UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended November 30, 20162017

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission File Number: 333-190067

 

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

(Exact name of Registrant as specified in its charter)

 

Nevada

47-1405387

(State of incorporation)

(IRS Employer ID Number)

 

1901 North Roselle Road, Suite 800

Schaumburg, Illinois 60195

(630) 250-2709

(Registrant’s telephone number)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

(Check one):

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

As of January 20, 2017,15, 2018, there were 147,100,000160,012,875 shares of common stock, par value $0.001 per share issued, issuable, and outstanding.

 

 
 
 

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

FORM 10-Q

NOVEMBER 30, 2016

INDEX2017

 

INDEX

Page No.

Page No.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

F-1

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

7

25

Item 4.

Controls and Procedures

258

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

9

27

Item 1A.

Risk Factors

9

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

9

27

Item 3.

Defaults Upon Senior Securities

9

27

Item 4.

Mine Safety Disclosures

9

27

Item 5.

Other Information

9

27

Item 6.

Exhibits

2810

SIGNATURES

2911

 

 

2

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

TABLE OF CONTENTS

 

Index to Financial Statements

Page

 

Page

 

Condensed Consolidated Balance Sheets as of November 30, 2017 and August 31, 2017

F-2

 

Condensed Balance Sheets as of November 30, 2016 (unaudited) and August 31, 2016 (audited)

4

CondensedConsolidated Statements of Operations for the three months ended November 30, 20162017 and 20152016 (unaudited)

F-3

5

Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 20162017 and 20152016 (unaudited)

F-4

6

Notes to Condensed Consolidated Financial Statements

8F-6

 

 
3F-1
Table of Contents

 

Item 1. Financial Statements.Statements.

 

DOCASA, INC.

DOCASA, INC.

DOCASA, INC.

and Subsidiaries

and Subsidiaries

and Subsidiaries

Consolidated Condensed Balance Sheets

Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

 

November 30,

 

August 31,

 

 

November 30,

 

August 31,

 

 

2016

 

 

2016

 

 

2017

 

 

2017

 

 

(unaudited)

 

 

 

 

 

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash

 

$86,366

 

$91,137

 

 

$202,133

 

$93,400

 

Accounts receivable, net (includes $130,936 and $288,389 to related parties for November 30, 2016 and August 31, 2016, respectively)

 

699,014

 

368,807

 

Other receivables

 

-

 

113,994

 

Accounts receivable

 

527,483

 

496,822

 

Prepaid expenses

 

149,634

 

190,249

 

 

229,040

 

36,270

 

Inventory

 

 

37,665

 

 

 

40,323

 

 

 

108,691

 

 

 

47,477

 

Total current assets

 

972,679

 

804,510

 

 

1,067,347

 

673,969

 

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

791,249

 

674,627

 

 

1,966,992

 

1,672,176

 

Intangible assets, net

 

6,921

 

9,065

 

 

12,685

 

10,134

 

Other receivables

 

37,456

 

39,540

 

 

40,517

 

38,660

 

Investments

 

1,249

 

1,318

 

 

-

 

1,289

 

Goodwill

 

2,185,012

 

-

 

Deposits

 

 

84,473

 

 

 

57,311

 

 

 

212,289

 

 

 

89,989

 

Total assets

 

$1,894,027

 

 

$1,586,371

 

 

$5,484,842

 

 

$2,486,217

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Notes payable

 

$32,548

 

$18,368

 

Notes payable, current portion

 

$167,023

 

$139,419

 

Accounts payable

 

835,884

 

610,101

 

 

1,589,492

 

849,642

 

Accrued expenses

 

101,017

 

95,226

 

 

587,812

 

59,561

 

Accounts payable to related parties

 

26,151

 

-

 

 

50,582

 

95,213

 

Taxes payable

 

63,822

 

73,091

 

 

100,131

 

151,676

 

Capital leases obligations, current portion

 

116,146

 

116,146

 

Deferred revenue

 

 

15,956

 

 

 

6,557

 

 

 

35,361

 

 

 

32,661

 

Total current liabilities

 

 

1,075,378

 

 

 

803,343

 

 

 

2,646,547

 

 

 

1,444,318

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

 

 

 

Notes payable (includes $1,040 and $39,540 to related parties for November 30, 2016 and August 31, 2016, respectively)

 

291,949

 

209,797

 

Notes payable (includes $11,417 and $39,540 to related parties for November 30, 2017 and August 31, 2017, respectively)

 

11,417

 

372,926

 

Notes payable, non-current portion

 

357,740

 

-

 

Capital leases obligations, non-current portion

 

163,596

 

-

 

Other long-term liabilities

 

 

16,833

 

 

 

23,168

 

 

 

70,275

 

 

 

207,003

 

Total long-term liabilities

 

 

308,782

 

 

 

232,965

 

 

 

603,028

 

 

 

579,929

 

Total liabilities

 

1,384,160

 

1,036,308

 

 

3,249,575

 

2,024,247

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 250,000,000 shares authorized,

 

 

 

 

 

147,100,000 shares issued, issuable, and outstanding at November 30,

 

 

 

 

 

2016 and August 31, 2016, respectively

 

147,100

 

-

 

Common stock, $0.001 par value, 250,000,000 shares authorized, 160,012,875

 

 

 

 

 

and 150,036,000 shares issued and outstanding, at November 30, 2017 and

 

 

 

 

 

August 31, 2017, and 47,087,125 and 57,064,000 conditionally issuable, at

 

 

 

 

 

November 30, 2017 and August 31, 2017, respectively

 

207,100

 

207,100

 

Additional paid-in capital

 

462,377

 

-

 

 

758,969

 

758,969

 

Class A ordinary shares (25,000,000 shares authorized, £1 par

 

 

 

 

 

value, 0 and 243,800 shares issued and outstanding as of

 

 

 

 

 

November 30, 2016 and August 31, 2016, respectively)

 

-

 

389,730

 

Class B ordinary shares (10,000,000 shares authorized, £1 par

 

 

 

 

 

value, 0 and 0 shares issued and outstanding as of

 

 

 

 

 

November 30, 2016 and August 31, 2016, respectively)

 

-

 

-

 

Preference shares (25,000,000 shares authorized, £1 par

 

 

 

 

 

value, 870,826 and 870,826 shares issued and outstanding as of

 

 

 

 

 

November 30, 2016 and August 31, 2016, respectively)

 

1,154,127

 

1,154,127

 

Share premium

 

-

 

193,540

 

Class A ordinary shares of DEPT-UK (25,000,000 shares authorized, £1 par value,

 

 

 

 

 

0 and 243,800 shares issued and outstanding as of November 30, 2017 and August

 

 

 

 

 

31,2017, respectively)

 

-

 

-

 

Class B ordinary shares of DEPT-UK (10,000,000 shares authorized, £1 par value,

 

 

 

 

 

0 and 0 shares issued and outstanding as of November 30, 2017 and August 31,

 

 

 

 

 

2017, respectively)

 

-

 

-

 

Accumulated other comprehensive income

 

145,630

 

153,187

 

 

222,555

 

119,464

 

Minority interest

 

55

 

81

 

Non-controlling interest:

 

 

 

 

 

Preference shares of DEPT-UK (25,000,000 shares authorized, £1 par value,

 

 

 

 

 

value, 2,987,826 and 1,642,826 shares issued and outstanding as of November 30,

 

 

 

 

 

2017 and August 31, 2017, respectively)

 

4,086,539

 

2,142,804

 

Accumulated deficit

 

 

(1,399,422)

 

 

(1,340,602)

 

 

(3,039,896)

 

 

(2,766,367)

Total shareholders' equity

 

 

509,867

 

 

 

550,063

 

Total DOCASA, Inc. shareholders' equity

 

 

2,235,267

 

 

 

461,970

 

Total liabilities and shareholders' equity

 

$1,894,027

 

 

$1,586,371

 

 

$5,484,842

 

 

$2,486,217

 

 

See accompanying notes to unaudited condensed consolidated condensed financial statements.

 

 
4F-2
Table of Contents

 

DOCASA, INC.

DOCASA, INC.

DOCASA, INC.

and Subsidiaries

and Subsidiaries

and Subsidiaries

Consolidated Condensed Statements of Operations

For the Three Months Ended November 30,

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Operations

For the three months ended November 30,

For the three months ended November 30,

(unaudited)

(unaudited)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

Revenue, net

 

$916,625

 

$1,051,577

 

 

$1,522,886

 

$916,625

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Direct costs of revenue

 

573,242

 

652,209

 

 

1,175,915

 

573,242

 

Professional fees

 

43,620

 

25,674

 

 

65,004

 

43,620

 

Rent

 

94,243

 

110,969

 

 

172,717

 

94,243

 

Depreciation and amortization

 

32,503

 

36,554

 

 

74,024

 

32,503

 

Property taxes

 

47,005

 

52,735

 

 

67,010

 

47,005

 

Other general and administrative expenses

 

 

135,844

 

 

 

131,681

 

 

 

235,589

 

 

 

135,844

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(9,832)

 

41,755

 

Operating loss

 

(267,373)

 

(9,832)

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(2,448)

 

(1,426)

 

(6,154)

 

(2,448)

Impairment expense

 

 

(46,566)

 

 

-

 

 

 

-

 

 

 

(46,566)

 

 

 

 

 

 

 

 

 

 

Income (loss) before tax and minority interest

 

(58,846)

 

40,329

 

Minority interest income (loss)

 

 

26

 

 

 

(81)

Loss before provision for income taxes

 

 

(273,529)

 

 

(58,846)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(58,820)

 

$40,248

 

Net loss

 

(273,529)

 

(58,846)

Loss attributable to non-controlling interest

 

 

281

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

(7,557)

 

 

(32,789)

Net loss attributable to common shareholders

 

$(273,248)

 

$(58,820)

 

 

 

 

 

 

 

 

 

 

Total comprehensive income (loss)

 

$(66,377)

 

$7,459

 

Foreign currency translation gain

 

 

103,091

 

 

 

(7,557)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic and diluted

 

$(0.00)

 

$0.00

 

Total comprehensive loss

 

$(170,157)

 

$(66,377)

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding - basic and diluted

 

 

146,800,000

 

 

 

151,800,000

 

Net loss attributable to common shareholders per share - basic

 

$(0.00)

 

$(0.00)

 

 

 

 

 

Weighted average number of shares outstanding - basic

 

 

150,036,000

 

 

 

146,800,000

 

 

See accompanying notes to unaudited condensed consolidated condensed financial statements.

 

 
5F-3
Table of Contents

 

DOCASA, INC.

DOCASA, INC.

DOCASA, INC.

and Subsidiaries

and Subsidiaries

and Subsidiaries

Consolidated Condensed Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended November 30,

For the Three Months Ended November 30,

For the Three Months Ended November 30,

(unaudited)

(unaudited)

(unaudited)

 

 

 

 

 

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(58,820)

 

$40,248

 

Adjustments to reconcile net income (loss) to net cash used in operations:

 

 

 

 

 

Net loss before taxes and non-controlling interest

 

$(273,529)

 

$(58,846)

Adjustments to reconcile net loss before taxes and non-controlling interest to

net cash provided by operations:

 

 

 

 

 

Depreciation and amortization expense

 

32,503

 

36,554

 

 

74,024

 

32,503

 

Other comprehensive income

 

(7,557)

 

(32,789)

 

103,091

 

(7,557)

Impairment expense

 

46,566

 

-

 

 

-

 

46,566

 

Minority interest gain (loss)

 

26

 

(81)

Non-controlling interest gain

 

281

 

26

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(349,647)

 

(24,632)

 

(30,661)

 

(349,647)

Other receivables

 

107,986

 

(18,239)

 

(1,857)

 

107,986

 

Prepaid expenses

 

63,051

 

(14,641)

 

(100,718)

 

63,051

 

Inventory

 

1,264

 

9,924

 

 

(9,803)

 

1,264

 

Other non-current receivables

 

-

 

(1,505)

Deposits

 

(30,183)

 

-

 

 

(2,301)

 

(30,183)

Accounts payable

 

244,065

 

(21,150)

 

739,850

 

244,065

 

Accounts payable to related parties

 

26,151

 

81,583

 

 

(44,631)

 

26,151

 

Accrued expenses

 

12,090

 

65,711

 

 

252,359

 

12,116

 

Taxes payable

 

(5,416)

 

(46,258)

 

(52,729)

 

(5,416)

Deferred revenue

 

9,745

 

(2,334)

 

2,700

 

9,745

 

Other non-current liabilities

 

 

(5,114)

 

 

(69,556)

 

 

136,728

 

 

 

(5,114)

Net cash provided by operating activities

 

 

86,710

 

 

 

2,835

 

 

 

792,804

 

 

 

86,710

 

 

 

 

 

 

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

Fixed assets and intangible assets acquired

 

 

(167,292)

 

 

(21,561)

Cash flows used in investing activities:

 

 

 

 

 

Acquisition of fixed assets

 

(291,994)

 

(167,292)

Acqusition of intangible assets

 

(6,060)

 

-

 

Cash acquired from acquisition of Tapped

 

200,582

 

-

 

Acquisition of Tapped, net

 

 

(237,877)

 

 

-

 

Net cash used in investing activities

 

 

(167,292)

 

 

(21,561)

 

 

(335,349)

 

 

(167,292)

 

 

 

 

 

 

 

 

 

 

Cash flows from (used in) financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from notes payable, net of payments

 

290,908

 

-

 

Proceeds from notes payable

 

-

 

290,908

 

Payment on capital leases

 

(43,407)

 

-

 

Sale of preference shares

 

26,558

 

-

 

Payments on notes payable

 

(177,641)

 

-

 

 

(331,873)

 

(177,641)

Payments on notes payable to related parties

 

 

(37,456)

 

 

(21,331)

 

 

-

 

 

 

(37,456)

Net cash provided by (used in) financing activities

 

 

75,811

 

 

 

(21,331)

 

 

(348,722)

 

 

75,811

 

 

 

 

 

 

 

 

 

 

 

Net decrease in cash

 

(4,771)

 

(40,057)

Net increase (decrease) in cash

 

108,733

 

(4,771)

Cash at beginning of period

 

 

91,137

 

 

 

81,255

 

 

 

93,400

 

 

 

91,137

 

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$86,366

 

 

$41,198

 

 

$202,133

 

 

$86,366

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$2,448

 

 

$5,710

 

 

$5,376

 

 

$2,448

 

Cash paid for taxes

 

$606

 

 

$-

 

 

$-

 

 

$606

 

 

 
6F-4
Table of Contents

 

DOCASA, INC.

DOCASA, INC.

DOCASA, INC.

and Subsidiaries

and Subsidiaries

and Subsidiaries

Consolidated Condensed Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended November 30,

For the Three Months Ended November 30,

For the Three Months Ended November 30,

(unaudited)

(unaudited)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

Issuance of note payable for treasury stock

 

$320,000

 

$-

 

 

$-

 

$320,000

 

Assets and liabilities assumed, net

 

$46,359

 

$-

 

 

$-

 

$46,359

 

Tapped - goodwill

 

$(2,185,012)

 

$-

 

Tapped - prepaid expenses

 

$92,052

 

$-

 

Tapped - inventory

 

$51,411

 

$-

 

Tapped - fixed assets, net

 

$73,337

 

$-

 

Tapped - deposits

 

$119,999

 

$-

 

Tapped - accrued expenses

 

$195,621

 

$-

 

Tapped - notes payable

 

$369,586

 

$-

 

Tapped - deferred taxes

 

$1,184

 

$-

 

Treasury stock acquired

 

$(115,000)

 

$-

 

 

$-

 

$(115,000)

Issuance of common stock for acquisition

 

$110,000

 

$-

 

Issuance of common stock for reverse acquisition

 

$-

 

$110,000

 

Issuable common stock for contribution

 

$300

 

$-

 

 

$-

 

$300

 

Issuance of preference shares for debt and services

 

$13,422

 

$793,301

 

 

$-

 

$13,422

 

Issuance of preference shares in exchange for common stock

 

$1,756,378

 

$-

 

Payment of debt by third party

 

$(320,000)

 

$-

 

 

$-

 

$(320,000)

 

See accompanying notes to unaudited condensed consolidated condensed financial statements.

 

 
7F-5
Table of Contents

 

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

and Subsidiaries

Notes to Consolidated Condensed Financial Statements

November 30, 20162017

(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.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 agreementsagreement by and between Atlantik and Nami Shams (“Seller”(the “Seller”). On the closing date, July 8, 2016, pursuant to the terms of the Stock Purchase Agreement,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 total issued andCompany’s outstanding common stock at that time. See Notes 2, 5, 6 and 9.

 

The Company determined that it would expand its products in the food industry. On September 1, 2016, the Company acquired 99.8% of the voting stock of the Department of Coffee and Social Affairs Limited, (“DEPT-UK”), a United Kingdom corporation. DEPT-UK was incorporated on August 12, 2009. The acquisition of 99.8% of the voting stock of DEPT-UK from Stefan Allesch-Taylor (“Allesch-Taylor”) was pursuant to a stock exchangecorporation (the “Share Exchange”“DEPT-UK”), which obligatedand the Company agreed to issue Allesch-TaylorDEPT-UK’s majority shareholder 170,000,000 shares of restrictedthe Company’s common stock—110,000,000 shares initially and 60,000,000 additional shares at a date to betime determined by the Company’s Board of Directors but no later than August 31, 2017. See Notes 3 and 13.

2017, which deadline was subsequently extended to August 31, 2018. 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 (the “Stock Cancellation”).and which note has since been paid in full. As a result of the Stock Cancellationacquisition and the issuance of the initial 110,000,000 share issuance to Allesch-Taylor, Allesch-Taylor,shares of common stock, and the Chairmancancellation of the 115,000,000 Atlantik shares, DEPT-UK is now the majority-owned subsidiary of the Company, became the holder of the majority of the issued and outstanding stock of the Company holding 74.9%experienced a change of the outstanding common stock of the Company. See Note 9.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 November 30, 2016,2017, DCIA has had no operations or activity.

 

DEPT-UKOn April 5, 2017, the Company formed a wholly-owned subsidiary, The 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 on November 9, 2014,(“DEPT-UKWS”), as filed with the Registrar of Companies for England and Wales. On February 28, 2014, the name was changed to DOCASA Limited. On May 1, 2015, the name was changed to Eat Sleep Juice Repeat Limited. AsDEPT-UKWS is a subsidiary of November 30, 2016, this subsidiary has had no operations or activity.DEPT-UK.

 

For financial reporting purposes, the Share Exchange transaction representsacquisition of DEPT-UK and the change of control in connection with acquisition represented a "reverse merger"“reverse merger” rather than a business combination, and DEPT-UK is deemed to be the accounting acquirer in the transaction. The Share Exchange transactionFor 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., the public company)) is being treated as the acquired company. Consequently, the assets and liabilities and the operations that will beare reflected in the historical financial statements prior to the Share Exchange will beacquisition are those of the Private CompanyDEPT-UK and will behave been recorded at the historical cost basis of the Private Company,DEPT-UK, and the financial statements after completion of the Share Exchange willacquisition include the assets and liabilities of both the Public Company and the Private Company,DEPT-UK, and the historical operations of Private CompanyDEPT-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 Share Exchange.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.

 

Nature of Operations

 

We are currently devoting our efforts to migrating to the specialty coffee industry, specifically with company-operated stores. The Company will generate revenue through sales at elevennineteen existing company-operated coffee shop locations in the UK, with fiveseven more locations under construction. The Company has expanded its operations to the United States and opened its first coffee shop in Chicago, Illinois in October 2017. Our objective is to continue to be recognized as one of the upper tier specialty coffee retail operations. Similar to other leading operators, we sell our proprietary coffee and related products, and complementary food and snacks. The Company, will continue to marketas of August 31, 2017, has discontinued its hot sauce products.products which had no activity in the year ended August 31, 2017 (see Note 3). Accounting for discontinued operations not required due to immateriality.

Principles of Consolidation

The consolidated financial statements include the accounts of DOCASA and its subsidiaries, DEPT-UK, DCIA, DEPT-IL and DEPT-UK’s subsidiary, DEPT-UKWS. All significant inter-company balances and transactions have been eliminated in consolidation.

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Basis of Presentation

 

The accompanying unaudited consolidated condensed financial statements of DOCASA Inc. 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 November 30, 20162017 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending August 31, 2017.2018. In the opinion of the Company’s management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments)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 JulyAugust 31, 2016,2017, filed on October 4, 2016December 18, 2017 and Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Form 8-K/A filed on December 5, 2016 which includes the audited financial statements of the subsidiary, Department of Coffee and Social Affairs Limited and its audited financial statements for the year ended August 31, 2016 and 2015 and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

 

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, depreciableestimated lives of the web siteintangible 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 deems all accounts receivable to be collectible at November 30, 2016. Management has not recorded an allowance for doubtful accounts.accounts as of November 30, 2017 or August 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.

 

Property, Equipment and DepreciationFixed Assets

 

Property and equipment is 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 if any, would beare 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.

Accounting for 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 or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. 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.

 

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”.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 payable and accrued expenses, and short term loans the carrying amounts approximate fair value due to their short maturities.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

 

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:

 

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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

 

The Company recognizes revenue for ourits services in accordance with ASCAccounting Standards Codification (“ASC”) 605-10, "Revenue Recognition in Financial Statements."“Revenue Recognition.” Under these guidelines,this guidance, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has fourthree primary revenue streams as follows:

 

·

Sales of specialty coffee and complementary food products.

·

Coffee school.

·

Coffee services.

·Sale of hot sauce products.

 

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 selling,other general and administrative expenses on the accompanying condensed consolidated statement of operations. For the three months ended November 30, 20162017 and 20152016 advertising expense was $6,038$8,137 and $1,214,$6,038, respectively.

 

Income Taxes

 

The Company adopted the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.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 November 30, 2016,2017, tax years 2014 - 20162017 remain open for IRS audit and tax years 2015 – 20162015–2017 remain open for HM Revenue & Customs (“HMRC”) audit. The Company has received no notice of audit from the IRS andor HMRC for any of the open tax years.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

Company adopted ASC 740-10, Definition of Settlement in FASB Interpretation No. 48,” (“ASC 740-10”), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying financial statements.

 

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.

 

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 income.

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Comprehensive Income (Loss)Loss

 

The Company reports comprehensive income (loss)loss and its components in its consolidated financial statements. Comprehensive income (loss)loss consists of net loss andon foreign currency translation adjustments affecting stockholders’ equity that, under U.S. GAAP, are excluded from net loss. As of November 30, 2016,2017, the exchange rate between U.S. Dollars and British Pounds was U.S. $1.2485323065US$1.35 = £1.00, and the weighted average exchange rate for the three months ended November 30, 20162017 was U.S. $1.28787153US$1.32 = £1.00. As of August 31, 2016,2017, the exchange rate between U.S. Dollars and British Pounds was U.S. $1.43531US$1.29 = £1.00, and the weighted average exchange rate£1.00.

Going Concern

The Company has a net loss for the three months ended November 30, 2015 was2017 of $273,529 and a working capital deficit as of November 30, 2017 of $1,579,200, and has cash provided by operations of $792,804 for the three months ended November 30, 2017. In addition, as of November 30, 2017, the Company had a stockholders’ equity and accumulated deficit of $2,315,538 and $3,039,896, 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. $1.488 = £1.00.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 unaudited financial statements. The accounting pronouncements and updates issued subsequent to the date of these audited financial statements that were considered significant by management were evaluated for the potential effect on these audited financial statements. Management does not believe anythat some of the subsequent pronouncements will have a material effect on these audited financial statements as presented and does not anticipate the need for any future restatement of these audited financial statements because of the retro-active application of any accounting pronouncements issued subsequent to November 30, 20162017 through the date these audited 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 does not expectexpects 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 will adopt 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. We expect this adjustment to be less than $100 million, 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, Cost of sales, Non-Financial Services interest income and other income/(loss), net, and Financial Services other income/(loss), net.

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NOTE 2 – ENTRY INTO A DEFINITIVE AGREEMENT

 

Acquisition of Department of CoffeeTapped and Social Affairs LimitedPacked Ltd

 

DOCASA, Inc. (f/k/a FWF Holdings, Inc., the “Public Company,” “we,” “us,” “our”)On November 1, 2017, DEPT-UK entered into an acquisition agreement (the “Acquisition“Tapped Acquisition Agreement”) with Department of Coffee and Social Affairs Limited (the “Private Company”),Tapped, a United Kingdom corporation. Prior to the acquisition, Pankaj Rajani, an officer and director of the Public Company, through Atlantik, acquired 115,000,000, or 75.8% of the outstanding shares of DOCASA, Inc. (f/k/a FWF Holdings, Inc.), the public company. Stefan Allesch-Taylor,Richard Lilley, an individual and the Private Company’s chairman (“Allesch-Taylor,” or “Shareholder”Lilley”), was the owner of record of 99.8% of the voting100 capital shares of the Private Company (the “Private Company Stock”).Tapped. Pursuant to the Tapped Acquisition Agreement, the Private Company StockTapped stock was transferred to the Public CompanyDEPT-UK on November 1, 2017, in consideration of £175,000 and 1,546,875 shares of common stock of the PublicCompany. 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, issuing Shareholder 170,000,000utilized his personally owned shares of common stock of the Company, and assigned the 1,546,875 shares (the “New Shares��“Allesch-Taylor Shares”) from his ownership to Lilley. In exchange for the use of the PublicAllesch-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 tois thinly-traded and an insignificant amount of stock traded has historically caused significant fluctuations in the Shareholder (or his designees) in an initial tranche of 110,000,000 shares and a subsequent tranche of 60,000,000 shares. The Public Company issued Shareholder 110,000,000 fully paid and nonassessable shares of the Public Company’s restricted common stock at the time of the execution of the Agreement. The Public Company shall issue a second tranche of 60,000,000 fully paid and nonassessable sharesprice per share of the Company’s restrictedcommon 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 (the “Deferred Shares”) at a time to be determined by the Public Company’s Board of Directors, but no later than August 31, 2017. The Deferred Shares are not conditional or contingent on any event or action by any partyas of the Agreement. As a resultdate of the Acquisition Agreement,transaction. Management believes that the Private Company becameseparate valuations will determine a subsidiaryfair and reasonable valuation thereby reducing the provisional goodwill recorded, as of the Public Company. See Notes 1, 5, 6 and 9.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

2017, 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 Note 1, 8, 9 and 14. Also in connection with the Tapped Acquisition Agreement: (i) Allesch-TaylorAgreement, Gill and GillLopez were appointed to serve on DOCASA’sTapped’s Board of Directors, serving as Chairman and Vice-Chairman, respectively; and (ii) Ashley Lopez (“Lopez”) was appointed Chief Executive Officer and President and Kazi Shahid (“Shahid”) was appointed Chief Financial Officer. Allesch-Taylor, Gill, Lopez and Shahid will maintain the same positions of DEPT-UK.

The transaction was accounted for as a reverse acquisition. As such, the future period equity amounts will be retro-actively restated to reflect the equity instruments of the accounting acquirer.Directors.

 

The following table summarizes the consideration given for DEPT-UK and the fair values of the assets and liabilities assumed at the acquisition date.

 

Consideration given:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock given

 

$207

 

Cash given

 

$237,877

 

Common stock shares given

 

 

1,918,125

 

 

 

 

 

 

 

Total consideration given

 

$207

 

 

$2,156,002

 

 

 

 

 

 

 

Fair value of identifiable assets acquired and liabilities assumed:

 

 

 

Fair value of identifiable assets acquired, and liabilities assumed:

 

 

 

 

 

 

 

 

 

Cash

 

$200,582

 

Prepaid expense

 

92,052

 

Inventory

 

$731

 

 

51,411

 

Notes payable

 

(32,547)

Accounts payable

 

(6,043)

Fixed assets, net

 

73,337

 

Deposits

 

119,999

 

Accrued expenses

 

 

(8,500)

 

(195,621)

Short-term note payable

 

(200,804)

Director note

 

(168,782)

Deferred taxes

 

 

(1,184)

Total identifiable net liabilities

 

(46,359)

 

(29,010)

Goodwill

 

 

46,566

 

 

 

2,185,012

 

Total consideration

 

$207

 

 

$2,156,002

 

 

The Company has determined that the goodwill of $46,566 is impairedrevenue and has been expensed accordinglyearnings for Tapped, as reflected in the periodunaudited condensed consolidated statement of operations, for the one month ended November 30, 2016.2017, to reflect the period from acquisition, is $204,181 and $28,595, respectively.

 

Accounting Treatment of the Merger

For financial reporting purposes, the Share Exchange represents a “reverse merger” rather than a business combination and Private Company is deemed to be the accounting acquirer in the transaction. The Share Exchange is being accounted for as a reverse-merger and recapitalization. Private Company is the acquirer for financial reporting purposes and the Public Company (DOCASA, Inc., f/k/a FWF Holdings, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of the Private Company and will be recorded at the historical cost basis of the Private Company, and the financial statements after completion of the Share Exchange will include the assets and liabilities of the Public Company and the Private Company, and the historical operations of Private Company and operations of both companies from the closing date of the Share Exchange.

Commercial Agreement

On April 29, 2015, the Board of Directors of DOCASA authorized the execution of that certain commercial agreement (the "Agreement") with Alimentos Kamuk Internacional (Costa Rica) S.A. ("AKI"). In accordance with the terms and provisions of the Agreement, the Company has agreed to purchase the hot sauce manufactured by AKI (the "Hot Sauce") with a purchase price (the "Purchase Price") that is subject to a 5%-7% annual price increase based on increased in production costs and raw materials and a potential volume discount starting from 10 pallets of a single product. For the first order, the Purchase Price shall be payable in full in advance and for subsequent orders, the Purchase Price shall be payable 50% in advance and the remaining balance net 30 days. In the event the relationship continues between the Company and AKI and exceeds $100,000 annually, revisions in the payment terms can be negotiated.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

In further accordance with the terms and provisions of the Agreement: (i) all packaging material design will be the Company's property and will be used by AKI for such products; (ii) AKI shall guarantee a one year shelf life and in the event the shelf life is extended by the Company, the Company will indemnify AKI and be responsible for any damages, claims or returns; (iii) the Company shall supply the artwork for the labels; and (iv) the Company shall cover all expenses associated with customs clearance, taxes or charges incurred during importing of the Hot Sauce.

NOTE 3 – GOING CONCERN

The accompanying financial statements and the factors within it, have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and the ability of the Company to continue as a going concern for a reasonable period of time. The Company sustained net losses of $58,820 and cash provided by operating activities of $86,710 for the three months ended November 30, 2016. The Company had a working capital deficit, stockholders’ equity and accumulated deficit of $102,699, $509,867 and $1,399,422, respectively, at November 30, 2016. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company is in the process of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurance can be given that the Company will be successful in these efforts. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 4 – RECEIVABLES

As of November 30, 2016 and August 31, 2016, the Company has trade receivables of $568,078 and $368,807, respectively. The receivables are as follows:

 

 

November 30,

 

 

August 31,

 

 

 

2016

 

 

2016

 

Trade receivables

 

$579,056

 

 

$380,396

 

Allowance for doubtful accounts

 

 

(10,978)

 

 

(11,589)
Receivables, net

 

$568,078

 

 

$368,807

 

NOTE 5 – INVENTORY

 

The Company has inventory of various items used for the sale of coffee and complementary products. As of November 30, 20162017, and August 31, 2016,2017, the Company had inventory for the coffee segment of $36,934$108,691 and $40,323,$47,477, 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.

 

As of November 30, 2016, the Company had 49 cases containing 12 bottles per case (588 bottles). As of November 30, 2016 and August 31, 2016, the Company had inventory for the hot sauce segment of $731 and $0 (actual amount was $731 but due to the reverse merger, is not reflected on the August 31, 2016 balance sheet), respectively. Inventory is recorded at the lower of cost or market and the cost of sales are recorded utilizing the FIFO method.

The inventory is as follows:

 

 

November 30,

 

August 31,

 

 

November 30,

 

August 31,

 

 

2016

 

2016

 

 

2017

 

 

2017

 

Consumable products

 

$6,405

 

$8,500

 

 

$71,915

 

$17,894

 

Food and drinks

 

19,282

 

22,858

 

 

30,262

 

24,117

 

Retail products

 

11,247

 

8,965

 

 

 

6,514

 

 

 

5,466

 

Hot sauce products (1)

 

 

731

 

 

 

-

 

Total inventory

 

$37,665

 

 

$40,323

 

 

$108,691

 

 

$47,477

 

____

 

(1) The hot sauce products were the books of DOCASA and due to the reverse merger with DEPT-UK, is not reflected in August 31, 2016.

 

 
13F-10
Table of Contents

 

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

NOTE 64 – 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. As of November 30, 2016 and August 31, 2016, the Company had fixed assets of $1,244,202 and $1,126,093, respectively, with accumulated depreciation of $452,953 and $451,466, respectively, for net fixed assets of $791,249 and $674,627, respectively. Variances between the two reporting periods may be due to the currency translation calculation. The fixed assets are as follows:

 

 

November 30,

 

August 31,

 

 

November 30,

 

August 31,

 

 

2016

 

2016

 

 

2017

 

2017

 

Computer equipment

 

$43,450

 

$36,839

 

 

$66,429

 

$62,038

 

Office equipment

 

21,761

 

22,972

 

 

30,722

 

22,526

 

Site equipment and machinery

 

208,318

 

198,532

 

 

457,134

 

366,661

 

Site fit out costs

 

807,880

 

707,678

 

 

1,799,750

 

1,606,067

 

Site furniture, fixtures and fittings

 

 

162,794

 

 

 

160,072

 

 

 

310,752

 

 

236,972

 

Total fixed assets

 

1,244,202

 

1,126,093

 

 

2,664,787

 

2,294,264

 

Less: Accumulated depreciation

 

 

452,953

 

 

 

451,466

 

 

 

697,795

 

 

622,088

 

Fixed assets, net

 

$791,249

 

 

$674,627

 

 

$1,966,992

 

$1,672,176

 

 

The depreciation expense for the three months ended November 30, 2017 and 2016, was $73,417 and 2015 was $30,784, and $36,554, respectively. The variance between the expense and the increase in accumulated depreciation is due to timing of the currency translation calculation.

 

NOTE 75 – INTANGIBLE ASSETS

 

The Company has intangible assets related to website development. The amortization of the intangible assets is over a three-year period. As of November 30, 2016 and August 31, 2016, net of accumulated amortization, of $6,921 and $9,065, respectively. Variances between the two reporting periods may be due to the currency translation calculation. The intangible assets are as follows:

 

 

November 30,

 

August 31,

 

 

November 30,

 

August 31,

 

 

2016

 

2016

 

 

2017

 

 

2017

 

Website development

 

$19,977

 

 

$21,088

 

 

$35,488

 

 

$29,428

 

Total intangible assets

 

19,977

 

21,088

 

 

35,488

 

29,428

 

Less: Accumulated amortization

 

 

13,056

 

 

 

12,023

 

 

 

22,803

 

 

 

19,294

 

Intangible assets, net

 

$6,921

 

 

$9,065

 

 

$12,685

 

 

$10,134

 

 

The amortization expense for the three months ended November 30, 2017 and 2016, was $607 and $1,719, (£1,335).respectively. The variance between the expense and the increase in accumulated amortization is due to timing of the currency translation calculation. Amortization, based on the currency translation calculation as of the date of this report, for the next five years, is as follows:

 

2018

 

$7,731

 

2019

 

 

4,954

 

2020

 

 

-

 

2021

 

 

-

 

2022

 

 

-

 

Total

 

$12,685

 

  

NOTE 86 – INVESTMENTS

 

On January 12, 2017, Allesch-Taylor purchased the Company’s original investment of £5,000 for a 5% ownership of Radio Station (f/k/a Soho Radio Ltd.) for £5,000 of his issued preference shares in DEPT-UK. The relationship with Radio Station will continue to provide the Company with intangible benefits. As the Company hashad previously impaired £4,000 of the investment as of August 31, 2015, the exchange will resultresulted in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, willare still anticipated to be applicable. Asto the benefit of November 30, 2016 and August 31, 2016, the balance was $1,249 and $1,318, respectively, with the variance due to currency translations.Company. See Notes 10, 118 and 15.9.

 

F-11
Table of Contents

NOTE 97 – NOTES PAYABLE

 

The Company has notes payable as of November 30, 20162017 and August 31, 20162017 are as follows:

 

14
Table of Contents

Notes payable - current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 30, 2017

 

 

August 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

 

 

112,005

 

 

 

-

 

 

 

112,005

 

 

 

-

 

 

 

-

 

 

 

-

 

Woodgrove Bank

 

 

22,470

 

 

 

-

 

 

 

22,470

 

 

 

-

 

 

 

-

 

 

 

-

 

Total

 

$167,023

 

 

$-

 

 

$167,023

 

 

$32,548

 

 

$-

 

 

$32,548

 

 

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

Notes payable - current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 30, 2016

 

 

August 31, 2016

 

 

 

 

 

 

Accrued

 

 

 

 

 

 

 

 

Accrued

 

 

 

 

 

 

Principal

 

 

Interest

 

 

Total

 

 

Principal

 

 

Interest

 

 

Total

 

Nami Shams (1)

 

$2,194

 

 

$-

 

 

$2,194

 

 

$-

 

 

$-

 

 

$-

 

Arch Investments (1)

 

 

5,067

 

 

 

-

 

 

 

5,067

 

 

 

-

 

 

 

-

 

 

 

-

 

Nami Shams (1)

 

 

5,065

 

 

 

-

 

 

 

5,065

 

 

 

-

 

 

 

-

 

 

 

-

 

Nami Shams (1)

 

 

15,873

 

 

 

-

 

 

 

15,873

 

 

 

-

 

 

 

-

 

 

 

-

 

Nami Shams (1)

 

 

4,349

 

 

 

-

 

 

 

4,349

 

 

 

-

 

 

 

-

 

 

 

-

 

HSBC

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18,368

 

 

 

-

 

 

 

18,368

 

Total

 

$32,548

 

 

$-

 

 

$32,548

 

 

$18,368

 

 

$-

 

 

$18,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The balance for August 31, 2016 of $32,548 is not reflected on the balance sheet due to the reverse merger.  The Company assumed this liability as a condition of the reverse merger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable - non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 30, 2016

 

August 31, 2016

 

 

 

 

 

 

Accrued

 

 

 

 

 

 

 

 

 

 

Accrued

 

 

 

 

 

 

 

Principal

 

 

Interest

 

 

Total

 

 

Principal

 

 

Interest

 

 

Total

 

Deij Capital Limited

 

$1,040

 

 

$-

 

 

$1,040

 

 

$39,540

 

 

$-

 

 

$39,540

 

HSBC

 

 

290,909

 

 

 

-

 

 

 

290,909

 

 

 

170,257

 

 

 

-

 

 

 

170,257

 

Total

 

$291,949

 

 

$-

 

 

$291,949

 

 

$209,797

 

 

$-

 

 

$209,797

 

On February 1, 2010, DEPT-UK entered into a business loan with International Capital Corporation (“ICC”), which is controlled by George Raphael (“Raphael”). The loan is for 7 years, with no interest. The imputed interest is deemed immaterial as of November 30, 2016. The loan was for $1,353,645 (£850,000) to be drawn down as and when required. On June 30, 2016, ICC converted the balance due of $255,450 (£192,745) into 192,745 shares of Preference Shares (see Note 11). The outstanding principal as of November 30, 2016 and August 31, 2016 was $0 (£0) and $0 (£0), respectively. See Note 10.

Notes payable - non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 30, 2017

 

 

August 31, 2017

 

 

 

 

 

 

Accrued

 

 

 

 

 

 

 

 

Accrued

 

 

 

 

 

 

Principal

 

 

Interest

 

 

Total

 

 

Principal

 

 

Interest

 

 

Total

 

Deij Capital Limited (1)

 

$11,417

 

 

$-

 

 

$11,417

 

 

$70,079

 

 

$-

 

 

$70,079

 

Woodgrove Bank

 

 

68,348

 

 

 

-

 

 

 

68,348

 

 

 

-

 

 

 

-

 

 

 

-

 

HSBC

 

 

289,394

 

 

 

-

 

 

 

289,394

 

 

 

409,718

 

 

 

-

 

 

 

409,718

 

Total

 

$369,159

 

 

$-

 

 

$369,159

 

 

$479,797

 

 

$-

 

 

$479,797

 

(1) Related party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On July 1, 2014, DEPT-UK entered into a business loan with Deij Capital Limited (“Deij Capital”), a companyrelated 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 November 30, 2016.2017. 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 $719,143$179,534542,617)135,464) into 542,617135,464 shares of Preference Shares (see Note 11)10). On May 31, 2017, Deij Capital converted of the balance due $63,990 (£51,500) into 51,500 shares of Preference Shares (see Note 10). The outstanding principal as of November 30, 20162017 and August 31, 20162017, was $1,040$11,417833)8,454) and $39,540$70,07930,000)56,454), respectively. The accrued interest as of November 30, 20162017 and August 31, 20162017, was $0 (£0) and $0 (£0), respectively. See Note 10.9.

 

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 November 30, 2016.2017. As of November 30, 20162017, and August 31, 2016,2017, the principal was $2,194, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger.$2,194. This note was acquired by Arch Investments, LLC. See Note 5.Notes 9.

 

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 November 30, 2016.2017. As of November 30, 20162017, and August 31, 2016,2017, the principal was $5,067, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger.$5,067. See Note 5.Notes 2 and 9.

 

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 November 30, 2016.2017. As of November 30, 20162017, and August 31, 2016,2017, the principal was $5,065, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger.$5,065. This note was acquired by Arch Investments, LLC. See Note 5.Notes 2 and 9.

 

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 November 30, 2016.2017. As of November 30, 20162017, and August 31, 2016,2017, the principal was $15,873, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger.$15,873. This note was acquired by Arch Investments, LLC. See Note 5.

15
Table of Contents

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)2 and 9.

 

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 November 30, 2016.2017. As of November 30, 20162017, and August 31, 2016,2017, the principal was $4,349, respectively. The balance for August 31, 2016 is not reflected on the balance sheet due to the reverse merger. The Company assumed this liability as a condition of the reverse merger.$4,349. This note was acquired by Arch Investments, LLC. See Note 5.Notes 2 and 9.

 

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 4 years, with an interest rate of 4.5% over the Bank of England base rate. The loan repayment is monthly, interest onlyinterest-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 $463,557$437,992 (£352,500) with an initial $122,534$115,767 (£93,178) drawn. The outstanding principal and accrued interest as of November 30, 20162017, and August 31, 20162017, was $290,909$401,399233,001)297,206) and $170,257$409,718129,178)317,941), respectively.

As of August 31, 2016, the Company had a temporary loan from HSBC in the amount of $18,368. As of November 30, 2016,2017, the liabilitycurrent portion was paid off.$112,006 (£82,932) and the non-current portion was $289,393 (£214,274).

 

On September 1, 2016, DOCASA acquired the 115,000,000 shares of common stock from Atlantik in exchange for a promissory note for $320,000, which is non-interest bearing and terminates in one year. The imputed interest is deemed immaterial as of November 30, 2016. The principal is payable in two tranches; $20,000 due September 30, 2016 and the remaining $300,000 due August 31, 2017. The $20,000 payment was made by a third party and recorded as contributed capital in September 2016. The remaining $300,000 balance was paid on November 30, 2016 to Atlantik by Allesch-Taylor (see Notes 10 and 11). The imputed interest is deemed immaterial as of November 30, 2016. See Notes 1, 2, 5, 6 and 10.
F-12
Table of Contents

 

NOTE 108 – RELATED PARTIES TRANSACTIONS

 

On July 1, 2014, DEPT-UK entered into a business loan with Deij Capital Limited (“Deij Capital”), a company in which Matthew Gill is the director and owner. The loan is for 3 years, with an interest rate of 0%. 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 $719,143 (£542,617) into 542,617 shares of Preference Shares (see Note 11). The outstanding principal as of November 30, 2016 and August 31, 2016 and 2015 was $1,040 (£833) and $39,540 (£30,000), respectively. The accrued interest as of November 30, 2016 and August 31, 2016 was $0 (£0) and $0 (£0), respectively. See Note 10.

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 non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2016. See Note 4.

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 non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2016. On July 20, 2016, Arch Investments, LLC acquired this promissory note due to Nami Shams. See Note 4.

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 non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2016. See Note 4.

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 non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2016. See Note 4.

On January 31, 2016, DOCASA executed a promissory note for $4,348 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2016. See Note 4.

On June 30, 2016, Nami Shams, a former officer and director of DOCASA, provided DOCASA with a Forgiveness of Debt for $6,302 for advances made by Nami Shams to the Company.

On June 30, 2016, 192,745February 28, 2017, 51,500 Preference Shares were issued to Allesch-Taylor in exchange for a payable of $255,450 (£192,745). See Note 11.

On June 30, 2016, 135,464 Preference Shares were issued to DEIJDeij Capital a company controlled by Gill, the deputy chairman of the Company, in exchange for a debt of $179,534$63,990135,464)51,500). See Note 11.

On July 8, 2016, the majority shareholder of DOCASA, Nami Shams, sold 115,000,000 shares of common stock representing 75.8% of the outstanding shares of the Company to Atlantik for a total purchase price of $200,000. See Notes 2 and 6.

16
Table of Contents

DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

On September 1, 2016, the Company acquired the 115,000,000 shares of common stock from Atlantik in exchange for a promissory note for $320,000. The principal is payable in two tranches; $20,000, which was paid on September 30, 2016, and the remaining $300,000 due August 29, 2017. See Notes 1, 2, 4, 6 and 10.

On September 1, 2016, the Company acquired DEPT-UK (see Notes 2, 6 and 9) and initially issued 110,000,000 shares of common stock as part of the acquisition to Stefan Allesch-Taylor, the Chairman of the Company.9.

 

For the three months ended November 30, 20162017 and 2015,2016, the Company purchased $36,363 (£28,235)£11,150 and $26,841 (£20,841),£28,235, respectively, of cakes from Dee Light, a company which Gill, the deputyvice chairman of the Company, was a 50% shareholder (until November 2016). As of November 30, 20162017, and August 31, 2016,2017, the Company owed Dee Light $0 (£0)£20,598 and $56,102 (£42,566),£54,448, respectively. See Note 9.

 

For the three months ended November 30, 20162017 and 2015,2016, the Company made sales or advances of $0 (£0)£88,117 and $0 (£0),£0, respectively, to The Roastery Department Ltd. (“The Roastery Department”), and purchasedmade purchases from it of £85,888 and £40,451 and £14,478 for the three months ended November 30, 20162017, and 2015,2016, respectively. As of November 30, 20162017, and August 31, 2016,2017, the Company both has receivables and payables from The Roastery Department, which netted as payablesreceivables of $351,203$3,012272,700)2,230) and $66,667$1,198,81150,582)930,277), 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. The relationship between The Roastery Department and the Company, as stated, is classified as a barter transaction. Therefore, the Company, at August 31, 2017, expensed the net of the receivable and the payable, $417,436 (£323,930), resulted in an expense of $423,680, with the variance due to the currency translation. At August 31, 2017, the Company maintained a receivable for cash advance of $328,703 (£255,072). At November 30, 2017, the Company expensed the net of the receivable and the payable, $3,012 (£2,230), resulted in an expense of $2,952, with the variance due to the currency translation. At November 30, 2017, the Company maintained a receivable for cash advance of $351,407 (£260,191), as included in accounts receivable.

On October 6, 2017, the Company issued 8,976,875 shares of common stock to Allesch-Taylor as part of the common stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK.

On October 30, 2017, the Company issued 1,000,000 shares of common stock to Allesch-Taylor as part of the common stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK.

 

As of November 30, 20162017, and August 31, 2016,2017, the Company owed Allesch-Taylor, the Company’s chairman, payables of $54,086 (£40,047) and $41,174 (£31,951), respectively.

As of November 30, 2017, and August 31, 2017, the Company owed Lopez, the Company’s chief executive officer, payables of $831$898 (£665) and $2,985$8932,265)693), respectively.

 

As of November 30, 20162017, and August 31, 2016, the Company owed Kazi Shadid, the Company’s chief financial officer, payables of $7,965 (£6,380) and $0 (£0), respectively.

As of November 30, 2016 and August 31, 2016, the Company owed Allesch-Taylor, the Company’s chairman, payables of $17,355 (£13,901) and $0 (£0), respectively.

As of November 30, 2016 and August 31, 2016,2017, the Company owed Deij Capital, a company in which Gill, the deputy chairman of the Company, is the director and owner, notes payable of $1,040$11,417833)8,454) and $39,540$70,07930,000)56,454), respectively.

On November 30, 2016, Allesch-Taylor individually paid the Company’s remaining balance of $300,000 in regards to the promissory note to Atlantik (see Notes 9 and 11). In exchange for the payment on behalf of the Company, the Company will issue Allesch-Taylor 300,000 shares of common stock at a value of $1.00 per share. The last transaction with stock was September 1, 2016, which valued the common stock at $0.0027 per share. The Company’s common stock did not trade during this period therefore the value for the November 30, 2016 transaction was determined to be multiples higher than the last recorded transaction. The Company believes that the value is not beneficial to Allesch-Taylor but does not state that this was an arm’s length transaction. As of November 30, 2016, the stock has not been issued and is recorded as issuable.

On January 12, 2017, Allesch-Taylor purchased the Company’s original investment of £5,000 for a 5% ownership of Radio Station (f/k/a Soho Radio Ltd.) for £5,000 of his issued preference shares in DEPT-UK. The relationship with Radio Station will continue to provide the Company with intangible benefits. As the Company has previously impaired £4,000 of the investment as of August 31, 2015, the exchange will result in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, will still be applicable. As of November 30, 2016 and August 31, 2016, the balance was $1,249 and $1,318, respectively, with the variance due to currency translations. See Notes 10, 11 and 15.

 

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, iswas a partner and also servesserved 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 necessarily considered as arm’s length transactions for all circumstances.

 

NOTE 119 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

The Company wasis authorized to issue up to 75,000,000 shares of common stock, par value $0.001 per share. On March 26, 2015, the Company increased it’s authorized 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 March 26, 2015, the directors of the Company approved a special resolution to undertake a forward split of the common stock of the Company on a basis of 115 new common shares for 1 old common share. The issued and outstanding common stock increased from 1,320,000 to 151,800,000 as of July 31, 2015.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

On July 22, 2014,October 6, 2017, the Company issued 1,150,000,000 (10,000,000 pre-split) common shares at $0.000008695 ($0.001 pre-split) per share to the sole director and President of the Company for cash proceeds of $10,000.

On March 24, 2015, the Company closed of its financing and the Company issued 36,800,000 (320,000 pre-split) common shares to 32 shareholders at $0.000261 ($0.03 pre-split) per share for net cash proceeds of $9,600.

On March 26, 2015, the founding shareholder of the Company returned 1,035,000,000 (9,000,000 pre-split) restricted8,976,875 shares of common stock to treasury andAllesch-Taylor as part of the shares were subsequently cancelled by the Company. The shares were returnedcommon stock owed to treasury for $0.000000009 per share for a total consideration of $10Allesch-Taylor in regards to the shareholder.acquisition of DEPT-UK.

 

On July 8, 2016, the majority shareholder ofOctober 30, 2017, the Company Nami Shams, sold 115,000,000issued 1,000,000 shares of common stock representing 75.8%to Allesch-Taylor as part of the outstanding sharescommon stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK. After the issuances on October 6, 2017 and October 30, 2017, of the Company for a total purchase pricesecond tranche of $200,000. See Note 5.60,000,000 shares issuable to Allesch-Taylor pursuant to the acquisition terms, 47,087,125 remain issuable to him by no later than August 31, 2018.

 

As of November 30, 2016,2017, the Company has not granted any stock options and has not recorded any stock-based compensation.

 

On September 1, 2016, the Company acquired DEPT-UK (see Notes 2, 5 and 10). As a condition of the acquisition, 110,000,000 shares of common stock were issued on September 1, 2016. Additionally, 60,000,000 shares of common stock are issuable at the discretion of the board of directors but no later than August 31, 2017.

On September 1, 2016, the Company acquired the 115,000,000 shares of common stock from Atlantik in exchange for a promissory note for $320,000. The acquired shares were cancelled on September 1, 2016. See Notes 1, 2, 5 and 10.

On November 30, 2016, Allesch-Taylor individually paid the Company’s remaining balance of $300,000 in regards to the promissory note to Atlantik (see Notes 9 and 11). In exchange for the payment on behalf of the Company, the Company issued Allesch-Taylor 300,000 shares of common stock at a value of $1.00 per share. The last transaction with stock was September 1, 2016, which valued the common stock at $0.0027 per share. The Company’s common stock did not trade during this period therefore the value for the November 30, 2016 transaction was determined to be multiples higher than the last recorded transaction. The Company believes that the value is not beneficial to Allesch-Taylor but does not state that this was an arm’s length transaction. As of November 30, 2016, the stock has not been issued and is recorded as issuable.

All references in these financial statements to number of common shares, price per share and weighted average number of shares outstanding prior to the 115:1 forward split have been adjusted to reflect the stock split on a retroactive basis unless otherwise noted.
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Preference Shares and Non-Controlling Interest

 

The Articles of Association of the DEPT-UK, pursuant to the Companies Act 2006, was authorized DEPT-UK to issue up to 25,000,000 Preference Shares,preference shares, par value £1.00 per share.share (such subsidiary preference shares referred to herein as “Preference Shares”). Such Preference Shares have no votes and no dividends.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, can be purchased by DEPT-UK, at the discretion of the boardBoard of directorsDirector of DEPT-UK, can be purchased at the Company.value they were issued or can be converted into contributed capital. The Preference Shares are accounted for as non-controlling interest. As of November 30, 2017, and August 31, 2017, 1,662,826 and 1,642,826 shares were outstanding, respectively. Of the outstanding shares, 905,826 and 885,826 were issued to related parties, as of November 30, 2017 and August 31, 2017, respectively.

DEPT-UK has a non-controlling interest of 0.2%. For the three months ended November 30, 2017, the Company had a non-controlling interest of $281. For the three months ended November 30, 2016, the Company had a non-controlling interest of $26, which was not material therefore not recorded.

Acquisition of Tapped and Packed Ltd

 

On June 30, 2016, 192,745November 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 issuedrecorded to Allesch-Taylor in exchange for payablesnon-controlling interest as part of $255,450 (£192,745).consolidation.

On June 30, 2016, 542,617 Preference Shares were issued ICC in exchange for a debt of $719,143 (£542,617).

On June 30, 2016, 135,464 Preference Shares were issued to Deij Capital Limited, a company which is owned and controlled by Gill, a director of the Company, in exchange for a debt of $179,534 (£135,464).

On January 12, 2017, Allesch-Taylor purchased the Company’s original investment of £5,000 for Radio Station for £5,000 of his issued preference shares in DEPT-UK. As the Company had impaired £4,000 of the investment as of August 31, 2015, the exchange will result in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, will still be applicable. See Notes 8 and 15.

 

NOTE 1210 – 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 January 20, 2017,the date of this report, there were no pending or threatened lawsuits.

 

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

Lease Commitment

 

We lease office space in Schaumburg, Illinois, pursuant to a lease that will expire on January 10, 2017.is monthly. This facility serves as our corporate office.

 

Future minimum lease payments under leases due to the acquisition ofwith DEPT-UK, (see Note 2)Tapped, and subsequent new leases, including the lease entered into after November 30, 2016 (see Note 15)DEPT-IL, are as follows:

 

2017

 

$422,600

 

2018

 

536,517

 

 

$

581,351

 

2019

 

537,321

 

 

775,490

 

2020

 

540,541

 

 

778,760

 

2021

 

507,741

 

 

746,502

 

2022

 

532,555

 

Future

 

 

1,198,941

 

 

 

1,241,852

 

Total

 

$3,743,661

 

 

$

4,656,510

 

 

Note: The above table will change in each future filing due to currency translation as applicable.

 

As a result of the acquisition on September 1, 2016 (see Note 10), for DEPT-UK 12has 20 leases, of which one is for the U.S. corporate office, one for the UK administrative office, and ten19 operational leases. The Company has one lease in the United States for DEPT-IL. Various leases have break out dates prior to expiration. See Notes 2 and 10.8.

 

The Company entered into twono new leases during this period andthe three months ended November 30, 2017.

The Company is a primary leaseholder on one lease subsequentwhich it has subleased to November 30, 2016 (see Note 15).the Roastery and is responsible for the payments.

 

Rent expense for the three months ended November 30, 2017 and 2016, was $172,717 and 2015 was $94,243, (£73,177) and $110,969 (£73,006), respectively.

 

NOTE 13 – CONCENTRATIONS
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NOTE 11 – 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 November 30, 2016.2017. There have been no losses in these accounts through November 30, 2016.2017.

 

Concentration of Customer

 

The Company has one customer, which, for the three months ended November 30, 20162017 and 2015,2016, had sales of $101,227$180,62678,600, 11.0%136,436, 11.9% of total revenue) and $119,472$101,227 (£78,600, 11.4%11.0% of total revenue), respectively. The Company has a three-year contract with thisthe customer to provide an internal coffee shop, catering, etc. The Company fully operates the site. The contractthat expires in July 2017. Currently, the Company and the customer are negotiating the renewal and three-year extension of the contract. While the Company does expect the contract to be extended, it may not be, and if it were not, the Company would have a loss of revenue.February 2020.

 

Concentration of Supplier

The Company does not rely on any particular suppliers for its services.

Concentration of Lender

The Company has one lender, a related party, that makes up its notes payable.

Concentration of Intellectual Property

The Company, after the acquisition of DEPT-UK, owns or has filed for the trademarks “Department of Coffee and Social Affairs,” “Coffeesmiths,” and “Elixir Espresso” as filed with in Great Britain and Northern Ireland with the Trade Marks Registry. See Notes 2 and 9.

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DOCASA, INC.

(f/k/a FWF Holdings, Inc.)

Notes to Condensed Financial Statements

November 30, 2016

(unaudited)

NOTE 1412 – REVENUE CLASSES

 

Selected financial information for the Company’s operating revenue classes are as follows:

 

Revenues:

 

For the three months ended

 

 

 

2016

 

 

2015

 

Coffee and complementary food products

 

$810,214

 

 

$926,303

 

Coffee school 

 

 

5,184

 

 

 

5,802

 

Management fees

 

 

101,227

 

 

 

119,472

 

Hot sauce (a)

 

 

-

 

 

 

-

 

Total

 

$916,625

 

 

$1,051,577

 

 

 

 

 

 

 

 

 

 

(a) For the three months ended November 30, 2015, due to the reverse merger on September 1, 2016, are not reflective on this table.

 

 

 

 

 

 

 

 

 

Direct costs of revenue:

 

For the three months ended

 

 

2016

 

 

2015

 

Coffee and complementary food products

 

$539,611

 

 

$612,652

 

Coffee school 

 

 

543

 

 

 

609

 

Management fees

 

 

33,088

 

 

 

38,948

 

Hot sauce (a)

 

 

-

 

 

 

-

 

Total

 

$573,242

 

 

$652,209

 

 

 

 

 

 

 

 

 

 

(a) For the three months ended November 30, 2015, due to the reverse merger on September 1, 2016, are not reflective on this table.
 

Revenues:

 

For the three months ended

 

 

For the three months ended

 

 

 

November 30, 2017

 

 

November 30, 2016

 

Coffee and complementary food products

 

$1,341,267

 

 

£1,013,128

 

 

$810,214

 

 

£629,111

 

Coffee school

 

 

993

 

 

 

750

 

 

 

5,184

 

 

 

4,025

 

Management fees

 

 

180,626

 

 

 

136,436

 

 

 

101,227

 

 

 

78,600

 

Total

 

$1,522,886

 

 

£1,150,314

 

 

$916,625

 

 

£711,736

 

Direct costs of revenue:

 

For the three months ended

 

 

For the three months ended

 

 

 

November 30, 2017

 

 

November 30, 2016

 

Coffee and complementary food products

 

$1,172,001

 

 

£885,273

 

 

$539,611

 

 

£418,994

 

Coffee school

 

 

106

 

 

 

80

 

 

 

543

 

 

 

422

 

Management fees

 

 

3,808

 

 

 

2,876

 

 

 

33,088

 

 

 

25,692

 

Total

 

$1,175,915

 

 

£888,229

 

 

$573,242

 

 

£445,108

 

The acquisition of Tapped, effective November 1, 2017, is reflective in the three months ended November 30, 2017 with revenue from Tapped for one month.

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NOTE 13 – CAPITAL LEASE OBLIGATIONS

The Company leases various assets under capital lease. As of November 30, 2017, and August 31, 2017, capital lease obligations consisted of the following:

 

 

November 30,
2017

 

 

August 31,
2017

 

Computer equipment

 

$57,128

 

 

$57,128

 

Office equipment

 

 

20,420

 

 

 

20,420

 

Site equipment and machinery

 

 

355,914

 

 

 

355,914

 

Site furniture, fixtures and fittings

 

 

233,669

 

 

 

233,669

 

Total fixed assets

 

 

667,131

 

 

 

667,131

 

Less: Accumulated depreciation

 

 

279,489

 

 

 

240,246

 

Fixed assets, net

 

$387,642

 

 

$426,885

 

Aggregate future minimum rentals under capital leases are as follows:

 

2018

 

$74,934

 

2019

 

 

88,906

 

2020

 

 

65,083

 

2021

 

 

50,564

 

2022

 

 

13,543

 

Total

 

 

293,030

 

Less: Interest

 

 

13,288

 

Present value of minimum lease payments

 

 

279,742

 

Less: Current portion of capital lease obligations

 

 

116,146

 

Capital lease obligations, net of current portion

 

$163,596

 

Note: The above schedule reflects only items that have payments associated with them.

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NOTE 1514 – 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 November 30, 2017.

On December 12, 2016,5, 2017, Borough Capital contributed $25,000 (£18,583) to DEPT-UK, entered into a lease relatedin exchange for 18,583 Preference Shares.

On December 14, 2017, Borough Capital contributed $45,000 (£33,488) to retail expansion (see Note 12).the DEPT-UK, in exchange for 33,488 Preference Shares.

 

On January 12,17, 2018, Borough Capital, in regards to an October 2017 Allesch-Taylor purchasedcontribution of £175,000 to DEPT-UK, converted the Company’s original investmentliability into 175,000 Preference Shares.

Acquisition of £5,000 for a 5% ownership of Radio Station (f/k/a Soho Radio Ltd.) for £5,000 of his issued preference shares in DEPT-UK. Tapped and Packed Ltd

On November 1, 2017, DEPT-UK entered into the Tapped Acquisition Agreement. See Note 2.

Pro-Forma Financial Information

The relationship with Radio Station will continue to providefollowing unaudited pro-forma data summarizes the Company with intangible benefits. As the Company has previously impaired £4,000result of the investment as of August 31, 2015,operations for the exchange will result in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, will still be applicable. As ofthree months ended November 30, 2017 and 2016 as if the acquisition of Tapped had been completed on September 1, 2016. The pro-forma financial information is presented for informational purposes only and August 31, 2016,is not indicative of the balance was $1,249 and $1,318, respectively, withresults of operations that would have been achieved if the variance due to currency translations. See Notes 8, 10 and 11.acquisitions had taken place on September 1, 2016.

 

 

For the Three Months Ended November 30, 2017

 

 

 

 

 

 

 

 

 

Pro-forma

 

 

 

 

 

 

DOCASA

 

 

Tapped

 

 

Adjustments

 

 

Combined

 

Revenue, net

 

$1,318,705

 

 

$453,300

 

 

$-

 

 

$1,772,005

 

Operating expenses

 

 

1,614,673

 

 

 

538,644

 

 

 

-

 

 

 

2,153,317

 

Income (loss) from operations

 

 

(295,968)

 

 

(85,344)

 

 

-

 

 

 

(381,312)

Other income (expense)

 

 

(6,154)

 

 

(260)

 

 

-

 

 

 

(6,414)

Income before income taxes

 

 

(302,122)

 

 

(85,604)

 

 

-

 

 

 

(387,726)

Loss attributable to non-controlling interest

 

 

281

 

 

 

-

 

 

 

-

 

 

 

281

 

Foreign currency translation gain

 

 

103,091

 

 

 

-

 

 

 

-

 

 

 

103,091

 

Net income (loss)

 

$(198,750)

 

$(85,604)

 

$-

 

 

$(284,354)

Net income (loss) per common share - basic and diluted

 

$(0.00)

 

 

 

 

 

 

 

 

 

$(0.00)

Weighted average number of common shares outstanding during the period - basic and diluted

 

 

150,036,000

 

 

 

 

 

 

 

 

 

 

 

150,036,000

 

 

 

For the Three Months Ended November 30, 2016

 

 

 

 

 

 

 

 

 

Pro-forma

 

 

 

 

 

 

DOCASA

 

 

Tapped

 

 

Adjustments

 

 

Combined

 

Revenue, net

 

$916,625

 

 

$500,794

 

 

$-

 

 

$1,417,419

 

Operating expenses

 

 

926,457

 

 

 

332,622

 

 

 

-

 

 

 

1,259,079

 

Loss from operations

 

 

(9,832)

 

 

168,172

 

 

 

-

 

 

 

158,340

 

Other income (expense)

 

 

(49,014)

 

 

-

 

 

 

-

 

 

 

(49,014)

Loss before income taxes

 

 

(58,846)

 

 

168,172

 

 

 

-

 

 

 

109,326

 

Loss attributable to non-controlling interest

 

 

26

 

 

 

-

 

 

 

-

 

 

 

26

 

Foreign currency translation gain

 

 

(7,557)

 

 

-

 

 

 

-

 

 

 

(7,557)

Net loss

 

$(66,377)

 

$168,172

 

 

$-

 

 

$101,795

 

Net loss per common share - basic and diluted

 

$(0.00)

 

 

 

 

 

 

 

 

 

$0.00

 

Weighted average number of common shares outstanding during the period - basic and diluted

 

 

146,800,000

 

 

 

 

 

 

 

 

 

 

 

146,800,000

 

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” ”will,“will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

 

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 8-K for the fiscal year ended August 31, 2016 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

 

Company Overview

 

The Company was a startup company that was incorporated in Nevada on July 22, 2014 and previously hadestablished a fiscal year end of July 31. On August 4, 2016, the Company filed with the State of Nevada to change its fiscal year to August 31.

 

The Company has historically been in the hot sauce product business focused on selling its hot sauce products with a blend of peppers, fruits, herbs and spices under the brand name “Fruit With Fire.”

On July 8, 2016, the Company experienced a change in control. Atlantik LP (“Atlantik”), controlled by a related party, acquired a majority of the issued and outstanding common stock of the Company in accordance with a stock purchase agreementsagreement by and between Atlantik and Nami Shams (“Seller”(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 entered into an acquisition agreement (the “Acquisition Agreement”) withacquired 99.8% of the voting stock of the Department of Coffee and Social Affairs Limited, a United Kingdom corporation (“Private Company”(the “DEPT-UK”). Pursuant to the Acquisition Agreement,, and the Company acquired 99.8% of the Private Company’s voting stock, and the Private Company’sagreed to issue DEPT-UK’s majority shareholder was to receive an aggregate of 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, 2017.2017, which deadline was subsequently extended to August 31, 2018. Also on September 1, 2016, the Company acquired 115,000,000 shares of the Company’s common stock (and then cancelled those shares) from Atlantik LP (“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 of 99.8%and the issuance of the votinginitial 110,000,000 shares of common stock, of the Private Company and the cancellation of the 115,000,000 Atlantik shares, the Private CompanyDEPT-UK is now the majority ownedmajority-owned subsidiary of the Company, and the Company experienced a change of control.

 

Prior to the Private Company acquisition, we were a company that was originally engaged in the business of commercial production and distribution of hot sauce. After the acquisition, we are now engaged in both the hot sauce business, as well as the artisan coffee business of the Private Company.

 

Our financial statements have been prepared assuming that we will continue as a going concernOn January 2, 2018, with an effective date of November 1, 2017, DEPT-UK acquired Tapped and accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be able to continue in operation. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.Packed Ltd (“Tapped”), an UK coffee shop company with four locations.

 

We are currently devoting the majoritysubstantially all of our efforts toward our specialtyas an artisan coffee business, focused primarily on servingcompany that serves premium single origin coffee to the United Kingdom’s discerning coffee drinkers as well as a selection of quality foods,foods. In October 2017, we opened our first coffee shop in addition to our legacy hot sauce business operations.the United States, in Chicago, Illinois.

 

The following Management Discussion and Analysis should be read in conjunction with the financial statements and accompanying notes included in this Form 10-Q.

 

 
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Results of Operations

 

For the Three Months Ended November 30, 20162017 and 2015November 30, 2016

 

Revenue

 

For the three months ended November 30, 2016, we2017, the Company had $916,625$1,522,886711,736)1,150,314) of revenue, compared to $1,051,577$916,625691,827)711,736) for the same period in 2015. For presentation purposes,2016. Revenue in U.S. Dollars increased by 66.1%, resulting primarily due to currency translation, revenue in US dollars, as reported on the consolidated financial statements, decreased whereas, as reflected above,from revenue in British Pounds increased £19,909,£438,578, or 2.9%61.6%, compared to the three months ended November 30, 2016, as a result of multiple new coffee shop locations being in service during the three months ended November 30, 2017, as compared to the three months ended November 30, 2015.2016. In the three months ended November 30, 2016,2017, the Company added, or washad 19 coffee shop locations in operation, with four of the shops being acquired in the processacquisition of adding, two additional locations to its nine locations as of August 31, 2016. These additional locations, which opened in mid-November 2016 andTapped. The revenue for the endmonth of November 2016, provided increased sales of $21,4232017 for Tapped was $204,18016,635) which should increase accordingly over time to reflect a full quarterly period of operations as well as the impact of being fully established. At November 30, 2015, there were ten locations in full operation. One location was closed during154,228). The revenue for the three months ended November 30, 2016 due to constraining issues related to construction2017, without Tapped, was $1,318,706 (£996,086), which was an increase of the prior year of $402,081 (£284,350). Additionally, coffee shops opened in the area. The Company opened another location in December 2016.prior year performed within management’s expectations for the three months ended November 30, 2017. Company revenues, by revenue class, are as follows:

 

Revenues:

 

For the three months ended

 

 

For the three months ended

 

For the three months ended

 

2016

 

2015

 

 

November 30, 2017

 

November 30, 2016

 

Coffee and complementary food products

 

$810,214

 

$926,303

 

 

$

1,341,267

 

£

1,013,128

 

$

810,214

 

£

629,111

 

Coffee school

 

5,184

 

5,802

 

 

993

 

750

 

5,184

 

4,025

 

Management fees

 

101,227

 

119,472

 

 

180,626

 

136,436

 

101,227

 

78,600

 

Hot sauce (a)

 

 

-

 

 

 

-

 

Total

 

$916,625

 

 

$1,051,577

 

 

$

1,522,886

 

£

1,150,314

 

$

916,625

 

£

711,736

 

 

 

 

 

(a) For the three months ended November 30, 2015, due to the reverse merger on September 1, 2016, are not reflective on this table.

Operating Expenses

 

Direct costs of Revenue

 

For the three months ended November 30, 2016,2017, direct costs of revenue were $1,175,915 (£888,229) compared to $573,242 (£445,108) compared to $652,209 (£429,085) for the same period in 2015.2016. For presentation purposes, primarily due to currency translation, direct costs of revenue, as reported in USU.S. Dollars on the consolidated financial statements, reflects a decreasean increase of 105.1% in direct costs of revenue whereas, direct costs of revenue in British Pounds increased £16,023,£443,121, or 3.7%99.6%, as compared to the three months ended November 30, 2015.2016. The increase is primarily due to the acquisition of Tapped. The direct costs of revenue for the month of November 2017 for Tapped was $138,673 (£104,747). The direct costs of revenue for the three months ended November 30, 2017, without Tapped, was $1,037,242 (£783,482), which was an increase in locations. The cost of revenues, by revenue class, are as follows:$464,000 (£338,374).

 

Direct costs of revenue:

 

For the three months ended

 

For the three months ended

 

For the three months ended

 

 

2016

 

2015

 

 

November 30, 2017

 

November 30, 2016

 

Coffee and complementary food products

 

$539,611

 

$612,652

 

 

$1,172,001

 

£885,273

 

$539,611

 

£418,994

 

Coffee school

 

543

 

609

 

 

106

 

80

 

543

 

422

 

Management fees

 

33,088

 

38,948

 

 

 

3,808

 

 

 

2,876

 

 

 

33,088

 

 

 

25,692

 

Hot sauce (a)

 

 

-

 

 

 

-

 

Total

 

$573,242

 

 

$652,209

 

 

$1,175,915

 

 

£888,229

 

 

$573,242

 

 

£445,108

 

 

 

 

 

 

(a) For the three months ended November 30, 2015, due to the reverse merger on September 1, 2016, are not reflective on this table.

  

General and Administrative Expenses

 

For the three months ended November 30, 2016,2017, general and administrative expenses were $353,215$614,344282,903)464,046) compared to $357,613$353,215235,272)266,801) for the same period in 2015.2016. For presentation purposes, primarily due to currency translation, general and administrative expenses, as reported in USU.S. Dollars, on the consolidated financial statements, reflects a decreasean increase of 82.6% in general and administrative expenses, whereas general and administrative expenses in British Pounds increased £47,631,£197,245, or 20.2%73.9%, as compared to the three months ended November 30, 2015.2016. The expenses for the three months ended November 30, 2017, were as follows: professional fees, $65,004 (£49,101); rent, $172,717 (£130,462); depreciation and amortization, $74,024 (£55,914); property taxes, $67,010 (£50,616); and other, $235589 (£177,953). The expenses for the three months ended November 30, 2016, were as follows: professional fees, $43,620 (£33,870); rent, $94,243 (£73,177); depreciation and amortization, $32,503 (£25,238); property taxes, $47,005 (£36,498); and other, $135,844 (£105,479). The expenses forFor the three months ended November 30, 2015 were as follows: professional fees, $25,674 (£16,891); rent, $110,969 (£73,006); depreciation, $36,554 (£24,049); property taxes, $52,735 (£34,694); and other, $131,681 (£86,632). Additionally, for the three months ended November 30, 2016,2017, the Company had expenses related to being a publicly registered entity of $35,926$76,397 whereas the three months ended November 30, 2015, there were no comparable expenses. Comparisons between the years is not on an equal basis due to the currency valuation for each respective period, the impact of the costs of being a publicly registered entity, and the costs of expansion of two new locations. For the three months ended November 30, 2016, there were expenses related to the opening and/or preparing for the opening, of two locations in this period, which was $33,715 (£26,179). For comparison purposes, the actual general and administrative expenses for the current operations, excluding the expansion costs and the costs related to being a publicly registered entity, was $283,574, which is 80.3% of the reported amount.

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Net Loss

We generated net losses of $58,820 for the three months ended November 30, 2016, the expenses were $72,028. The increase in general and administrative expenses during the three months ended November 30, 2017, as compared to November 30, 2016, are primarily a result of the increase in operating expenses associated with opening new coffee shop locations and the acquisition of Tapped.

Net Loss

The Company generated net losses of $273,529 for the three months ended November 30, 2017, compared to net incomeloss of $40,248$58,846 for the same period in 2015. Both years2016. For both comparative periods, the Company’s primary expenses were direct costs of revenue. As discussed in the General and Administrative Expenses section, for further comparison purposes, deductingabove, the costs ofassociated with setting up the new locations and the costs of being a publicly registered entity, the general and administrative expenses would have decreased by $69,641, and an impairment expense of $46,566 related to the impairment of goodwill recorded in regards to the acquisition of DEPT-UK, therefore, for comparison purposes only,Tapped resulted in much of the net loss would have becomeincrease in expenses which reduces our net income of $57,387 (does not account for minority interest of 0.2% of DEPT-UK), or 6.3% of revenue forduring the three months ended November 30, 20162017, as compared to 3.8% for the three months ended November 30, 2015.2016.

 

The Company has a single customer, which, for the three months ended November 30, 20162017 and 2015,November 30, 2016, accounted for sales of $180,626 (£136,436, or 11.9% of total revenue in British pounds) and $101,227 (£78,600, 11.7%or 11.0% of total revenue) and $119,472 (£78,600, 11.4% of total revenue)revenue in British pounds), respectively. The Company’sCompany has a contract with thethis customer that expires in July 2017. While the Company and the customer are negotiating a three-year extension of the contract, and the Company expects the contract to be extended, if it were not, the Company’s operations would be adversely affected as it would lose the revenue from that customer.February 2020.

 

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Liquidity and Capital Resources

 

General

 

At November 30, 2016, we2017, the Company had cash and cash equivalents of $86,366. We have$202,133. The Company has historically met ourits cash needs through a combination of cash flows from operating activities and proceeds from private placements of our securities and loans. We planThe Company plans to continue meeting ourits cash needs through the same methods used historically.

 

OurThe Company’s operating activities provided cash of $86,710$792,804 for the three months ended November 30, 2016,2017, and provided cash in operations of $2,835$86,710 during the same period in 2015.2016. The principal elements of cash flow from operations for the three months ended November 30, 2016,2017, included a net loss of $58,820, impairment expense of $46,566, decrease in prepaid expense of $63,051,$273,530, and an increase in accounts payable of $244,065$739,850 and accrued expenses of $252,360, offset primarily by an increase in accounts receivableprepaid expenses of $349,647.$100,718.

 

Cash used in investing activities during the three months ended November 30, 2016,2017, was $167,292$335,349 compared to $21,561$167,292 during the same period in 2015,2016, which was primarily related in both periods to the acquisition of fixed assets.assets and Tapped.

 

Cash generatedused in ourthe Company’s financing activities was $75,811$348,722 for the three months ended November 30, 2016,2017, compared to cash usedprovided by financing activities of $21,330$75,811 during the comparable period in 2015. 2016.

As of November 30, 2017, current assets exceeded current liabilities. Current assets were $673,969 at August 31, 2017 and $1,067,347 at November 30, 2017, whereas current liabilities increased from $1,444,318 at August 31, 2017, to $2,646,547 at November 30, 2017.

 

 

For the three months ended

 

 

 

November 30,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$792,804

 

 

$86,710

 

Cash used in investing activities

 

 

(335,349)

 

 

(167,292)

Cash provided by (used in) financing activities

 

 

(348,722)

 

 

75,811

 

Net changes to cash

 

$108,733

 

 

$(4,771)

Going Concern

The Company entered intohas a line of credit with HSBC which resulted in borrowings of $233,000net loss for the three months ended November 30, 2016.

As2017 of $273,529 and a working capital deficit as of November 30, 2016, current liabilities exceeded current assets. Current assets were $804,510 at August 31, 20162017 of $1,579,200, and $972,679 athas cash provided by operations of $792,804 for the three months ended November 30, 2016, whereas current liabilities increased from $803,343 at August 31, 2016, to $1,075,378 at2017. In addition, as of November 30, 2016.

 

 

For the three months ended

 

 

 

November 30,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$86,710

 

 

$2,835

 

Cash used in investing activities

 

 

(167,292)

 

 

(21,561)

Cash provided by (used in) financing activities

 

 

75,811

 

 

 

(21,331)

Net changes to cash

 

$(4,771)

 

$(40,057)

Going Concern2017, the Company had a stockholders’ equity and accumulated deficit of $2,315,538 and $3,039,896, respectively. Without further funding, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The accompanying consolidated financial statements and the factors within it, have been prepared onin conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern basis, which contemplatesand the realization of assets and the satisfaction of liabilities in the normal course of business and thebusiness. 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, for a reasonable period of time. The Company sustained net losses of $58,820 and cash provided by operating activities of $86,710 forit would likely not be able to realize its assets at values comparable to the three months ended November 30, 2016. The Company had a working capital deficit, stockholders’ equity and accumulated deficit of $102,699, $509,867 and $1,399,422, respectively, at November 30, 2016. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company iscarrying value or the fair value estimates reflected in the processbalances set out in the preparation of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurancethe consolidated financial statements.

There can be givenno assurances that the Company will be successful in these efforts.generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of recorded asset amounts or the amountsassets and classification of liabilities that might be necessary shouldnecessary. Based on the Company’s current resources, the Company will not be unableable to continue as a going concern.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.

 

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Off Balance Sheet Arrangements

 

WeThe Company currently havehas no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

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Critical Accounting Policies

 

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, depreciable lives of the web site and property and equipment, valuation of warrant and beneficial conversion feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.

 

Changes in Accounting Principles. No significant changes in accounting principles were adopted during the period ended November 30, 2016.

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 or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. 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.2017.

 

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”.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 and Fair Value Measurements. The Company measures their financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses escrow liability and short-term loans the carrying amounts approximate fair value due to their short maturities.

 

We have adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. 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:

 

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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. The Company recognizes revenue for our services in accordance with ASC 605-10, "Revenue“Revenue Recognition in Financial Statements." Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has four primary revenue streams as follows:

 

·

Sale of coffee and complementary food products to consumer.

·

Coffee school.

·

Coffee services.

·

Selling of hot sauce products.

 

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 Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50. 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 estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.

 

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See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 1, “Summary of Significant Accounting Policies” in our audited financial statements for the year ended JulyAugust 31, 2016,2017, included in our Annual Report on Form 10-K, as filed on October 4, 2016 and amended as filed on NovemberDecember 18, 2016, and our Form 8-K for September 1, 2016, as filed on September 6, 2016 and amended on December 5, 2016 and January 20, 2017, for a discussion of our critical accounting policies and estimates.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

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Table of Contents

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company'scompany’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC'sSEC’s rules and forms and that information required to be disclosed is accumulated and communicated to the chief executive and interim chief financial officer to allow timely decisions regarding disclosure.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are not effective as of such date. The Chief Executive Officer and Chief Financial Officer have determined that the Company continues to have the following deficiencies which represent a material weakness:

 

1.

The Company intends to appoint additional independent directors;

2.

Lack of in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;

3.

Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting;

4.

Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes.

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Table of Contents

 

To remediate our internal control weaknesses, management intends to implement the following measures:

 

·

The Company will add sufficient number of independent directors to the board and appoint additional member(s) to the Audit Committee.

·

The Company will add sufficient accounting personnel to properly segregate duties and to effect a timely, accurate preparation of the financial statements.

·

The Company will hire staff technically proficient at applying U.S. GAAP to financial transactions and reporting.

·

Upon the hiring of additional accounting personnel, the Company will develop and maintain adequate written accounting policies and procedures.

 

The additional hiring and appointment of independent directors is contingent uponwill be addressed in the Company’s efforts to obtain additional funding through equity or debt and the results of its operations.future.

 

Changes in Internal Control Over Financial Reporting

 

As described herein, we experienced a change of control as a result of the acquisition of DEPT-UK. In connection with the acquisition, (i) Stefan Allesch-Taylor and Matthew Gill were appointed to serve on our Board of Directors, serving as Chairman and Vice-Chairman, respectively, Ashley Lopez was appointed as our Chief Executive Officer and President, and Kazi Shahid was appointed Chief Financial Officer. Due to acquisition and our modified business plan, we are in the process of finalizing our controls over our new business operations and processes. In March 2017, Mr. Shahid resigned as Chief Financial Officer of the Company and its subsidiary, DEPT-UK, and our Chief Executive Officer, Ms. Lopez, assumed, on an interim basis, the duties of the Chief Financial Officer. There are no changes in our internal controls over financial reporting other than as described above.

 

Limitations on the Effectiveness of Controls

 

The Company’s management, including the CEO and CFO, which is the same person, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

 
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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no pending legal proceedings in which we are a party or in which any of our directors, officers or affiliates, any owner of record or beneficiary of more than 5% of any class of our voting securities is a party adverse to us or has a material interest adverse to us. Our property is not the subject of any pending legal proceedings.

 

Item 1A. Risk Factors

 

Not required.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On September 1, 2016, the Company acquired 99.8% of the voting stock of Department of Coffee and Social Affairs Limited (“DEPT-UK”), a United Kingdom corporation, from Stefan Allesch-Taylor (“Allesch-Taylor”), pursuant to an acquisition agreement requiring the Company to issue Allesch-Taylor 170,000,000 shares of restricted common stock, 110,000,000 shares initially and 60,000,000 subsequently at a date to be determined by the Board of Directors, but no later than August 31, 2017.

Also on September 1, 2016, the Company acquired 115,000,000 shares of the Company’s common stock (and then cancelled those shares) from Atlantik LP (“Atlantik”) in exchange for issuing Atlantik a promissory note for $320,000.

On November 30, 2016, Allesch-Taylor, the Company’s Chairman, personally paid Atlantik the remaining balance of $300,000 owed by the Company to Atlantik pursuant to its promissory note from the Company dated September 1, 2016. In consideration of Allesch-Taylor’s payment of the Company’s balance, the Company agreed to issue Allesch-Taylor 300,000 shares of the Company’s common stock, valued at $1.00 per share. As of the date hereof, the stock has not been issued but has been recorded as issuable. After the issuance of the shares, Allesch-Taylor will beneficially own 110,300,000 shares of the Company’s common stock, or approximately 74.8% of the Company’s common stock.None.

 

The shares and promissory note described above were issued or will be issued based on exemptions from registration under Section 4(a)(2) of the Securities Act of 1933 and Regulation D promulgated thereunder as there was no general solicitation, and the transactions did not involve a public offering.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.On November 1, 2017, Department of Coffee and Social Affairs Limited (“DEPT-UK”), a subsidiary of DOCASA, Inc. (“DOCASA,” or the “Company”), contracted with Tapped and Packed Ltd. (“Tapped”), a United Kingdom company, to be acquired. DEPT-UK was obligated to compensate the owner of Tapped, Richard Lilley (“Lilley”), with cash of £175,000 and 1,546,875 shares of common stock of the Company. Stefan Allesch-Taylor (“Allesch-Taylor”), Chairman of the Company, assigned 1,546,875 of his personal shares to Lilley. Allesch-Taylor was issued 1,325,000 Preference Shares of DEPT-UK for the use of his personal shares of the Company to satisfy the compensation to Lilley for the transaction.

 

 
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Item 6. Exhibits

 

Number

Description

3.1

Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1, filed on July 22, 2013)

3.2

Bylaws (incorporated by reference to our Registration Statement on Form S-1, filed on July 22, 2013)

3.3

Certificate of Amendment, Change of Name (incorporated by reference to our Current Report on Form 8-K filed on August 16, 2016)

3.4

Certificate of Amendment, Change of Fiscal Year (incorporated by reference to our Current Report on Form 8-K filed on August 16, 2016)

10.1

Share Exchange Agreement dated November 6, 2014 (incorporated by reference to our Form 10-Q/A for the period ended December 31, 2014, filed on September 10, 2015)

10.2

Audit for the Period Ended November 6, 2014 of DOCASA, Inc. (f/k/a FWF Holdings, Inc.), the private company (incorporated by reference to our Form 10-Q/A for the period ended December 31, 2014, filed on September 10, 2015)

10.3

Acquisition Agreement between DOCASA, Inc. (f/k/a FWF Holdings, Inc.) and Department of Coffee and Social Affairs Limited (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2016)

10.410.2

Employment agreement with Ashley Lopez (incorporated by reference to our Current Report on Form 8-K filed on January 20, 2017)

10.510.3

Consulting agreement with Clearbrook Capital Partners LLP (incorporated by reference to our Current Report on Form 8-K filed January 20, 2017)

31.110.4

Acquisition agreement between Department of Coffee and Social Affairs Limited and Tapped and Packed Ltd.

31 (1)

Certification of Principal Executive Officer and Principal Financial Officer of DOCASA, Inc. (f/k/a FWF Holdings, Inc.) required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.232 (1)

Certification of Principal Accounting Officer of DOCASA, Inc. (f/k/a FWF Holdings, Inc.) required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 (1)

Certification of Principal Executive Officer of DOCASA, Inc. (f/k/a FWF Holdings, Inc.) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63

32.2 (1)99.1

Certification of Principal Accounting Officer of DOCASA, Inc. (f/k/a FWF Holdings, Inc.) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63

99.1

Unaudited Pro-Forma Condensed Combined Financial Statements (incorporated by reference to our Current Report on Form 8-K filed on January 20, 2017)

101.INS (1)

XBRL Taxonomy Extension Instance Document

101.SCH (1)

XBRL Taxonomy Extension Schema Document

101.CAL (1)

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF (1)

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB (1)

XBRL Taxonomy Extension Label Linkbase Document

101.PRE (1)

XBRL Taxonomy Extension Presentation Linkbase Document

_____________

(1)

__________

(1) Filed herewith

 

 
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Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: January 19, 2018

By:

/s/ Ashley Lopez

January 23, 2017

Ashley Lopez

Principal Executive Officer and Interim Principal Financial Officer

Date

 

/s/ Kazi Shahid

January 23, 2017

Kazi Shahid, Principal Financial Officer

Date11

 

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