The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying unaudited notes are an integral part of the unaudited condensed consolidated financial statements
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.
The Company operates 6 restaurants in the Denver, Colorado metro area and 1 restaurant in the Ft. Lauderdale, Florida metro area. Kalaka Mexican Kitchen (f/k/a 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 first of the Companys newest concept - Illegal Pizza - opened in Lauderhill, Florida in June 2019. The Company plans to continue opening Illegal Burger and Illegal Pizza 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 Company completed its Illegal Burger Franchise Offering documents in May 2019. Illegal Burger Franchising has retained a marketing group to assist with the startup of its offering of franchises and to pre-qualify potential franchisees. The Company hopes to have its first franchise sales in the third quarter 2020.
The Company began its operations in Illegal Brands in June 2019, offering its own branded CBD infused water and CBD powder packets, first through its restaurant locations. Illegal Brands expects to offer these products to third parties on a wholesale basis.
The accompanying condensed consolidated financial statements include the activities of West Coast Ventures Group Corp., Nixon Restaurant Group, Inc., J&F Restaurant, LLC (Kalaka and Illegal Burger Evergreen), Illegal Burger, LLC (Arvada), Illegal Burger Writer Square, LLC, Illegal Burger Capital Hill, LLC, Illegal Burger CitiSet, LLC, Illegal Pizza, LLC, Illegal Brands, LLC, Illegal Burger Franchising, LLC and Illegal Brands IP, LLC, its wholly owned subsidiaries.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, Illegal Burger CitiSet, LLC, Illegal Pizza Lauderhill, LLC, Illegal Brands, LLC, Illegal Burger Franchising, LLC and Illegal Brands IP, LLC. 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 six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
F-6
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
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 and derivatives.
c) 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 removed 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.
d) 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.
e) Operating Leases
Effective January 1, 2019, the Company 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 classify 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, Illegal Burger CitiSet, Illegal Pizza Lauderhill and the corporate office were classified as operating leases as of June 30, 2020. Operating lease expense is recognized on a straight-line basis over the term of the lease.
The Company identifies 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) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
f) Net Income (Loss) Per Share
Basic income (loss) per share excludes dilution and is computed by dividing the income (loss) attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted income (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 income (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. The dilutive common stock equivalents were 20,993,851,521 and zero for the six months ended June 30, 2020 and 2019.
g) 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 2018, 2017 and 2016 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.
h) 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. The Company had no financial instruments that qualified as cash equivalents.
i) 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) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
i) 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.
j) 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 any gain or loss on extinguishment is recognized in earnings.
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.
k) 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.
l) Related Party Transactions
All transactions with related parties are in the normal course of operations and are measured at the exchange amount.
m) Recent Accounting Pronouncements
On January 1, 2019, the Company adopted 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 adoption of ASU 2016-02 resulted in the Companys recognition of right to use assets and associated obligations on its balance sheet.
n) Revenue Recognition
The Company adopted Accounting Standards Codification, (ASC), 606, Revenue from Contracts with Customer on January 1, 2018. This revenue recognition standard 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 Companys principal operations are the operation of quick casual restaurants wherein the customer pays for their food upon placing the order. The Illegal Brands operations are the sale of CBD infused water and CBD soluble packets which at present are only sold in the Companys restaurants. The franchise operations have yet to sell a franchise, but upon such sales will follow the appropriate revenue recognition procedures.
F-9
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
n) Revenue Recognition, continued
The Companys 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.
o) Inventories
Inventories consist of food, beverages, and supplies valued at the lower of cost (first-in, first-out method) or net realizable value.
(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 realized net income of approximately $0.5 million for the six months ended June 30, 2020 and have an accumulated deficit of approximately $8.5 million and a negative working capital of approximately $5.1 million at June 30, 2020, inclusive of current 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, 2019 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:
|
|
| |
|
June 30, 2020
|
|
December 31, 2019
|
Equipment
|
$
569,715
|
|
$
569,715
|
Leasehold improvements
|
239,050
|
|
231,493
|
Total
|
$
808,765
|
|
$
801,208
|
Accumulated depreciation
|
(407,788)
|
|
(342,249)
|
Ending Balance
|
$
400,977
|
|
$
458,959
|
F-10
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(4) FIXED ASSETS, continued
Depreciation expense was $65,539 and $29,827 for the six months ended June 30, 2020 and 2019, respectively.
(5) INTANGIBLE ASSETS
Intangible assets consisted of the following:
|
|
| |
|
June 30, 2020
|
|
December 31, 2019
|
Leasehold rights
|
$
175,000
|
|
$
175,000
|
Liquor licenses
|
11,913
|
|
12,789
|
Franchise offering documents
|
16,000
|
|
16,000
|
Franchise sales website
|
16,500
|
|
16,500
|
Trademarks
|
9,100
|
|
9,100
|
Total
|
$
228,513
|
|
$
229,389
|
Accumulated amortization
|
(77,929)
|
|
(66,235)
|
Ending Balance
|
$
150,584
|
|
$
163,154
|
Amortization expense was $11,695 and $6,597 for the six months ended June 30, 2020 and 2019, respectively.
The following table presents the estimated aggregate future amortization expense of intangible assets:
| |
2020 (six months)
|
$
11,695
|
2021
|
21,140
|
2022
|
20,997
|
2023
|
20,997
|
2024
|
20,997
|
Thereafter
|
54,758
|
|
$
150,584
|
(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.
F-11
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(7) STOCKHOLDER LOAN
From time to time the principal stockholder of the Company has loaned funds to the Company on an undocumented 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 $144,472 and $0 at June 30, 2020 and December 31, 2019, respectively.
(8) DERIVATIVES
The following is the Companys assets and liabilities measured at fair value on a recurring and nonrecurring basis at June 30, 2020 and December 31, 2019, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):
|
|
|
|
| |
|
June 30, 2020
|
|
December 31, 2019
|
Level 3 - Embedded Derivative Liabilities
|
$
|
795,880
|
|
$
|
2,740,054
|
Changes in Level 3 assets measured at fair value for the three months ended March 31, 2020 were as follows:
|
| |
Balance, December 31, 2019
|
$
|
2,740,054
|
Portion of initial valuation recorded as debt discount
|
|
-
|
Change upon conversion or settlement
|
|
(47,154)
|
Change in fair value of derivative
|
|
(1,897,020)
|
Balance, June 30, 2019
|
$
|
795,880
|
F-12
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES
Notes Payable consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Look
|
|
Balance
|
Inception
|
|
Issue
|
|
Maturity
|
|
|
|
Interest
|
|
Conversion
|
|
Back
|
|
June 30,
|
|
December
|
Amount
|
|
Date
|
|
Date
|
|
OID
|
|
Rate
|
|
Price
|
|
Period
|
|
2020
|
|
31, 2019
|
a) Sale of Future Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
various
|
|
various
|
|
-
|
|
-
|
|
-
|
|
-
|
|
$
267,608
|
|
$
309,311
|
b) Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
$
25,903
|
|
10/1/18
|
|
6/4/20
|
|
-
|
|
17%
|
|
-
|
|
-
|
|
-
|
|
3,372
|
$
4,100
|
|
10/22/18
|
|
10/22/20
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,327
|
$
14,800
|
|
6/5/18
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8,505
|
|
10,219
|
$
100,000
|
|
4/10/19
|
|
4/10/20
|
|
-
|
|
20%
|
|
-
|
|
-
|
|
104,603
|
|
114,630
|
|
|
|
|
|
|
|
|
$
113,108
|
|
$
130,548
|
c) Convertible Notes - Variable Conversion Rate
|
|
|
|
|
|
|
|
|
|
|
$
30,000
|
|
6/14/17
|
|
12/14/17
|
|
-
|
|
10%
|
|
35%
|
|
3 days
|
|
34,597
|
|
33,600
|
$
50,000
|
|
4/16/19
|
|
1/16/20
|
|
10%
|
|
12%
|
|
45%
|
|
20 days
|
|
330
|
|
330
|
$
153,000
|
|
5/28/19
|
|
5/24/20
|
|
-
|
|
12%
|
|
45%
|
|
20 days
|
|
39,543
|
|
72,105
|
$
118,750
|
|
6/24/19
|
|
3/17/20
|
|
-
|
|
12%
|
|
50%
|
|
25 days
|
|
105,374
|
|
123,868
|
$
50,000
|
|
6/28/19
|
|
3/27/20
|
|
10%
|
|
12%
|
|
45%
|
|
20 days
|
|
47,659
|
|
49,427
|
$
50,000
|
|
6/28/19
|
|
3/27/20
|
|
10%
|
|
12%
|
|
45%
|
|
20 days
|
|
51,992
|
|
57,652
|
$
50,000
|
|
6/28/19
|
|
3/27/20
|
|
10%
|
|
12%
|
|
45%
|
|
20 days
|
|
61,300
|
|
57,779
|
$
103,000
|
|
7/1/19
|
|
6/27/20
|
|
-
|
|
12%
|
|
45%
|
|
20 days
|
|
115,394
|
|
109,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-13
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Look
|
|
Balance
|
Inception
|
|
Issue
|
|
Maturity
|
|
|
|
Interest
|
|
Conversion
|
|
Back
|
|
June 30,
|
|
December
|
Amount
|
|
Date
|
|
Date
|
|
OID
|
|
Rate
|
|
Price
|
|
Period
|
|
2020
|
|
31, 2019
|
c) Convertible Notes - Variable Conversion Rate, continued
|
|
|
|
|
|
|
|
|
$
108,000
|
|
7/5/19
|
|
6/30/20
|
|
11.11%
|
|
12%
|
|
45%
|
|
20 days
|
|
129,438
|
|
132,699
|
$
103,000
|
|
7/10/19
|
|
7/10/20
|
|
10%
|
|
8%
|
|
45%
|
|
20 days
|
|
96,255
|
|
121,862
|
$
75,000
|
|
8/7/19
|
|
5/7/20
|
|
-
|
|
12%
|
|
50%
|
|
10 days
|
|
77,046
|
|
73,600
|
$
70,000
|
|
8/7/19
|
|
5/7/20
|
|
12%
|
|
12%
|
|
40%
|
|
20 days
|
|
83,088
|
|
77,172
|
$
90,000
|
|
8/8/19
|
|
8/8/20
|
|
-
|
|
10%
|
|
43%
|
|
20 days
|
|
92,938
|
|
96,914
|
$
135,000
|
|
8/12/19
|
|
7/10/20
|
|
11%
|
|
8%
|
|
45%
|
|
20 days
|
|
162,352
|
|
160,160
|
$
53,000
|
|
10/31/19
|
|
8/15/20
|
|
-
|
|
12%
|
|
45%
|
|
20 days
|
|
56,351
|
|
53,709
|
$
18,235
|
|
12/13/19
|
|
12/13/20
|
|
9%
|
|
10%
|
|
35%
|
|
25 days
|
|
19,696
|
|
18,394
|
Subtotal Convertible Notes - Variable Conversion Rate
|
|
|
|
|
|
1,167,895
|
|
1,238,468
|
Less unamortized discounts
|
|
|
|
|
|
|
|
|
|
(49,870)
|
|
(553,646)
|
Net Convertible Notes - Variable Conversion Rate
|
|
|
|
|
|
$
1,118,025
|
|
$
684,822
|
d) Convertible Notes - Fixed Conversion Rate
|
|
|
|
|
|
|
|
|
|
|
$
87,522
|
|
7/3/18
|
|
12/31/20
|
|
-
|
|
12%
|
|
$0.0035
|
|
-
|
|
23,358
|
|
22,039
|
$
54,445
|
|
7/10/18
|
|
12/31/21
|
|
-
|
|
8%
|
|
$0.0035
|
|
-
|
|
61,500
|
|
59,406
|
$
33,504
|
|
8/10/18
|
|
12/31/21
|
|
-
|
|
12%
|
|
$0.0035
|
|
-
|
|
39,465
|
|
37,551
|
$
80,044
|
|
8/7/19
|
|
12/31/21
|
|
-
|
|
12%
|
|
$0.0035
|
|
-
|
|
39,664
|
|
37,866
|
$
100,000
|
|
4/10/19
|
|
4/10/20
|
|
-
|
|
20%
|
|
$.05
|
|
-
|
|
104,603
|
|
114,630
|
Subtotal Convertible Notes - Fixed Conversion Rate
|
|
|
|
|
|
268,590
|
|
271,492
|
Less unamortized discounts
|
|
|
|
|
|
|
|
|
|
(4,196)
|
|
(76,465)
|
Net Convertible Notes - Variable Conversion Rate
|
|
|
|
|
|
$
264,394
|
|
$
195,027
|
e) Note of Wholly Owned Subsidiary
|
|
|
|
|
|
|
|
|
$
375,000
|
|
3/5/15
|
|
12/5/15
|
|
-
|
|
18%
|
|
-
|
|
-
|
|
$
538,896
|
|
$
438,220
|
F-14
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
a) Future Receivables Sale Agreements
The Company, through Nixon Restaurant Group, Inc, J&F Restaurants, LLC, Illegal Burger, LLC, Illegal Burger Writer Square, LLC, Illegal Burger Capitol Hill, LLC and Illegal Burger CitiSet, LLC entered into several agreements at various times 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 2019 and 2018 totaled $415,000 and $140,000, respectively. At June 30, 2020 and December 31, 2019, the total payable balances inclusive of interest under the factoring agreements were $499,353 and $450,258, respectively.
b) One Year Note
In April 2019, the Company entered into a one year note for $100,000 with a third party. This note carries a 20% interest rate and is collateralized by a second mortgage on the founder and CEOs residence. The loan balance, including interest, was $104,603 at June 30, 2020. In June 2020, the lender agreed to extend the maturity one year in exchange for the Company paying the first year accrued interest of $20,000.
c) Convertible Notes - Variable Conversion
In the fourth quarter 2019, the Company entered into two convertible notes in exchange for $73,000 in cash with a principal amount of $73,000. 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 $73,000 with a related debt discount of $73,000.
In the third quarter 2019, the Company entered into six convertible notes in exchange for $567,000 in cash with a principal amount of $609,400. 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 $960,354 with a related debt discount of $609,400, and an immediate loss of $281,945.
In the third quarter 2019, the Company paid off three convertible notes in cash in the amount of $472,093.
In the second quarter 2019, the Company entered into nine convertible notes in exchange for $591,000 in cash with a principal amount of $669,000. 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 $891,345 with a related debt discount of $602,580, and an immediate loss of $291,355.
In the second quarter 2019, the Company paid off three convertible notes in cash in the amount of $504,812.
In the first quarter 2019, the Company entered into five convertible notes in exchange for $424,000 in cash. 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 first quarter 2019, the Company paid off two convertible notes in cash in the amount of $101,181.
In the fourth quarter 2018, the Company entered into two convertible notes in exchange for $238,000 in cash. 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. These notes were settled in 2019.
In the third quarter 2018, the Company entered into two convertible notes in exchange for $68,000 in cash. 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. These notes were settled in 2019.
F-15
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
c) Convertible Notes - Variable Conversion, continued
In the first quarter 2018, the Company entered into three convertible notes in exchange for $280,000 in cash. 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. These notes were settled in 2018, and which included a penalty of $40,528.
d) Convertible Notes - Fixed Conversion
In the third quarter 2019, the Company entered into one convertible note in exchange for $108,000 in cash with a note amount of $120,000. Based on the conversion terms the beneficial conversion rights embedded in this convertible note was recorded as a debt discount in the amount of $28,800.
In the second quarter 2019, the Company entered into one convertible note in exchange for $100,000 in cash. This note matures in one year and carry a 20% interest rates. The note converts into shares of the Companys common stock at a price of $0.04 per share of Common Stock from October 10, 2019 to maturity. At maturity it is convertible at $0.05 per share as long as Companys Volume Weighted Average Price, (VWAP) for the ten trading days prior to the conversion notice is greater than $0.07 per share. If the VWAP is below $0.07, then the conversion formula is $0.05xVWAP/$0.07. Based on the conversion terms the beneficial conversion rights embedded in this convertible note was recorded as a debt discount in the amount of $56,250 and is being amortized over the life of the loan. In June 2020, the lender agreed to extend the maturity one year in exchange for the Company paying the first year accrued interest of $20,000.
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 into four 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 December 31, 2020 and 2021. During 2019, $82,831 of these notes were converted into 23,665,964 shares of common stock. The aggregate remaining balance outstanding of these notes at December 31, 2019 is $156,862.
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. During the second and third quarters of 2019 this note was converted into 5,000,000 shares of common stock, and the balance of this note is $0 at December 31, 2019.
In the fourth quarter 2018, the Company entered into a convertible note in exchange for $100,000 in cash. This note matures in two years 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. In the second quarter 2019, this note was paid in full in cash. The balance of this note is $0 at December 31, 2019.
e) Third Party Note Payable with Subsidiary
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
F-16
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(9) NOTES PAYABLE TO THIRD PARTIES, continued
e) Third Party Note Payable with Subsidiary, continued
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, 2020 and December 31, 2019, 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. In October 2018, the lender filed a claim demanding repayment of all amounts outstanding in the amount of $565,267. (See Note 16a)
f) Third Party Notes Payable
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.
g) US Small Business Administration Paycheck Protection Program (PPP)
In April 2020, the Company received a loan of $298,700 under the SBAs PPP. Depending upon the final determination of the requirements for forgiveness under this program, the Company expects its PPP loan to be substantially to wholly forgiven. Any amount not forgiven becomes a two year loan at 1% interest.
h) US Small Business Administration Economic Injury Disaster Loans (EIDL)
In May 2020, the Company, through one of its operating LLC subsidiaries, received a SBA EIDL in the amount of $21,900. In June 2020, the Company, through five of its operating LLC subsidiaries received five SBA EIDL in the total amount of $747,500 and EIDL Grants totaling $36,000. The EIDL are 30 year loans carrying a 3.25% interest rate with the first payment due in June 2021. The Grants do not get repaid.
(10) OPERATING LEASES
a) 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 consist 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 in May 2014.
b) 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.
F-17
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(10) OPERATING LEASES, continued
c) Discount Rate Applied to Property Operating Lease
To determine the present value of the 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
d) Discount Rate Applied to Property Operating Lease, continued
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 interest rate average for its latest borrowings.
e) Right of Use Assets
Right of use assets are included in the consolidated Balance Sheet as follows:
f) Non-current assets
Right of use assets at June 30, 2020, net of amortization - $1,346,323.
g) Total operating lease cost
Individual components of the total lease cost incurred by the Company is as follows:
|
|
| |
|
Six Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2019
|
Operating lease expense
|
$
323,541
|
|
$
271,902
|
Minimum rental payments under operating leases are recognized on a straight line basis over the term of the lease.
h) Maturity of operating leases
The amount of future minimum lease payments under operating leases at June 30, 2020 are as follows:
| |
|
Operating Lease
|
Undiscounted future minimum lease payments:
|
|
2020 (six months)
|
$
217,354
|
2021
|
307,419
|
2022
|
241,002
|
2023
|
252,891
|
2024
|
256,264
|
Thereafter
|
540,490
|
|
|
Total
|
1,815,420
|
Amount representing imputed interest
|
(418,097)
|
|
|
Total operating lease liability
|
$
1,397,323
|
Current portion of operating lease liability
|
$
284,632
|
Operating lease liability, non-current
|
$
1,112,691
|
F-18
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(11) LIABILITY TO ISSUE COMMON STOCK
During the fourth quarter 2018 and second quarter 2019 the Company entered into four (4) Securities Purchase Agreements, (SPAs), with three parties, two of whom are related to each other. All four of these SPAs have language prohibiting the holder to own more than 4.99% of the issued and outstanding shares of the Company at any time.
In connection with these SPAs the Company was entitled to receive $906,500 in cash for the issuance of common stock, issuable at per share prices ranging between $0.0035 and $0.06 per share subject to downward adjustment based on volume weighted average price as defined at the date of issuance notice. The Company received $249,000 in 2018 and $310,000 in 2019 under these SPAs. The Company has not received the final September 2019 tranche of $347,500 as required under one of the SPAs. Contractually, under the SPAs, the Company is required to issue 88,619,381 shares. 1,537,246 shares were issued in the third quarter 2019, under one of these SPAs. (See Note 16a)
(12) DEFICIENCY IN STOCKHOLDERS EQUITY
At June 30, 2020 and December 31, 2019, the Company had 10,000,000,000 shares of par value $0.001 common stock authorized and 3,109,519,939 and 918,470,359 issued and outstanding, respectively. At June 30, 2020 and December 31, 2019, the Company has 10,000,000 shares of par value $0.001 preferred stock authorized and 500,000 issued and outstanding,
Common Stock
In the second quarter 2020, the Company issued 100,000,000 shares of common stock valued at $10,000 to settle $6,000 of convertible debt.
In the first quarter 2020, the Company issued 2,035,059,580 shares of common stock valued at $491,504 to settle $114,658 of convertible debt. The Company issued 56,000,000 shares of common stock in exchange a subscription of $39,200 in cash.
In the fourth quarter 2019, the Company issued 2,500,000 shares of common stock as an inducement for the extension of convertible debt, valued at $157,500. The Company issued 3,997,266 shares of common stock valued at $286,044 to settle $13,990 of convertible debt pursuant to the modification of terms to fixed conversion rate. The Company issued 798,519,055 shares of common stock valued at $1,200,597 to settle $445,367 of convertible debt. The Company issued 36,348,494 shares of common stock in exchange for $41,053 in cash.
In the third quarter 2019, the Company issued 100,000 shares of common stock as an inducement for the extension of convertible debt, valued at $5,460. The Company issued 10,838,698 shares of common stock valued at $322,344 to settle $46,894 of convertible debt pursuant to the modification of terms to fixed conversion rate.
In the third quarter 2019, the Company issued 1,500,000 shares of common stock valued at $77,250 to settle $25,500 of convertible debt. The Company issued 1,537,246 shares of common stock valued at $57,647 for $32,282 of a Securities Purchase Agreement (SPA) funded in October 2018. The Company issued 6,404,057 shares of common stock in exchange for $120,423 in cash.
In the second quarter 2019, the Company issued 1,933,333 shares of common stock as an inducement for the extension of convertible debt, valued at $94,730. The Company issued 3,900,000 shares of common stock valued at $316,500 to settle $39,000 of convertible debt pursuant to the modification of terms to fixed conversion rate. The Company issued 3,333,333 shares of common stock in exchange for services valued at $239,333. The Company issued 5,000,000 shares of common stock in exchange for $50,000 in cash and $279,990 in fixed assets. The Company issued 386,589 shares of common stock in exchange for one-half of the first year rent on the Companys corporate office, valued at $26,520. The Company issued 1,247,449 shares of common stock in exchange for $67,124 in cash.
F-19
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(12) DEFICIENCY IN STOCKHOLDERS EQUITY, continued
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 $18,568 of convertible debt pursuant to the modification of terms to fixed conversion rate.
Preferred stock
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.
(13) EARNINGS PER SHARE (EPS)
|
|
|
|
| |
|
For the six Months Ended June 30, 2020
|
|
Income (Numerator)
|
|
Shares (Denominator)
|
|
Per Share Amount
|
Income from continuing operations
|
$
474,671
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
Income available to common stockholders
|
474,671
|
|
3,109,519,939
|
|
$
0.0002
|
Effect of dilutive securities
|
|
|
|
|
|
Change in embedded derivative value
|
(1,897,020)
|
|
|
|
|
Convertible notes payable
|
(610,111)
|
|
20,909,929,738
|
|
|
Common stock issuable
|
|
|
83,921,783
|
|
|
Diluted EPS
|
|
|
|
|
|
Income available to common stockholders + assumed conversions
|
$
(2,032,460)
|
|
24,103,371,460
|
|
$
(0.0001)
|
(14) COMMITMENTS AND CONTINGENCIES
a) Real Property Leases
The Company leases seven (7) restaurant spaces and its corporate office from unrelated parties. Rent expense paid was $323,541 and $271,902 for the six months ended June 30, 2020 and 2019.
F-20
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(14) COMMITMENTS AND CONTINGENCIES, continued
a) Real Property Leases, continued
Future minimum lease payments under these real property lease agreements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the Year Ending December 31,
|
|
KMKE
|
|
IBE
|
|
IBA
|
|
IBWS
|
|
IBCH
|
|
IBCS
|
|
IPL
|
2020 (six months)
|
|
$
-
|
|
$
-
|
|
$
38,897
|
|
$
51,322
|
|
$
35,091
|
|
$
33,000
|
|
$
32,524
|
2021
|
|
$
-
|
|
$
-
|
|
$
25,931
|
|
$
102,643
|
|
$
23,394
|
|
$
67,200
|
|
$
66,151
|
2022
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
104,354
|
|
$
-
|
|
$
69,000
|
|
$
67,648
|
2023
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
112,908
|
|
$
-
|
|
$
70,800
|
|
$
69,183
|
2024
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
112,908
|
|
$
-
|
|
$
72,600
|
|
$
70,756
|
Thereafter
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
94,090
|
|
$
-
|
|
$
281,400
|
|
$
165,001
|
Total minimum lease payments
|
|
$
-
|
|
$
-
|
|
$
64,828
|
|
$
578,225
|
|
$
58,485
|
|
$
594,000
|
|
$
471,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WCVC
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
2020 (six months)
|
|
$
26,520
|
|
$
217,354
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
$
22,100
|
|
$
307,419
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
$
-
|
|
$
241,002
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
$
-
|
|
$
252,891
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
$
-
|
|
$
256,264
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
$
-
|
|
$
540,491
|
|
|
|
|
|
|
|
|
|
|
Total minimum lease payments
|
|
$
48,620
|
|
$
1,815,421
|
|
|
|
|
|
|
|
|
|
|
KMKE: Kalaka Mexican Kitchen - Evergreen; IBE: Illegal Burger - Evergreen; IBA: Illegal Burger - Arvada; IBWS - Illegal Burger - Writer Square; IBCH - Illegal Burger - Capital Hill; IBCS - Illegal Burger - CitiSet; IPL - Illegal Pizza - Lauderhill; WCVC - corporate office. The Companys leases for the Evergreen locations expired on August 31, 2019, and are currently operating on a month to month basis.
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.
F-21
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(14) COMMITMENTS AND CONTINGENCIES, continued
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, including interest plus attorneys fees and costs. The Company expects to either negotiate a settlement agreement or to vigorously defend this action. In May 2020 the U.S. Securities and Exchange Commission, (SEC), filed a civil action alleging fraud against the creditor in Note 13c above. The SEC also appointed a court supervised receiver of this creditor, who has stayed all current litigation involving this creditor. The Company expects to reach a settlement with this receiver when they lift the stay.
The two related party holders of four fixed rate convertible notes and two of the SPAs for the purchase of common shares has threatened litigation relating to these securities, based on a claim that the Company does not have sufficient shares reserved for issuance under these notes and SPAs as required. The Company claims that these holders have defaulted under the SPA that required a $347,500 tranche to be invested in September 2019, and that the failure to provide these funds directly caused the circumstances causing the claimed shortfall in reserved shares.
(15) 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 June 30, 2020 and December 31, 2019.
(16) COVID-19 PANDEMIC
The short term impact of COVID-19 are the result of government directives, first from the City of Denver, CO, and subsequently from the States of Colorado and Florida requiring only pick-up and delivery orders of food and beverages. Under these directives we were required to close our dining areas in all our restaurants. This has caused a fall-off in business, which has been somewhat offset by an increase in pick-up and delivery orders. We have been able to keep our restaurants open for pick-up and delivery orders. This in turn has allowed us to continue to employ our staff at the restaurants. We intend to continue to pay our employees through this crisis in the hopes that once the crisis has passed and we will be allowed to return to more normal operations we can do so quickly by bringing our existing staff back in without having to train a large number of new staff. Our Denver area locations were allowed to resume 50% of dining facilities beginning on May 29.
The Company has had to develop and implement new policies and procedures for use in all of it restaurants to foster continued customer confidence when they purchase food from us during this crisis. The Company has had to develop and implement procedures for drive through pick up orders as none of our restaurants are equipped with drive through windows. We have expended considerable time and effort developing multiple means to get the information out to the buying public that all our restaurants are open for pick-up and delivery orders.
The Company temporarily closed our El Senor Sol - Evergreen, CO location because it was not receiving sufficient take out/delivery orders to make sense remaining open. The Company elected to re-brand this location during this. The Company had been seeking to complete a re-branding in a way that would cause the least financial harm. The pandemic provided a perfect opportunity. The locations new brand is Kalaka Mexican Kitchen.
The State of Colorado required all restaurants to cease seating patrons and go to only pick up/delivery orders only beginning in mid-March 2020. This requirement caused a 14% drop in revenue in the six months ended June 30, 2020 over the same period in 2019.
During the state imposed pandemic requirement to reduce operations, the lenders of the Future Receivable Sales Agreements agreed to lower the payments due to them. Also the party holding the remaining One Year Note and one of the Fixed Rate Convertible Notes agreed to a 90 day extension to the maturity and a subsequent 90 day extension upon payment of the initial one year interest in the amount of $40,000. Several holders of Variable Rate Convertible Notes have also agreed to 90 day extensions to the maturity of their notes. The Company has requested extensions on the balance of the Variable Rate Convertible Notes, but has not received a response from the lenders.
F-22
WEST COAST VENTURES GROUP CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
(17) SUBSEQUENT EVENTS
a) Deficiency in Stockholders Equity
In the third quarter 2020, the Company issued 343,235,349 shares of common stock valued at $34,324 to settle $10,547 of convertible debt.
F-23