See accompanying notes to unaudited condensed consolidated financial statements.
Notes
to Consolidated Condensed Financial Statements
June
30, 2018
(unaudited)
NOTE
1 – NATURE OF BUSINESS AND PRESENTATION
Organization
DOCASA,
Inc. (the “Company,” “we,” “us,” “our,” or “DOCASA”) was incorporated
in the State of Nevada on July 22, 2014, under the name of FWF Holdings, Inc. The Company changed its name on August 4, 2016.
The Company was originally engaged in the business of commercial production and distribution of hot sauce (see Note 3). On August
4, 2016, the Company changed its year end from July 31 to August 31.
On
July 8, 2016, the Company experienced a change in control. Atlantik LP (“Atlantik”), a related party, acquired a majority
of the issued and outstanding common stock of the Company in accordance with a stock purchase agreement by and between Atlantik
and Nami Shams (the “Seller”). On the closing date, July 8, 2016, pursuant to the terms of the stock purchase agreement,
Atlantik purchased from the Seller 115,000,000 shares of the Company’s outstanding restricted common stock for $200,000,
representing 75.8% of the Company’s outstanding common stock at that time.
On
September 1, 2016, the Company acquired 99.8% of the voting stock of the Department of Coffee and Social Affairs Limited, a United
Kingdom corporation (the “DEPT-UK”), and the Company agreed to issue DEPT-UK’s majority shareholder 170,000,000
shares of the Company’s common stock—110,000,000 shares initially and 60,000,000 shares at a time determined by the
Company’s Board of Directors but no later than August 31, 2017, which deadline was subsequently extended to August 31, 2019.
Also, on September 1, 2016, the Company acquired 115,000,000 shares of the Company’s common stock from Atlantik in exchange
for issuing Atlantik a promissory note for $320,000, which shares were then cancelled, and which note has since been paid in full.
As a result of the acquisition and the issuance of the initial 110,000,000 shares of common stock, and the cancellation of the
115,000,000 Atlantik shares, DEPT-UK is now the majority-owned subsidiary of the Company, and the Company experienced a change
of control.
DEPT-UK
formed a wholly-owned subsidiary, Department of Coffee and Internal Affairs Limited (“DCIA”), on September 11, 2014,
as filed with the Registrar of Companies for England and Wales. As of June 30, 2018, DCIA has had no operations or activity.
On
April 5, 2017, the Company formed Department of Coffee and Social Affairs IL, Inc. (“DEPT-IL”), an Illinois corporation.
On
May 18, 2017, the Company formed Department of Coffee and Social Affairs White Space Limited (“DEPT-UKWS”), as filed
with the Registrar of Companies for England and Wales. DEPT-UKWS is a subsidiary of DEPT-UK.
For
financial reporting purposes, the acquisition of DEPT-UK and the change of control in connection with acquisition represented
a “reverse merger” rather than a business combination, and DEPT-UK is deemed to be the accounting acquirer in the
transaction. For the periods subsequent to August 31, 2016, the acquisition is being accounted for as a reverse-merger and recapitalization.
DEPT-UK is the acquirer for financial reporting purposes, and the Company (DOCASA, Inc., f/k/a FWF Holdings, Inc.) is the acquired
company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements
prior to the acquisition are those of DEPT-UK and have been recorded at the historical cost basis of DEPT-UK, and the financial
statements after completion of the acquisition include the assets and liabilities of both the Company and DEPT-UK, and the historical
operations of DEPT-UK prior to closing and operations of both companies from the closing of the acquisition.
On
January 2, 2018, with an effective date of November 1, 2017, DEPT-UK acquired Tapped and Packed Ltd (“Tapped”), an
UK company, for a combination of cash and shares of common stock of the Company. See Note 2. Tapped became a subsidiary of DEPT-UK
as a result of the transaction. Tapped has four shop locations in the UK which serve coffee and food.
On
February 23, 2018, the Board of Directors determined to change the Company’s fiscal year end to December 31 from August
31. The Company believes this change will benefit the Company by aligning its reporting periods to be more consistent with peer
coffee companies.
On
May 23, 2018, DEPT-UK acquired Bea’s of Bloomsbury Limited (“Bea’s”), an UK company, for shares of common
stock of the Company. See Note 2. Bea’s became a subsidiary of DEPT-UK as a result of the transaction. Bea’s has five
shop locations in the UK which serves coffee and food.
On
June 29, 2018, DEPT-UK acquired Tradewind Espresso Ltd (“Tradewind”), an UK company, for cash. See Note 2. Tradewind
became a subsidiary of DEPT-UK as a result of the transaction. Tradewind has one shop location in the UK which serves coffee
and food.
On
June 29, 2018, DEPT-UK acquired Roasted Rituals Coffee Ltd (“Roasted Rituals”), an UK company, for cash. See Note
2. Roasted Rituals became a subsidiary of DEPT-UK as a result of the transaction. Roasted Rituals is a specialty coffee roaster
and has one location in the UK.
Nature
of Operations
We are
in the specialty coffee industry, specifically with company-operated stores. The Company will generate revenue through
sales at nineteen existing company-operated coffee shop locations in the UK, with seven more locations under construction. Similar
to other leading operators, we sell our proprietary coffee and related products, and complementary food and snacks.
Principles
of Consolidation
The
consolidated financial statements include the accounts of DOCASA and its subsidiaries, DEPT-UK, DCIA, DEPT-IL and DEPT-UK’s
subsidiaries, Tapped, Bea’s, Roasted Rituals, Tradewind, and DEPT-UKWS. All significant inter-company balances and transactions
have been eliminated in consolidation.
Basis
of Presentation
The
accompanying unaudited consolidated condensed financial statements of DOCASA have been prepared in accordance with U.S. generally
accepted accounting principles for interim financial information and the instructions to Form 10-Q and done under §240.13(a)
of the Securities Act. The results of operations for the interim period ended June 30, 2018 shown in this report are not necessarily
indicative of results to be expected for the full fiscal year ending December 31, 2018. In the opinion of the Company’s
management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments, unless otherwise
indicated) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows.
The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company’s
Form 10-K for the year ended August 31, 2017, filed on December 18, 2017 and Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial
statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance
for accounts receivable, estimated lives of intangible and fixed assets, and valuation of share-based payments.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Accounts
Receivable
Accounts
receivable consisted of amounts due from customers primarily for management fees. The Company considered accounts more than 30
days old to be past due. The Company used the allowance method for recognizing bad debts. When an account was deemed uncollectible,
it was written off against the allowance. The Company generally does not require collateral for its accounts receivable. Management
has not recorded an allowance for doubtful accounts as of June 30, 2018 or December 31, 2017.
Inventory
Inventory
is recorded at the lower of cost or market and the cost of sales are recorded utilizing the first in first out (“FIFO”)
method.
Fixed
Assets
Property
and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives
of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the
lease term or the useful life of the leased equipment. Leasehold improvements are amortized over the lesser of the lease term
or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization
threshold are expensed as incurred.
Impairment
of Long-Lived Assets
The
Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10,
“Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to
sell.
Fair
Value of Financial Instruments
The
Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain
of our financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, the carrying
amounts approximate fair value due to their short maturities.
We
follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides
guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements,
but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not
apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach
(comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to
replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those
three levels:
Level
1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level
2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar
assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not
active.
Level
3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed
by us, which reflect those that a market participant would use.
Revenue
Recognition
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provides a comprehensive
new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer
at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also
requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer
contracts. We have adopted this update. We do not believe this guidance will impact the recognition of our primary source of revenue
from company-owned coffee shops. The adoption of this guidance did not have a material impact on our consolidated financial statements.
Stock-Based
Compensation
The
Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies
to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued
to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite
service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance
with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the
grant date by using the Black-Scholes option-pricing model.
Advertising
Advertising
is expensed as incurred and is included in other general and administrative expenses on the accompanying condensed consolidated
statement of operations. For the six months ended June 30, 2018 and May 31, 2017 advertising expense was $8,068 and $23,171, respectively.
Income
Taxes
The
Company adopted the provisions of ASC 740, “Income Taxes.” 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 condensed consolidated balance sheets along with any associated interest and penalties
that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain
of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of June
30, 2018, tax years 2014 - 2017 remain open for IRS audit and tax years 2015–2017 remain open for HM Revenue & Customs
(“HMRC”) audit. The Company has received no notice of audit from the IRS or HMRC for any of the open tax years.
Net
Earnings (Loss) Per Share
In
accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing
the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted
earnings (loss) per share are computed using the weighted average number of common stock shares outstanding during the period.
The Company does not currently have any potential dilutive securities outstanding as of June 30, 2018 and May 31, 2017.
Foreign
Currency Translation and Transactions
The
British Pound (“£”) is the functional currency of DEPT-UK and Tapped whereas the financial statements are reported
in United States Dollar (“USD,” “$”). Assets and liabilities are translated based on the exchange rates
at the condensed consolidated balance sheet date, while revenue and expense accounts are translated at the average exchange rates
prevailing during the period. Equity accounts are translated at historical exchange rates. The resulting translation gain and
loss adjustments are accumulated as a component of stockholders’ equity and other comprehensive loss.
Comprehensive
Loss
The
Company reports comprehensive loss and its components in its consolidated financial statements. Comprehensive loss consists of
net loss on foreign currency translation adjustments affecting stockholders’ equity that, under U.S. GAAP, are excluded
from net loss. As of June 30, 2018, the exchange rate between U.S. Dollars and British Pounds was US$1.32 = £1.00, and the
weighted average exchange rate for the six months ended June 30, 2018 was US$1.34 = £1.00. As of December 31, 2017, the
exchange rate between U.S. Dollars and British Pounds was US$1.35 = £1.00.
Going
Concern
The
Company had net loss attributable to common shareholders for the six months ended June 30, 2018 of $939,467 and a working
capital deficit as of June 30, 2018 of $2,047,845, and has cash provided by operations of $85,774 for the six months
ended June 30, 2018. In addition, as of June 30, 2018, the Company had a stockholders’ deficit and accumulated deficit of
$1,399,902 and $3,422,375, respectively. Without further funding, these conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
The
accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company
as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability
of the Company to continue its operations is dependent on the execution of management’s plans, which include the raising
of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working
capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets
at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of
the financial statements.
There
can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources
to be used for operations. The financial statements do not include any adjustments relating to the recoverability of assets and
classification of assets and liabilities that might be necessary. Based on the Company’s current resources, the Company
will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining
the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or
contemplate the sale of its assets, if necessary.
Effect
of Recent Accounting Pronouncements
The
Company reviews new accounting standards and updates as issued. No new standards or updates had any material effect on these financial
statements. The accounting pronouncements and updates issued subsequent to the date of these financial statements that were considered
significant by management were evaluated for the potential effect on these financial statements. Management does believe that
some of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate
the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements
issued subsequent to June 30, 2018 through the date these financial statements were issued.
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU on lease accounting. The ASU requires
the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets
and liabilities on the balance sheet. The ASU is effective for reporting periods beginning after December 15, 2018 with early
adoption permitted. While the Company is still evaluating the ASU, the Company expects the adoption of the ASU to have a material
effect on the Company’s financial condition due to the recognition of the lease rights and obligations as assets and liabilities.
The Company expects the ASU to have a material effect on the Company’s results of operations and financial position, and
the ASU will have no effect on cash flows.
ASU
2014-09, Revenue – Revenue from Contracts with Customers. In May 2014, the FASB issued a new accounting standard that requires
recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which we expect to be entitled in exchange for those goods or services. The FASB has also issued several updates to ASU 2014-09.
The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than
the present standards. It also requires additional disclosures. We adopted the new revenue guidance effective January 1, 2017,
by recognizing the cumulative effect of initially applying the new standard as an increase to the opening balance of retained
earnings. The effect of the adoption was immaterial, with an immaterial impact to our net income on an ongoing basis. Adoption
of the new standard will also result in changes in classification between Revenues and Direct costs of revenue.
NOTE
2 – ACQUISITIONS
Acquisition
of Tapped and Packed Ltd
On
November 1, 2017, DEPT-UK entered into an acquisition agreement (the “Tapped Acquisition Agreement”) with Tapped,
a United Kingdom corporation. Richard Lilley, an individual (“Lilley”), was the owner of record of 100 capital shares
of Tapped. Pursuant to the Tapped Acquisition Agreement, Tapped stock was transferred to DEPT-UK on November 1, 2017, in consideration
of £175,000 and 1,546,875 shares of common stock of the Company. The £175,000 was paid in October 2017 as a prepayment
to the completion date of November 1, 2017. Stefan Allesch-Taylor (“Allesch-Taylor”), Chairman of the Company, utilized
his personally owned shares of common stock of the Company, and assigned the 1,546,875 shares (the “Allesch-Taylor Shares”)
from his ownership to Lilley. In exchange for the use of the Allesch-Taylor Shares, which were provisionally valued at $1,918,125
(“Provisional Share Compensation Value”), the Board of Directors issued Allesch-Taylor 1,325,000 Preference Shares
of DEPT-UK. The Provisional Share Compensation Value was determined by the previous day’s closing price of $1.24 per share.
The Company’s common stock is thinly-traded and an insignificant amount of stock traded has historically caused significant
fluctuations in the price per share of the Company’s common stock. The Company will utilize an independent third-party business
valuation to determine the value of Tapped, as well as get an independent valuation of the Company’s common stock as of
the date of the transaction. Management believes that the separate valuations will determine a fair and reasonable valuation thereby
reducing the provisional goodwill recorded, as of June 30, 2018, of $2,185,012. The Allesch-Taylor Shares of common stock were
assigned to Lilley on or about October 19, 2017 and were released in accordance to the agreement. See Notes 1, 7 and 8. Also in
connection with the Tapped Acquisition Agreement, Gill and Lopez were appointed to serve on Tapped’s Board of Directors.
The
following table summarizes the consideration given for DEPT-UK and the provisional fair values of the assets and liabilities assumed
at the acquisition date.
Consideration given:
|
|
|
|
|
|
|
|
|
|
Cash given
|
|
$
|
237,877
|
|
Common stock shares given
|
|
|
1,918,125
|
|
|
|
|
|
|
Total consideration given
|
|
$
|
2,156,002
|
|
|
|
|
|
|
Fair value of identifiable assets acquired, and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
200,582
|
|
Prepaid expense
|
|
|
92,052
|
|
Inventory
|
|
|
51,411
|
|
Fixed assets, net
|
|
|
73,337
|
|
Deposits
|
|
|
119,999
|
|
Accrued expenses
|
|
|
(195,621
|
)
|
Short-term note payable
|
|
|
(200,804
|
)
|
Director note
|
|
|
(168,782
|
)
|
Deferred taxes
|
|
|
(1,184
|
)
|
Total identifiable net liabilities
|
|
|
(29,010
|
)
|
Goodwill
|
|
|
2,185,012
|
|
Total consideration
|
|
$
|
2,156,002
|
|
The
revenue and net loss for Tapped, as reflected in the unaudited condensed consolidated statement of operations, for the six months
ended June 30, 2018, to reflect the current period, was $1,056,081 and $56,725, respectively.
Acquisition
of Bea’s of Bloomsbury Limited
On May 23, 2018, DEPT-UK entered into an
acquisition agreement (the “Bea’s Acquisition Agreement”) with Bea’s, a United Kingdom corporation.
Pursuant to the Bea’s Acquisition Agreement, Bea’s stock was transferred to DEPT-UK on May 23, 2018, in
consideration of 1,933,239 shares of common stock of the Company. As of the date of this report, the shares have not been
issued to the owners of Bea’s and are recorded as issuable as of June 30, 2018, as approved by the Board of Directors
of the Company. The Company’s common stock was valued at $0.84 therefore the Company recorded the value of $1,623,921.
Management recorded a provisional goodwill, as of June 30, 2018, of $1,698,321, which is attributable to common synergies,
the workforce, and may be adjusted based on management’s final determination of the fair value of the assets and
liabilities acquired. See Notes 1, 7 and 8.
The
following table summarizes the consideration given by DEPT-UK and the provisional fair values of the assets and liabilities
assumed at the acquisition date.
Consideration given:
|
|
|
|
|
Common stock shares given
|
|
$
|
1,623,921
|
|
|
|
|
|
|
Total consideration given
|
|
$
|
1,623,921
|
|
|
|
|
|
|
Fair value of identifiable assets acquired, and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
$
|
86,764
|
|
Inventory
|
|
|
36,311
|
|
Fixed assets, net
|
|
|
315,558
|
|
Deposits
|
|
|
54,357
|
|
Accounts payable
|
|
|
(250,365
|
)
|
Accrued expenses
|
|
|
(271,096
|
)
|
Short-term note payable
|
|
|
(45,931
|
)
|
Total identifiable net liabilities
|
|
|
(74,400
|
)
|
Goodwill
|
|
|
1,698,321
|
|
Total consideration
|
|
$
|
1,623,921
|
|
The revenue and loss for Bea’s, as reflected
in the unaudited condensed consolidated statement of operations, for the six months ended June 30, 2018, to reflect the current
period, was $166,201 and $31,562, respectively, and for the six months ended May 31, 2017, the historical financial
statements are unavailable.
Acquisition
of Roasted Rituals Coffee Ltd
On
June 29, 2018, DEPT-UK entered into an acquisition agreement (the “Roasted Rituals Acquisition Agreement”) with Roasted
Rituals, a United Kingdom corporation. Pursuant to the Roasted Rituals Acquisition Agreement, Roasted Rituals’ stock was
transferred to DEPT-UK on June 29, 2018, in consideration of £175,000. The £175,000 is to be paid in tranches; £37,500
at closing, £62,500 on the first anniversary of the closing date, and £75,000 on the second anniversary of the closing
date. The Company has recorded the liabilities as short-term and long-term, respectively. Management has calculated provisional
goodwill of $181,593, which is attributable to common synergies, the workforce, and may be adjusted based on management’s
final determination of the fair value of the assets and liabilities acquired. See Note 1 and 7.
The
following table summarizes the consideration given for DEPT-UK and the provisional fair values of the assets and liabilities assumed
at the acquisition date.
Consideration given:
|
|
|
|
|
Cash given
|
|
$
|
49,096
|
|
Accrued consideration
|
|
|
180,020
|
|
Total consideration given
|
|
$
|
229,116
|
|
|
|
|
|
|
Fair value of identifiable assets acquired, and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
27,078
|
|
Accounts receivable, net
|
|
|
11,350
|
|
Fixed assets, net
|
|
|
11,344
|
|
Accrued expenses
|
|
|
(2,249
|
)
|
Total identifiable net assets
|
|
|
47,523
|
|
Goodwill
|
|
|
181,593
|
|
Total consideration
|
|
$
|
229,116
|
|
The
revenue and loss for Roasted Rituals, as reflected in the unaudited condensed consolidated statement of operations, for
the six months ended June 30, 2018, to reflect the current period, was $0 and $1,171, respectively, and for
the six months ended May 31, 2017, the financial statements are unavailable.
Acquisition
of Tradewind Espresso Ltd
On
June 29, 2018, DEPT-UK entered into an acquisition agreement (the “Roasted Rituals Acquisition Agreement”) with Roasted
Rituals, a United Kingdom corporation. Pursuant to the Roasted Rituals Acquisition Agreement, Roasted Rituals’ stock was
transferred to DEPT-UK on June 29, 2018, in consideration of £175,000. The £175,000 is to be paid in tranches; £37,500
at closing, £62,500 on the first anniversary of the closing date, and £75,000 on the second anniversary of the closing
date. The Company has recorded the liabilities as short-term and long-term, respectively. Management has calculated provisional
goodwill of $197,565, which is attributable to common synergies, the workforce, and may be adjusted based on management’s
final determination of the fair value of the assets and liabilities acquired. See Note 1 and 7.
The
following table summarizes the consideration given by DEPT-UK and the provisional fair values of the assets and liabilities
assumed at the acquisition date.
Consideration given:
|
|
|
|
|
Cash given
|
|
$
|
49,096
|
|
Accrued consideration
|
|
|
180,020
|
|
Total consideration given
|
|
$
|
229,116
|
|
|
|
|
|
|
Fair value of identifiable assets acquired, and liabilities assumed:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
31,569
|
|
Accounts receivable, net
|
|
|
473
|
|
Fixed assets, net
|
|
|
13,308
|
|
Accrued expenses
|
|
|
(13,799
|
)
|
Total identifiable net assets
|
|
|
31,551
|
|
Goodwill
|
|
|
197,565
|
|
Total consideration
|
|
$
|
229,116
|
|
The
revenue and loss for Tradewinds, as reflected in the unaudited condensed consolidated statement of operations, for the
six months ended June 30, 2018, to reflect the current period, was $0 and $3,226, respectively, and for the
six months ended May 31, 2017, the financial statements were unavailable.
Pro-Forma
Financial Information
The
following unaudited pro-forma data summarizes the result of the operations for the six months ended June 30, 2018 and May 31,
2017, as if the acquisition of Bea’s, Roasted Rituals and Tradewind had been completed on September 1, 2016, which
was the beginning of the Company’s previous adjusted fiscal year (for comparison purposes) prior to the change to a calendar
year end in March 2018. The pro-forma financial information is presented for informational purposes only and is not indicative
of the results of operations that would have been achieved if the acquisitions had taken place on September 1, 2016.
|
|
For the Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Roasted
|
|
|
|
|
|
Pro-forma
|
|
|
|
|
|
|
DOCASA
|
|
|
Tapped
|
|
|
Bea’s
|
|
|
Rituals
|
|
|
Tradewind
|
|
|
Adjustments
|
|
|
Combined
|
|
Revenue, net
|
|
$
|
2,692,461
|
|
|
$
|
1,056,081
|
|
|
$
|
1,022,579
|
|
|
$
|
63,790
|
|
|
$
|
186,961
|
|
|
$
|
-
|
|
|
$
|
5,021,873
|
|
Operating expenses
|
|
|
4,642,058
|
|
|
|
1,112,806
|
|
|
|
1,223,736
|
|
|
|
66,380
|
|
|
|
204,933
|
|
|
|
-
|
|
|
|
7,249,913
|
|
Loss from operations
|
|
|
(1,949,597
|
)
|
|
|
(56,725
|
)
|
|
|
(201,156
|
)
|
|
|
(2,590
|
)
|
|
|
(17,972
|
)
|
|
|
-
|
|
|
|
(2,228,040
|
)
|
Other income (expense)
|
|
|
(11,297
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,297
|
)
|
Loss before income taxes
|
|
|
(1,960,894
|
)
|
|
|
(56,725
|
)
|
|
|
(201,156
|
)
|
|
|
(2,590
|
)
|
|
|
(17,972
|
)
|
|
|
-
|
|
|
|
(2,239,337
|
)
|
Net Loss attributable to common shareholders
|
|
$
|
(1,960,894
|
)
|
|
$
|
(56,725
|
)
|
|
$
|
(201,156
|
)
|
|
$
|
(2,590
|
)
|
|
$
|
(17,972
|
)
|
|
$
|
-
|
|
|
$
|
(2,239,337
|
)
|
Net income (loss) per common share - basic
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
Weighted average number of common shares outstanding during the period - basic
|
|
|
151,143,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,143,287
|
|
|
|
For
the Six Months Ended May 31, 2017
|
|
|
|
DOCASA
|
|
|
Tapped
|
|
|
Bea’s
(a)
|
|
|
Roasted
Rituals
|
|
|
Tradewind
|
|
|
Pro-forma
Adjustments
|
|
|
Combined
|
|
Revenue,
net
|
|
$
|
1,100,939
|
|
|
$
|
983,110
|
|
|
$
|
-
|
|
|
$
|
81,233
|
|
|
$
|
186,420
|
|
|
$
|
-
|
|
|
$
|
2,351,702
|
|
Operating
expenses
|
|
|
1,722,031
|
|
|
|
696,770
|
|
|
|
-
|
|
|
|
55,559
|
|
|
|
195,201
|
|
|
|
-
|
|
|
|
2,669,561
|
|
Income
(loss) from operations
|
|
|
(621,092
|
)
|
|
|
286,340
|
|
|
|
-
|
|
|
|
25,674
|
|
|
|
(8,781
|
)
|
|
|
-
|
|
|
|
(317,859
|
)
|
Other
income (expense)
|
|
|
(9,858
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,858
|
)
|
Income
(loss) before income taxes
|
|
|
(630,950
|
)
|
|
|
286,340
|
|
|
|
-
|
|
|
|
25,674
|
|
|
|
(8,781
|
)
|
|
|
-
|
|
|
|
(327,717
|
)
|
Net
income (loss) attributable to common shareholders
|
|
$
|
(630,950
|
)
|
|
$
|
286,340
|
|
|
$
|
-
|
|
|
$
|
25,674
|
|
|
$
|
(8,781
|
)
|
|
$
|
-
|
|
|
$
|
(327,717
|
)
|
Net
loss per common share - basic
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.00
|
)
|
Weighted
average number of common shares outstanding during the period - basic
|
|
|
146,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,800,000
|
|
(a)
|
Historical
financial statements unavailable.
|
NOTE
3 – INVENTORY
The
Company has inventory of various items used for the sale of coffee and complementary products. As of June 30, 2018, and December
31, 2017, the Company had inventory of $138,760 and $100,386, respectively. The Company accounts for its inventory using the lower
of cost or market and the cost of sales are recorded utilizing the first in first out (“FIFO”) method.
The
inventory is as follows:
|
|
June 30, 2018
|
|
|
December 31, 2017
|
|
Consumable products
|
|
$
|
37,402
|
|
|
$
|
37,750
|
|
Cold brew
|
|
|
12,761
|
|
|
|
7,119
|
|
Retail products
|
|
|
36,820
|
|
|
|
18,725
|
|
Food and drinks
|
|
|
51,777
|
|
|
|
36,792
|
|
Total inventory
|
|
$
|
138,760
|
|
|
$
|
100,386
|
|
NOTE
4 – FIXED ASSETS
The
Company has fixed assets including computer equipment, office equipment, site equipment and machinery, site fit out costs, site
furniture, fixtures and fittings.
The
depreciation expense for the six months ended June 30, 2018 and May 31, 2017, was $170,565 and $90,330, respectively. The variance
between the expense and the increase in accumulated depreciation is due to timing of the currency translation calculation.
NOTE
5 – INTANGIBLE ASSETS
Website Development
The Company has intangible assets related
to website development. The amortization of the intangible assets is over a three-year period.
The amortization expense for the six months
ended June 30, 2018 and May 31, 2017, was $2,801 and $3,524, respectively. The variance between the expense and the increase in
accumulated amortization is due to timing of the currency translation calculation.
Goodwill
The Company has goodwill related to the acquisitions
of Tapped, Bea’s, Tradewind and Roasted Rituals. The Company has not determined the deductibility of goodwill for tax
purposes. As of June 30, 2018, the Company has $4,262,492 of goodwill, as allocated below:
Balance, December 31, 2017
|
|
$
|
2,185,012
|
|
Acquisitions
|
|
|
2,077,480
|
|
Balance, June 30, 2018
|
|
$
|
4,262,492
|
|
NOTE
6 – NOTES PAYABLE
The
Company has notes payable as of June 30, 2018 and December 31, 2017, are as follows:
Notes
payable - current
|
|
June 30, 2018
|
|
|
December 31, 2017
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
Arch Investments
|
|
$
|
2,194
|
|
|
$
|
-
|
|
|
$
|
2,194
|
|
|
$
|
2,194
|
|
|
$
|
-
|
|
|
$
|
2,194
|
|
Arch Investments
|
|
|
5,067
|
|
|
|
-
|
|
|
|
5,067
|
|
|
|
5,067
|
|
|
|
-
|
|
|
|
5,067
|
|
Arch Investments
|
|
|
5,065
|
|
|
|
-
|
|
|
|
5,065
|
|
|
|
5,065
|
|
|
|
-
|
|
|
|
5,065
|
|
Arch Investments
|
|
|
15,873
|
|
|
|
-
|
|
|
|
15,873
|
|
|
|
15,873
|
|
|
|
-
|
|
|
|
15,873
|
|
Arch Investments
|
|
|
4,349
|
|
|
|
-
|
|
|
|
4,349
|
|
|
|
4,349
|
|
|
|
-
|
|
|
|
4,349
|
|
HSBC
|
|
|
109,536
|
|
|
|
-
|
|
|
|
109,536
|
|
|
|
111,970
|
|
|
|
-
|
|
|
|
111,970
|
|
HSBC
|
|
|
27,251
|
|
|
|
-
|
|
|
|
27,251
|
|
|
|
26,642
|
|
|
|
-
|
|
|
|
26,642
|
|
Total
|
|
$
|
169,335
|
|
|
$
|
-
|
|
|
$
|
169,335
|
|
|
$
|
171,160
|
|
|
$
|
-
|
|
|
$
|
171,160
|
|
Notes payable - non-current
|
|
June 30, 2018
|
|
|
December 31, 2017
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
|
|
Accrued
|
|
|
|
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
Deij Capital Limited (1)
|
|
$
|
11,164
|
|
|
$
|
-
|
|
|
$
|
11,164
|
|
|
$
|
11,414
|
|
|
$
|
-
|
|
|
$
|
11,414
|
|
HSBC
|
|
|
219,072
|
|
|
|
-
|
|
|
|
219,072
|
|
|
|
280,011
|
|
|
|
-
|
|
|
|
280,011
|
|
HSBC
|
|
|
51,759
|
|
|
|
-
|
|
|
|
51,759
|
|
|
|
65,670
|
|
|
|
-
|
|
|
|
65,670
|
|
Total
|
|
$
|
281,995
|
|
|
$
|
-
|
|
|
$
|
281,995
|
|
|
$
|
357,095
|
|
|
$
|
-
|
|
|
$
|
357,095
|
|
(1)
Related party
On
July 1, 2014, DEPT-UK entered into a business loan with Deij Capital Limited (“Deij Capital”), a related party in
which Gill is the director and owner. The loan is for 3 years, with an interest rate of 0%. The note was extended to July 1, 2018.
The imputed interest is deemed immaterial as of June 30, 2018. The facility loan was for $171,437 (£100,000) to be drawn
down as and when required. On June 30, 2016, Deij Capital converted the balance due of $179,534 (£135,464) into 135,464
shares of Preference Shares. On May 31, 2017, Deij Capital converted of the balance due $63,990 (£51,500) into 51,500 shares
of Preference Shares. The outstanding principal as of June 30, 2018 and December 31, 2017 was $11,164 (£8,454) and $11,414
(£8,454), respectively. The accrued interest as of June 30, 2018 and December 31, 2017, was $0 (£0) and $0 (£0),
respectively.
On
July 31, 2014, DOCASA executed a promissory note for $2,194 with Nami Shams, a former officer and director of the Company. The
note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of June 30, 2018.
As of June 30, 2018, and December 31, 2017, the principal was $2,194. This note was acquired by Arch Investments, LLC.
On
April 30, 2015, DOCASA executed a promissory note for $5,067 with Nami Shams, a former officer and director of the Company. The
note has no set term of repayment and is non-interest bearing. On July 20, 2016, Arch Investments, LLC acquired this promissory
note due to Nami Shams. The imputed interest is deemed immaterial as of June 30, 2018. As of June 30, 2018, and December 31, 2017,
the principal was $5,067.
On
July 31, 2015, DOCASA executed a promissory note for $5,065 with Nami Shams, a former officer and director of the Company. The
note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of June 30, 2018.
As of June 30, 2018, and December 31, 2017, the principal was $5,065. This note was acquired by Arch Investments, LLC.
On
October 31, 2015, DOCASA executed a promissory note for $15,873 with Nami Shams, a former officer and director of the Company.
The note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of June 30, 2018.
As of June 30, 2018, and December 31, 2017, the principal was $15,873. This note was acquired by Arch Investments, LLC.
On
January 31, 2016, DOCASA executed a promissory note for $4,349 with Nami Shams, a former officer and director of the Company.
The note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of June 30, 2018.
As of June 30, 2018, and December 31, 2017, the principal was $4,349. This note was acquired by Arch Investments, LLC.
On
July 28, 2016, DEPT-UK entered into a business loan with HSBC. The loan is a development loan drawn down against development invoices.
The loan is for four years, with an interest rate of 4.5% over the Bank of England base rate. The loan repayment is monthly, interest-only
payments for the first six months followed by monthly repayments of principal and interest over the remaining forty-two months.
The loan was for $437,992 (£352,500) with an initial $115,767 (£93,178) drawn. The outstanding principal and accrued
interest as of June 30, 2018, and December 31, 2017, was $328,608 (£248,824) and $391,981 (£290,294), respectively.
As of June 30, 2018, the current portion was $109,536 and the non-current portion was $219,072.
On
September 8, 2016, Tapped, prior to being acquired by DEPT-UK, entered into a business loan with HSBC. The loan is for five years,
with an interest rate of 5.51%. The loan was for £90,000. The outstanding principal as of June 30, 2018, and December 31,
2017, was $79,010 and $92,312, respectively. As of June 30, 2018, the current portion was $27,251 and the non-current portion
was $51,759.
NOTE
7 – RELATED PARTIES TRANSACTIONS
For
the six months ended June 30, 2018 and May 31, 2017, the Company purchased £59,331 and £88,389, respectively,
of cakes from Dee Light, a company which Gill, the vice chairman of the Company, was a 50% shareholder (until November 2016).
As of June 30, 2018, and December 31, 2017, the Company owed Dee Light £50,484 and £63,833, respectively.
For
the six months ended June 30, 2018 and May 31, 2017, the Company made sales or advances of £246,414 and £202,676,
respectively, to The Roastery Department Ltd. (“The Roastery Department”) and made purchases from it of £202,596
and £118,135 for the six months ended June 30, 2018 and May 31, 2017, respectively. As of June 30, 2018, and December 31,
2017, the Company both has receivables and payables from The Roastery Department, which netted as receivables of $479,412 (£363,013)
and $421,353 (£312,113), respectively. Gill, the Company’s vice chairman, and Ashley Lopez (“Lopez”),
the Company’s chief executive officer, were both unpaid directors of The Roastery Department until they resigned on December
1, 2016. The Company, when purchasing products from The Roastery Department, was provided a discount due to the strategic relationship
between the two parties which provided the Company its purchases at cost.
As
of June 30, 2018, and December 31, 2017, the Company owed Allesch-Taylor, the Company’s chairman, payables of $54,416 (£41,204)
and $36,729 (£29,383), respectively.
As
of June 30, 2018, and December 31, 2017, the Company owed Lopez, the Company’s chief executive officer, payables of $878
(£665) and $14,613 (£11,690), respectively.
As
of June 30, 2018, and December 31, 2017, the Company owed Deij Capital, a company in which Gill, the deputy chairman of the Company,
is the director and owner, notes payable of $11,164 (£8,454) and $11,414 (£8,454), respectively.
The
Company has an employment agreement with Lopez, our CEO, and did have a consulting agreement with Clearbrook Capital Partners
LLP (“Clearbrook”), an entity where Kazi Shahid, our former CFO, was a partner and also served as CFO. Allesch-Taylor
is a director of Clearbrook. The agreement with Clearbrook was terminated on March 15, 2017.
The
above related party transactions are not considered as arm’s length transactions for all circumstances.
NOTE
8 – STOCKHOLDERS’ EQUITY
Common
Stock
The
Company is authorized to issue up to 250,000,000 shares of common stock. Each outstanding share of common stock entitles the holder
to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative,
with no pre-emptive rights.
On
May 23, 2018, the Company issued 1,932,239 shares of common stock to various third parties as compensation for the acquisition
of Bea’s (see Notes 1 and 2). As of June 30, 2018, these shares had not been issued.
As
of June 30, 2018, the Company has not granted any stock options and has not recorded any stock-based compensation.
Preference
Shares and Non-Controlling Interest
The
Articles of Association of DEPT-UK, pursuant to the Companies Act 2006, authorized DEPT-UK to issue up to 25,000,000 preference
shares, par value £1.00 per share (such subsidiary preference shares referred to herein as “Preference Shares”).
Such Preference Shares have no votes and limited distribution rights. Subject to the provisions of the Companies Act 2006, DEPT-UK
shall have the right pursuant to Section 687-688 of the Companies Act 2006 to redeem at par the whole or any part of the Preference
Shares at any time or times after the date of issue of the said Preference Shares upon giving to DEPT-UK not less than three months’
previous notice in writing. The Preference Shares, at the discretion of the Board of Director of DEPT-UK, can be purchased at
the value they were issued or can be converted into contributed capital. The Preference Shares are accounted for as non-controlling
interest. As of June 30, 2018, and December 31, 2017, 4,319,641 and 3,557,796 shares were outstanding, respectively. Of the outstanding
shares, 1,603,460 and 1,666,709 were issued to related parties, as of June 30, 2018, and December 31, 2017, respectively.
DEPT-UK
has a non-controlling interest of 0.2%. For the six months ended June 30, 2018, the Company had a non-controlling interest of
$1,305. For the six months ended May 31, 2017, the Company had a non-controlling interest of $653.
On
February 28, 2017, 51,500 Preference Shares were issued to Deij Capital in exchange for a debt of $63,990 (£51,500). See
Note 7.
On
December 5, 2017, Borough Capital contributed $25,000 (£18,583) to DEPT-UK, in exchange for 18,583 Preference Shares.
On
December 14, 2017, Borough Capital contributed $45,000 (£33,488) to the DEPT-UK, in exchange for 33,488 Preference Shares.
On
January 17, 2018, Borough Capital, in regards to an October 2017 contribution of $111,061 to DEPT-UK, converted the liability
into 79,563 Preference Shares.
During
the three months ended June 30, 2018, 682,282 Preference Shares were issued for contributions of $863,120 to DEPT-UK.
Acquisition
of Tapped and Packed Ltd
On
November 1, 2017, DEPT-UK entered into the Tapped Acquisition Agreement with Tapped, a United Kingdom corporation. See Note 2.
The
dollar amount of Preference Shares, as recorded, were recorded to non-controlling interest as part of consolidation.
NOTE
9 – COMMITMENTS AND CONTINGENCIES
Legal
Matters
From
time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.
As of August 24, 2018, there were no pending or threatened lawsuits.
Lease
Commitment
We
lease office space in Schaumburg, Illinois, pursuant to a lease that is monthly. This facility serves as our corporate office.
Future
minimum lease payments under leases with the various subsidiaries, are as follows:
2018
|
|
$
|
387,567
|
|
2019
|
|
|
775,490
|
|
2020
|
|
|
778,760
|
|
2021
|
|
|
746,502
|
|
2022
|
|
|
532,555
|
|
Future
|
|
|
1,241,852
|
|
Total
|
|
$
|
4,462,726
|
|
Note:
The above table will change in each future filing due to currency translation as applicable.
DEPT-UK
has 18 leases, of which one is for the UK administrative office, and 17 operational leases. The Company has two leases in the
United States for DEPT-IL. Various leases have break out dates prior to expiration.
The
Company is a primary leaseholder on one lease which it has subleased to the Roastery and is responsible for the monthly payments
which approximate £221.
Rent
expense for the six months ended June 30, 2018 and May 31, 2017, was $588,477 and $233,373, respectively.
NOTE
10 – CONCENTRATIONS
Concentration
of Credit Risk
Financial
instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments.
The
Company places its temporary cash investments with financial institutions insured by the Federal Deposit Insurance Corporation
(“FDIC”) for the United States and the Financial Services Compensation Scheme (“FSCS”) for the United
Kingdom. No amounts exceeded federally insured limits as of June 30, 2018. There have been no losses in these accounts through
June 30, 2018.
Concentration
of Customer
The
Company has one customer, which, for the six months ended June 30, 2018 and May 31, 2017, had sales of $444,833 (£333,191,
11.4% of total revenue) and $349,798 (£274,432, 16.8% of total revenue), respectively. The Company has a contract with the
customer that expires in February 2020.
NOTE
11 – REVENUE CLASSES
Selected
financial information for the Company’s operating revenue classes are as follows:
|
|
For the six months ended
|
|
|
For the six months ended
|
|
|
|
June 30, 2018
|
|
|
May 31, 2017
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coffee and complementary food products
|
|
$
|
3,538,442
|
|
|
£
|
2,651,111
|
|
|
$
|
1,826,925
|
|
|
£
|
1,459,928
|
|
Coffee school
|
|
|
6,786
|
|
|
|
5,083
|
|
|
|
6,906
|
|
|
|
5,520
|
|
Management fees
|
|
|
369,515
|
|
|
|
276,776
|
|
|
|
250,218
|
|
|
|
199,946
|
|
Total
|
|
$
|
3,914,743
|
|
|
£
|
2,932,970
|
|
|
$
|
2,084,049
|
|
|
£
|
1,665,394
|
|
|
|
For
the six months ended
|
|
|
For
the six months ended
|
|
|
|
June
30, 2018
|
|
|
May
31, 2017
|
|
Direct costs of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coffee
and complementary food products
|
|
$
|
2,819,984
|
|
|
£
|
2,116,349
|
|
|
$
|
1,554,987
|
|
|
£
|
1,223,067
|
|
Coffee school
|
|
|
6,108
|
|
|
|
4,575
|
|
|
|
5,558
|
|
|
|
4,429
|
|
Management
fees
|
|
|
113,035
|
|
|
|
84,666
|
|
|
|
58,529
|
|
|
|
46,138
|
|
Total
|
|
$
|
2,939,127
|
|
|
£
|
2,205,590
|
|
|
$
|
1,619,074
|
|
|
£
|
1,273,634
|
|
The
acquisition of Tapped, effective November 1, 2017, is reflective in 2018 for the six months. The acquisition of Bea’s, Tradewind
and Roasted Ritual in May 2018, June 2018 and June 2018, respectively, are not significant.
NOTE
12 – CAPITAL LEASE OBLIGATIONS
The
Company leases various assets under capital lease. As of June 30, 2018, and December 31, 2017, capital lease obligations consisted
of the following:
|
|
June 30, 2018
|
|
|
December 31, 2017
|
|
Computer equipment
|
|
$
|
66,429
|
|
|
$
|
66,429
|
|
Office equipment
|
|
|
45,276
|
|
|
|
23,609
|
|
Site equipment and machinery
|
|
|
492,547
|
|
|
|
457,134
|
|
Site fit out costs
|
|
|
1,799,750
|
|
|
|
1,799,750
|
|
Site furniture, fixtures and fittings
|
|
|
468,037
|
|
|
|
268,796
|
|
Total fixed assets
|
|
|
2,872,039
|
|
|
|
2,615,718
|
|
Less: Accumulated depreciation
|
|
|
1,155,123
|
|
|
|
858,322
|
|
Fixed assets, net
|
|
$
|
1,716,916
|
|
|
$
|
1,757,396
|
|
Aggregate
future minimum rentals under capital leases are as follows:
2018
|
|
$
|
94,568
|
|
2019
|
|
|
168,035
|
|
2020
|
|
|
135,040
|
|
2021
|
|
|
86,622
|
|
2022
|
|
|
13,875
|
|
Future
|
|
|
2,753
|
|
Total
|
|
|
500,893
|
|
Less: Interest
|
|
|
23,142
|
|
Present value of minimum lease payments
|
|
|
477,751
|
|
Less: Current portion of capital lease obligations
|
|
|
172,348
|
|
Capital lease obligations, net of current portion
|
|
$
|
305,403
|
|
Note:
The above schedule reflects only items that have payments associated with them.
NOTE
13 – SUBSEQUENT EVENTS
Management
has reviewed and evaluated subsequent events through the date on which the current financial statements were available to be issued
and did not have any material recognizable subsequent events after June 30, 2018.