factory
where administrative, accounting and security activities will be developed.
Global3pl, Inc (New York Corporation)
Global 3PL, Inc. (NY) is a logistics subsidiary with a seasoned
industry team focused on the development of a SaaS platform serving the just-in-time warehouse inventory & distribution industry,
as well as general and special commodities segment of the North American freight industry. It intends to operate three integrated
brands: AFX, G3PL, and Urban X
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Principles of consolidation
The consolidated financial statements include
the accounts of Cannagistics, Inc. and its wholly owned subsidiaries American Freight Xchange, Inc and Global3pl, Inc. (Ontario),
formerly known as KRG Logistics, Inc. All significant inter-company transactions and balances have been eliminated.
Basis of Presentation
We have summarized our most significant accounting
policies for the fiscal period ended July 31, 2019.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
Unaudited Consolidated Interim Financial Statements
These unaudited condensed consolidated interim
financial statements have been prepared on the same basis as the annual financial statement and should be read in conjunction with
those annual financial statements filed on Form 10-K for the year ended July 31, 2019. In the opinion of management, these unaudited
condensed consolidated interim financial statements reflect adjustments, necessary to present fairly the Company’s financial
position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily
indicative of the results for a full year or for any future period.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting principles 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 the financial statements
and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Income Taxes
The Company accounts for income taxes under
ASC 740 "Income Taxes," which codified SFAS 109, "Accounting for Income Taxes" and FIN 48 “Accounting
for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” Under the asset and liability method
of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred
tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
Derivative Financial Instruments
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks.
The Company reviews the terms of convertible
loans, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including
embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument.
Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants to employees
and non-employees in connection with consulting or other services. These options or warrants may, depending on their terms, be
accounted for as derivative instrument liabilities, rather than as equity.
Derivative financial instruments are initially
measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at fair value and then re-valued at each reporting date, with changes in the fair value reported as charges
or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities
exceed the total proceeds received an immediate charge to income is recognized in order to initially record the derivative instrument
liabilities at their fair value.
The discount from the face value of the convertible
debt instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated
rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the
effective interest method.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any
previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative
instrument could be required within twelve months of the balance sheet date.
Fair value of financial instruments
The Company’s financial instruments consist
of its liabilities. The carrying amount of payables and the loan payable – related party approximate fair value because of
the short-term nature of these items. The promissory notes, and convertible notes payables are measured at amortized cost using
the effective interest method, which approximates fair value due to the relationship between the interest rate on long-term debt
and the Company’s incremental risk adjusted borrowing rate.
Accounts receivable and allowance for doubtful
accounts
Accounts receivable are stated at the amount
management expects to collect. The Company generally does not require collateral to support customer receivables. The Company
provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection
information and existing economic conditions. As of January 31, 2020, and 2019 the allowance for doubtful accounts was $0 and
$0, respectively.
Revenue Recognition
The Company recognizes revenue related to transaction
from its third-party logistics sales when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing
the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no
significant obligation for future performance to directly bring about the resale of the product by the buyer as required by ASC
605 – Revenue Recognition. Cost of sales, rebates
In May 2014, the FASB issued ASU 2014-09 “Revenue
from Contracts with Customers” (Topic 606) which establishes revenue recognition standards. ASU 2014-09 was effective for
annual reporting periods beginning after December 15,2017. We adopted ASU 2014-09 effective August 1, 2018. ASU 2014-09 has not
had a significant effect on the Company’s financial position and results of operations.
FASB ASC Topic 830, Foreign Currency Matters
(formerly FASB Statement No. 52, Foreign Currency Translation) provides accounting guidance for transactions denominated in a foreign
currency, and for operations undertaken in a foreign currency environment. To prepare consolidated financial statements, an entity
translates all functional currency financial statements into a single reporting currency. The same applies if an entity uses different
currencies for reporting purposes and for its functional currency. The company reports its currency in US dollars.
Leases
In February 2016, FASB issued ASU-2016-02 (Topic
842) “Leases”, provides accounting guidance for leases, recognizing lease assets and lease liabilities on the balance
sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning
after December 15, 2018.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
NOTE 3 – GOING CONCERN
Management does not expect existing cash as
of January 31, 2020 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of
these January 31, 2020 financial statements. These financial statements have been prepared on a going concern basis which assumes
the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of January 31,
2020, the Company has incurred losses totaling $6,290,565 since inception, has not yet generated material revenue from operations,
and will require additional
funds to maintain its operations. These factors
raise substantial doubt regarding the Company’s ability to continue as a going concern within one year after the consolidated
financial statements are issued. The Company’s ability to continue as a going concern is dependent upon its ability to generate
future profitable operations and obtain the necessary financing to meet its obligations and repay its liabilities arising from
normal business operations when they become due. The Company intends to finance operating costs over the next twelve months through
its existing financial resources and we may also raise additional capital through equity offerings, debt financings, collaborations
and/or licensing arrangements. If adequate funds are not available on acceptable terms, we may be required to delay, reduce the
scope of, or curtail, our operations. The accompanying consolidated financial statements do not include any adjustments to the
recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
NOTE 4 – DISCONTINUED OPERATIONS
On November 6, 2019, the Company discontinued its operations of
subsidiary Global3pl, Inc., formerly known as KRG Logistics, Inc., (an Ontario corporation) and sold the assets of $54,315 for
$10 dollars. The transactions resulted in a loss of $119,081 as reported on the income statement as of January 31, 2020.
The following summarizes the operations of the discontinued operations:
|
|
For
the Six Months Ended
|
|
|
January
31, 2020
|
|
January
31, 2019
|
Revenues
|
|
$
|
295,312
|
|
|
$
|
1,166,308
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
295,223
|
|
|
|
1,129,789
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
89
|
|
|
|
36,519
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
32,546
|
|
|
|
294,095
|
Wages and benefits
|
|
|
24,070
|
|
|
|
—
|
Professional fees
|
|
|
3,016
|
|
|
|
—
|
Total operating expenses
|
|
|
59,632
|
|
|
|
294,095
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(59,543
|
)
|
|
|
(257,576)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(5,223
|
)
|
|
|
(8,567)
|
|
|
|
|
|
|
|
|
Loss from operations of discontinued operations
|
|
|
(64,766
|
)
|
|
|
(266,143)
|
Loss on disposal of discontinued operations
|
|
|
(54,315
|
)
|
|
|
—
|
|
|
$
|
(119,081
|
)
|
|
$
|
(266,143)
|
NOTE 5 – EQUIPMENT AND IMPROVEMENTS
Equipment and improvements are summarized as follows:
|
|
January 31, 2020
|
|
January 31, 2019
|
Furniture and fixtures
|
|
$
|
—
|
|
|
$
|
76,930
|
Machinery and equipment
|
|
|
—
|
|
|
|
205,900
|
Transportation equipment
|
|
|
—
|
|
|
|
11,185
|
Building improvements
|
|
|
—
|
|
|
|
4,413
|
|
|
|
0
|
|
|
|
283,075
|
|
|
|
|
|
|
|
|
Less accumulated
depreciation and amortization
|
|
|
0
|
|
|
|
244,132
|
|
|
$
|
0
|
|
|
$
|
54,296
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
$
|
8,806
|
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
NOTE 6 – PROMISSORY NOTES
Promissory notes payable as of January 31, 2020 and July 31, 2019
consisted of the following:
Description
|
|
January 30, 2020
|
|
January 31, 2019
|
Note payable dated March 8, 2018, matures March 8, 2019, currently in default, bearing interest at 10% per annum.
|
|
$
|
30,000
|
|
|
$
|
30,000
|
Note payable dated July 20, 2018 matures October 1, 2019, bearing interest at 0% per annum. This Note is still outstanding
|
|
|
135,000
|
|
|
|
135,000
|
Less current portion of long-term debt
|
|
|
165,000
|
|
|
|
165,000
|
Total long-term debt
|
|
$
|
0
|
|
|
$
|
0
|
Interest expense for the six months ended January 31, 2020 and 2019
was $8,570 and $5,019 respectively.
NOTE 7 - CONVERTIBLE DEBT
Convertible debt as of January 31, 2020 and January 31,
2019 consisted of the following:
Description
|
|
January 31, 2020
|
|
January 31, 2019
|
|
|
|
|
|
Convertible note agreement dated November 1, 2013 in the amount of $30,000 payable and due on demand bearing interest at 12% per annum. Principal and accrued interest is convertible at $.002250 per share.
|
|
$
|
11,041
|
|
|
$
|
11,041
|
Convertible note agreement dated February 20, 2018 in the amount of $1,034,000 payable and due on demand bearing interest at 10% per annum. Principal and accrued interest is convertible at $.028712 per share.
|
|
$
|
1,034,000
|
|
|
$
|
1,034,000
|
Convertible note agreement dated March 13, 2019 in the amount of $800,000 payable and due on March 20, 2020 bearing interest at 24% per annum.
|
|
$
|
800,000
|
|
|
$
|
0
|
Convertible note agreement dated June 28, 2019 in the amount of $300,000 payable and due on June 28, 2020 bearing interest at 20% per annum.
|
|
$
|
300,000
|
|
|
$
|
0
|
Convertible note agreement dated August 6, 2019 in the amount of $31,500 payable and due on August 6, 2020 bearing interest at 20% per annum.
|
|
$
|
31,500
|
|
|
$
|
0
|
Convertible note agreement dated August 19, 2019 in the amount of $3,800 payable and due on August 19, 2020 bearing interest at 24% per annum.
|
|
$
|
3,800
|
|
|
$
|
0
|
Convertible note agreement dated September 4, 2019 in the amount of $36,500 payable and due on September 4, 2020 bearing interest at 20% per annum.
|
|
$
|
36,500
|
|
|
$
|
0
|
Convertible note agreement dated December 4, 2019 in the amount of $95,000 payable and due on December 4, 2020 bearing interest at 12% per annum.
|
|
$
|
95,000
|
|
|
$
|
0
|
Convertible notes, net of discount
|
|
$
|
2,311,841
|
|
|
$
|
1,045,041
|
The Company recognized $0 of debt
discount accretion expense on the above notes. Interest expense related to these notes for the six months ended January 31, 2020
and 2019 was $187,218 and $21,475.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
NOTE 8 - LINE OF CREDIT
The Company has a line of credit with a maximum
borrowing limit of $400,000, bearing an interest rate of prime plus 3.25% per annum and secured by a General Security Agreement.
As of January 31, 2020, and January 31, 2019, $289,242 and $247,043 were drawn on the line of credit, respectively. Interest expense
for the six months ended January 31, 2020 and 2019 was $5,227 and $4,433 respectively. Beginning February 1, 2019, the Company
is required to maintain a cash collateral account in the amount of $200,000 in Canadian dollars. The Company has invested in a
Guaranteed Investment Certificate for a one-year term at an interest rate of .25%.
NOTE 9 – RELATED PARTY TRANSACTIONS
A shareholder of the Company has paid certain
expenses of the Company. These amounts are reflected as a loan payable to related party. The shareholder advanced $9,000 and $0
during the six months ended January 31, 2020 and 2019, respectively. As of January 31, 2020, and 2019, there were $542,402 and
$499,583 due to related parties, and a shareholder, respectively.
The Company has consulting agreements with
two of its shareholders to provide management and financial services that commenced on December 1, 2017. For the three months ended
January 31, 2020 and 2019 consulting fees paid were $62,186 and $68,465 respectively. For the six months ended January 31, 2020
and 2019 consulting fees paid were $87,773 and $153,987 respectively. The consulting fees are included as part of professional
fees on the Company’s consolidated statements of operations.
The Company on February 20, 2018 entered into
a related party (that being Recommerce Group, Inc. and our President is a principal in Recommerce Group, Inc.) note receivable
in the amount of $1,034,000. The Company made an additional advance in the amount of $175,000 that is non-interest bearing. The
note is payable and due on demand and bears interest at the rate of 10%. A total of $153,217 has been applied as payments against
this Note. Interest expense in the amount of $26,062 and $21,475 for the three months ended January 31, 2020 and 2019, respectively,
has been recorded in the financial statements. Interest expense in the amount of $52,125 and $43,220 for the six months
ended January 31, 2020 and 2019, respectively, has been recorded in the financial statements.
NOTE 10 – STOCKHOLDERS’ EQUITY
(DEFICIT)
The Company is authorized to issue
250,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of Preferred stock. As of January 31, 2020, and
July 31, 2019, there were 97,599,277 and 93,118,077 shares, of common stock outstanding, respectively. There were 8,000,000 shares of
Series D Preferred stock outstanding as of January 31, 2020 and July 31, 2019.
On November 1, 2017, we effected a one-for-
four reverse stock split. All share and per share information has been retroactively adjusted to reflect the stock split.
On November 7, 2017, the Company designated
1,000,000 shares of Preferred Stock as Series C Preferred stock, par value $0.001 per share (the “Series C Preferred Stock”).
Each share of Series C Preferred Stock is convertible into 72.5 common shares and has voting rights based on this ratio. As of
January 31, 2018, there were 1,000,000 shares of Preferred C shares issued and outstanding. On May 15, 2019, the 1,000,000 shares
were converted to 72,500,000 shares of common stock.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
January 31, 2020
On April 29, 2019, the Company designated 10,000,000
shares of Preferred Stock as Series D Preferred stock, par value $0.001 per share (the “Series D Preferred Stock”).
Each share of Series D Preferred Stock is convertible into 72.5 common shares and has voting rights based on this ratio. As of
January 31, 2019, there were 8,000,000 shares of Preferred D shares issued and outstanding.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Litigations, Claims and Assessments
The Company may become involved in various
lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any
such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its
business, financial condition or operating results.
Operating Leases
The Company in February 2019 assumed a lease
agreement for a facility site and entered into a lease agreement for office space. The facility site lease has a term of twenty-three
months expiring on December 31, 2020 and the office space lease has a five-year term and begins April 1, 2019 and ends March 31,
2024.
Effective October 1, 2019, the Company suspended
operations of its subsidiary Global3pl, Inc., (an Ontario corporation, formerly known as KRG Logistics, Inc.), suspended future
operations related to the operations in Mississauga, Ontario. It is in the process of collecting accounts receivables still due
and working on a plan to pay its payables. It has entered into an agreement with 10451029 Canada Inc., d/b/a Reliable Logistics,
for the assignment and of the assets of Global3pl, Inc., (an Ontario Corporation). The transaction has not yet been completed.
The Company on July 31, 2019 entered into a
lease agreement for additional office space. The lease has a commencement date of June 1, 2019 and has a lease term of five years
expiring on May 31, 2024.
Future minimum lease payments, as set forth
in the lease, are below:
Year
|
|
Amount
|
2019-2020
|
|
|
$
|
22,075
|
2020-2021
|
|
|
$
|
22,737
|
2021-2022
|
|
|
$
|
23,415
|
2022-2023
|
|
|
$
|
24,122
|
2023-2024
|
|
|
$
|
14,314
|
NOTE 12 – SUBSEQUENT EVENTS
Management of the Company has evaluated
the subsequent events that have occurred through the date of the report and determined that the following subsequent events require
disclosure:
Sanguine Group, LLC, has loaned the Company
additional funds not already included in the established promissory note. These funds are not yet reduced to a written agreement.
Garden State Holdings loaned the Company $55,000
on December 4, 2019. There is no written note at this time, but Garden State Holdings has committed to loan the Company up to $175,000.
Sanguine Group, LLC and Garden State Holdings
are entities controlled by the same person, who is an investor in the Company.
Emerging Growth Advisors, Inc., controlled
by James W. Zimbler, our President/Director has loaned the company a total of $44,777.24. There is no terms or written note.
The Company has two projects currently under development.
They are the Malta Project and the Global3pl, Inc., (NY Corporation) software as a system platform, as described in Note 1.