| Colorado | 20-8980078 |
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) |
| Incorporation or organization) | |
| 1350 Independence St., Suite 300 | |
| Lakewood, CO | 80215 |
| (Address of principal executive offices) | (Zip Code) |
[x] Accelerated filer ☐ Non-accelerated filer Smaller reporting company ☒ Emerging growth company ☒ Page Item 1 - Financial Statements 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Item 1 STWC HOLDINGS, INC. October 31, 2018 (Unaudited) (Audited) ASSETS Current assets: Cash $ 30,243 $ 27,925 Accounts Receivable, net 48,998 5,000 Inventory 29,786 11,888 Prepaid expenses and other assets 28,881 17,592 Total current assets 137,908 62,405 Tenant improvements and office equipment, net of accumulated amortization and depreciation of $25,458 and $24,703 at October 31, 2018 and January 31, 2018, respectively 3,018 3,773 Notes receivable 503,333 94,061 Equity method investment in unconsolidated subsidiary 339,292 — Trademarks, net of accumulated amortization of $3,538 and $2,989 at October 31, 2018 and January 31, 2018, respectively 9,722 8,021 Total assets $ 993,273 $ 168,260 LIABILITIES AND STOCKHOLERS' EQUITY (DEFICIT) LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 909,590 $ 366,438 Due to related party 218,526 490,970 Deferred revenue 176,000 150,000 Total current liabilities 1,304,116 1,007,408 Notes payable, net of discount 27,273 — Total liabilities 1,331,389 1,007,408 Commitments and contingencies — — Stockholders' deficit Common stock, no par value, 100,000,000 shares authorized, 33,350,089 issued and outstanding — — Additional Paid in Capital 6,950,980 5,325,684 Retained deficit (7,289,096 ) (6,164,832 ) Total stockholders' deficit (338,116 ) (839,148 ) Total liabilities and stockholders' deficit $ 993,273 $ 168,260 2018 2017 2018 2017 Consulting services $ 12,500 $ 20,000 $ 143,749 $ 173,500 Cost of consulting services (12,500) (55,121) (24,943) (172,473) Gross profit — (35,121) 118,806 1,027 Operating costs and expenses Rents and other occupancy 13,500 28,143 39,516 56,445 Compensation 148,856 137,206 433,341 389,734 Professional, legal and consulting 335,429 33,150 420,518 84,283 Depreciation and amortization 435 183 1,304 1,874 General and administrative 79,895 97,202 221,536 238,328 Total operating costs and expenses 578,115 295,884 1,116,215 770,664 Loss from continuing operations (578,115) (331,005) (997,409) (769,637) Loss on equity investment in unconsolidated subsidiary (10,129) — (10,129) — Other (114,986) (115) (116,726) (1,016) Loss from continuing operations, before provision for taxes on income (703,230) (331,120) (1,124,264) (770,653) Provision for taxes on income — — — — Loss from continuing operations, net of tax (703,230) (331,120) (1,124,264) (770,653) Income from discontinued operations, net of tax — 1,974,363 — 1,144,976 Net income/(loss) $ (703,230) $ 1,643,243 $ (1,124,264) $ 374,323 Basic earnings and fully diluted income (loss) per common share Continuing operations $ (.02) $ (0.01) $ (0.04) $ (0.03) Discontinued operations $ — $ 0.07 $ — $ 0.04 Basic and fully diluted weighted average number of shares outstanding 29,437,372 27,140,550 27,914,571 27,140,550 STWC HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Nine months Ended October 31, 2018 2017 Cash flows from operating activities: Net (loss)/Income $ (1,124,264 ) $ 374,323 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 755 1,325 Decrease in trademark 549 549 Loss from equity investment in unconsolidated subsidiary 10,129 15,000 Bad debt expense — 3,000 Stock-based compensation and conversion of debt 183,775 — Increase in accounts receivable (43,998 ) (8,000 ) Increase in inventory (17,898 ) — Increase in prepaid expenses and other assets (11,289 ) — Increase in deferred revenue 26,000 135,000 Increase in accounts payable and accrued expenses 543,152 418,420 Net cash flow (used in)/provided by operating activities from continuing operations (433,089 ) 939,617 Net cash flow used in operating activities from discontinued operations — (1,013,193 ) Net cash flow used in operating activities (433,089 ) (73,576 ) Cash flows from investing activities: Investment in trademark (2,250 ) — Purchase of equipment — (4,024 ) Investment in unconsolidated subsidiary (152,983 ) — Net cash flow used in investing activities from continuing operations (155,233 ) (4,024 ) Net cash flow used in investing activities from discontinued activities — — Net cash flow used in investing activities (155,233 ) (4,024 ) Cash flows from financing activities: Proceeds from issuance of stock 683,200 — Proceeds from conversion of warrants 42,150 — Cash advances for notes receivable (409,272 ) (58,766 ) Proceeds from notes payable 225,000 — Cash (payments)/advances from related parties 49,562 68,629 Net cash flows from financing activities from continuing operations 590,640 9,863 Net cash flow from financing activities from discontinued activities — — Net cash flows from financing activities 590,640 9,863 Net cash flows 2,318 (67,737 ) Cash and equivalent, beginning of period 27,925 133,189 Cash and equivalent, end of period $ 30,243 $ 65,452 Supplemental cash flow disclosures: Cash paid for interest $ 6,477 $ 92,861 Cash paid for income taxes $ — $ — Supplemental disclosure of non-cash activities: Conversion of related party advances $ 402,508 $ — Acquisition of interest in unconsolidated subsidiary $ 196,438 $ — Common Stock Shares Amount Total Balance, January 31, 2018 27,140,550 — $ 5,325,684 $ (6,164,832 ) $ (839,148 ) Issuance of common stock for: Regulation D offering 3,416,000 683,200 683,200 Warrant conversions 281,000 — 42,150 — 42,150 Conversion of debt 2,012,539 — 402,508 — 402,508 Stock-based compensation — — 76,000 — 76,000 Common stock issued for Volume 2, LLC 500,000 — 100,000 — 100,000 Warrants issued for Volume 2, LLC — — 96,438 — 96,438 Beneficial conversion feature Related to convertible note — — 225,000 — 225,000 Net Loss — — — (1,124,264 ) (1,124,264 ) Balance, October 31, 2018 33,350,089 — $ 6,950,980 $ (7,289,096 ) $ (338,116 ) October 31, 2018 January 31, 2018 Leasehold improvements $ 2,200 $ 2,200 Office equipment, furniture and fixtures 26,276 26,276 28,476 28,476 Accumulated amortization and depreciation (25,458) (24,703) $ 3,018 $ 3,773 Investment in Unconsolidated Entity – The Company Trademarks – Trademarks and other intangible assets are stated at cost and are amortized using the straight-line method over fifteen years. Gross Carrying Amount Accumulated Amortization Net Trademarks $ 13,260 $ 3,538 $ 9,722 Three Months Ended October 31, 2017 Nine months Ended October 31, 2017 Rental income from the Regulated Entities (Affiliates) $ 397,198 $ 2,254,793 Total revenues 397,198 2,254,793 Operating costs and expenses Reserve for amounts due from Regulated Entities (Affiliates) 99,698 984,428 Rents and other occupancy (1,719,769) (87,212) Depreciation and amortization 38,831 120,756 Total operating costs and expenses (1,581,240) 1,017,972 Operating (loss)/income from discontinued operations 1,978,438 1,236,821 Other income and (expenses) Interest expense (4,075) (91,845) Loss from discontinued operations $ 1,974,363 $ 1,144,976 Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Remainder of 2019 $ 13,750 2020 55,250 2021 56,250 2022 42,750 Thereafter Total minimum lease payments $ 168,000 balance sheet. purchase and security agreement common stock, at a price lower than a net receipt to the Company of $0.15 per share, at such price that shall be at the same discount ratio as on the Funding Date. The conversion price of the Notes will be further subject to proportional adjustment for stock splits, reverse stock splits or combinations of shares, stock dividends, and the like. There are penalties for failure to timely deliver conversion shares. The company recognized a beneficial conversion feature on the notes as a discount and additional paid in capital of $225,000. The company has recognized $40,909 in interest expense for the amortization of the debt discount for the period ending April 30, 2019. $38,647, respectively. The We do NOT grow marijuana plants, produce marijuana infused products, sell marijuana plants and/or sell marijuana infused products of any nature in any jurisdiction were such activity has not been legalized. Change 2018 2017 $ % Consulting services $ 12,500 $ 20,000 $ (7,500) (38) Cost of consulting services (12,500) (55,121) 42,621 (77) Gross profit — (35,121) 35,121 100 Operating costs and expenses Rents and other occupancy 13,500 28,143 (14,643) (52) Compensation 148,856 137,206 11,650 8 Professional, legal and consulting 335,429 33,150 302,279 912 Depreciation and amortization 435 183 252 137 General and administrative 79,895 97,202 (17,307) (18) Total operating costs and expenses 578,115 295,884 282,231 95 Loss from continuing operations (578,115) (331,005) (247,110) 75 Loss on equity investment in unconsolidated subsidiary (10,129) — (10,129) 100 Other (114,986) (115) (114,871) 100 Loss from continuing operations, before provision for taxes on income (703,230) (331,120) 372,110 112 Provision for taxes on income — — — — Loss from continuing operations, net of tax (703,230) (331,120) 372,110 112 Income (loss) from discontinued operations, net of tax — 1,974,363 (1,974,363) (100) Net income/(loss) $ (703,230) $ 1,643,243 $ (2,346,473) (143) Change 2018 2017 $ % Consulting services $ 143,749 $ 173,500 $ (29,751) (17) Cost of consulting services (24,943) (172,473) 147,530 (86) Gross profit 118,806 1,027 117,779 11,468 Operating costs and expenses Rents and other occupancy 39,516 56,445 (16,929) (30) Compensation 433,341 389,734 43,607 11 Professional, legal and consulting 420,518 84,283 336,235 399 Depreciation and amortization 1,304 1,874 (570) (30) General and administrative 221,536 238,328 (16,792) (7) Total operating costs and expenses 1,116,215 770,664 334,551 45 Loss from continuing operations (997,409) (769,637) (227,772) 30 Loss on equity investment in unconsolidated subsidiary (10,129) — (10,129) 100 Other (116,726) (1,016) (115,710) 11,389 Loss from continuing operations, before provision for taxes on income (1,124,264) (770,653) (353,611) (46) Provision for taxes on income — — — Loss from continuing operations, net of tax (1,124,264) (770,653) (353,611) (46) Income (loss) from discontinued operations, net of tax — 1,144,976 1,144,976 (100) Net income/(loss) $ (1,124,264) $ 374,323 $ (1,498,587) (400) 2018 2017 Consolidated Statements of Cash Flows Data: Net cash used in operating activities $ (433,089 ) $ (73,756) Net cash used in investing activities (155,233 ) ( 4,024) Net cash provided by financing activities 590,640 9,863 Net change in cash $ 2,318 $ (67,737) affiliates. 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 ☐[] No ☒"large“large accelerated filer," "accelerated” “accelerated filer," "non-accelerated” “non-accelerated filer,"” and "smaller“smaller reporting company,"” and "emerging“emerging growth companycompany” in Rule 12b-2 of the Exchange Act. Large acclerated filer☐☒Stateissuer'sissuer’s classes of common equity, as of the latest practicable date: 33,350,08934,220,089 shares of common stock as of NovemberApril 30, 2018.2019.PartPART I - Financial Information15PartItem 3 – Quantitative and Qualitative disclosures about market risk20 Item 4 – Controls and Procedures 20 PART II - Other InformationOTHER INFORMATION-– Legal Proceedings19Item 1A - Risk Factors19Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds19Item 3 - Defaults Upon Senior Securities19Item 4 - Mine Safety Disclosures19Item 5 - Other Information1920Signatures21October 31, 2018April 30, 2019 and January 31, 2018 and for the Threethree-month periods ended April 30, 2019 and Nine month periods Ended October 31, 2018 and 2017STWC HOLDINGS, INC.CONDENSED BALANCE SHEETSITEM 1: FINANCIAL STATEMENTS STWC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) April 30, 2019 ASSETS Current assets: Cash $ 49,735 $ 2,965 Accounts Receivable, net 56,517 56,459 Inventory 40,810 29,786 Prepaid expenses and other assets 15,470 19,675 Total current assets 162,532 108,885 Property and equipment, net 11,267 2,767 Intangible assets, net 9,119 9,452 Right-of-use asset 139,955 - Notes receivable, related party 493,520 452,709 Equity method investment in unconsolidated subsidiary (22,667 ) - Total assets $ 793,726 $ 573,813 LIABILITIES AND STOCKHOLERS’ EQUITY (DEFICIT) LIABILITIES Current liabilities: Accounts payable $ 423,062 $ 447,626 Accrued expenses 496,121 437,388 Accrued expenses, related party 316,747 218,165 Restricted cash held for related parties 91,001 - Loan to related party 29,349 32,021 Deferred revenue 192,500 192,500 Lease liability 56,091 - Notes payable, current, net of discount 472,951 274,282 Total current liabilities 2,077,822 1,601,982 Lease liability 84,136 - Long-term loan from related party 48,240 48,240 Long-term notes payable 123,240 125,000 Total liabilities 2,333,438 1,775,222 Stockholders’ deficit Common stock, no par value, 100,000,000 shares authorized, 33,872,589 and 33,792,589 issued and outstanding at April 30, 2019 and January 31, 2019, respectively. — — Additional Paid in Capital 7,331,880 7,238,699 Retained deficit (8,871,592 ) (8,440,108 ) Total stockholders’ deficit (1,539,712 ) (1,201,409 ) Total liabilities and stockholders’ deficit $ 793,726 $ 573,813 2019 2018 Consulting services $ 20,545 $ 43,813 Product sales 9,822 - Cost of consulting services (11,467 ) (10,000 ) Gross profit 18,900 33,813 Operating costs and expenses Rents and other occupancy 17,963 12,516 Compensation 162,892 146,204 Professional, legal and consulting 114,977 49,896 General and administrative 60,960 52,511 Depreciation and amortization 584 435 Total operating costs and expenses 357,376 261,562 Other income (expense) Interest expense (67,602 ) (612 ) Impairment on investment (2,739 ) - Loss on investment in affiliate (22,667 ) - Total other income (expense) (93,008 ) (612 ) Loss from operations, before provision for taxes on income (431,484 ) (228,361 ) Provision for taxes on income - - Net income/(loss) $ (431,484 ) $ (228,361 ) Basic earnings and fully diluted income (loss) per common share Continuing operations $ (0.01 ) $ (0.01 ) Basic and fully diluted weighted average number of shares outstanding 29,275,708 27,140,550 STWC HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) For the three months ended April 30, 2019 2018 Cash flows from operating activities: Net Loss $ (431,484 ) $ (228,361 ) Depreciation and amortization 584 435 Accretion of debt discount 40,909 - Loss from equity investment in unconsolidated subsidiary 22,667 - Stock based compensation 13,181 - Changes in assets and liabilities Accounts receivable (58 ) 5,000 Inventory (11,024 ) (17,377 ) Right-of-use asset 272 - Notes receivable, related party (128,350 ) (10,000 ) Prepaid expenses and other assets 4,205 (6,158 ) Accounts payable 66,517 85,440 Accrued expenses 58,733 81,231 Deferred revenue - 53,687 Net cash flow used in operating activities (363,848 ) (36,103 ) Cash flows from investing activities: Purchase of fixed assets (8,751 ) - Net cash flow used in investing activities (8,751 ) - Cash flows from financing activities: Proceeds from issuance of stock 80,000 - Proceeds from debt 150,000 - Proceeds from related party loans 14,369 8,765 Proceeds from related party loans, restricted cash 175,000 - Net cash flows from financing activities 419,369 8,765 Net cash flows 46,770 (27,338 ) Cash and equivalent, beginning of period 2,965 27,925 Cash and equivalent, end of period $ 49,735 $ 587 Cash paid for interest $ 223 $ 513 Cash paid for income taxes $ - $ - STWC HOLDINGS, INC.CONDENSED STATEMENT OF CASH FLOWS(Unaudited) STWC HOLDINGS, INC. STATEMENT OF CHANGES IN STOCKHOLDERS’ (DEFICT) (Unaudited) Three Months Ended April 30, 2019 2018 Common stock and paid-in capital Balance, beginning of period $ 7,238,699 $ 5,325,684 Common stock issued 41,353 - Warrants granted 38,647 - Stock-based compensation 13,181 - Balance, end of period $ 7,331,880 $ 5,325,684 Retained Earnings Balance, beginning of period $(8,440,108) $(6,164,832) Net Loss (431,484) (228,361) Balance, end of period $(8,871,592) $(6,393,193) Total stockholders’ deficit $(1,539,712) $(1,067,509) INC.INCSTATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)(Unaudited) 7Notes to the Unaudited Consolidated Financial Statements-– Organizationformerly known asthrough its wholly-owned subsidiary, Strainwise, Inc., (identified in these footnotes as "STWC" "we" "us“STWC” “we” “us” or the "Company"“Company”) provides branding marketing, administrative, accounting, financial and compliance services ("(“Fulfillment Services"Services”) to entities in the cannabis retail cultivation, and manufacturing industry (the "Regulated Entities").production industry. The Company originally incorporated in the State of Utah on April 25, 2007, and redomiciled to Colorado by merging into a Colorado corporation incorporated on June 7, 2016. Strainwise, Inc., a wholly owned subsidiary of the Company, was originally incorporated in the state of Colorado as a limited liability company on June 8, 2012, and subsequently converted to a Colorado corporation on January 16, 2014.TheOn December 13, 2018, the Company was established to provide sophisticated Fulfillment Services to medical andinvested in Meridian A, LLC which owns a CBD retail stores, cultivation, and manufacturing facilities in the regulated cannabis industry throughout the United States. Such Fulfillment Services would only be provided to stores and facilitiesstore located in geographical areas whereOklahoma. The company’s Chief executive officer is the governing statemanaging member of the entity and local ordinances allow forSTWC Holdings, Inc. owns 75% of the unfettered provision of such services.The Fulfillment Services thatlegal entity. In accordance with Accounting Standards Codification 810 Consolidation, the Company is currently able to provide are summarized, as follows:Opportunity Assessment: For a standard fee, we will complete an Opportunity Assessment for a client, which would include financial modeling, completed with our proprietary assessment software.●Application Filing Assistance: Based upon our knowledge ofhas consolidated the various rules and regulations of respective state and local jurisdictions, the Company willentity. provide turn-key application preparation and submission services for a client, and/or provide consulting assistance to a client who is self-preparing their application.●Branding, Marketing and Administrative Consulting Services: Customers may contract with the Company to use the Strainwise® name, logo and affinityimages in their retail store locations. A monthly fee will permit a branding customer to use the Strainwise® brand at a specific location. In addition, the Company will assist operators in marketing and managing their businesses, setting up new retail locations and general business planning and execution at an hourly rate.This includes services to establish an efficient, predictable production process, as well as, nutrient recipes for consistent and appealing marijuana strains.●Accounting and Financial Services: For a monthly fee, the Company will provide a customer with a fully implemented general ledger system, with an industry centric chart of accounts, which enables management to readily monitor and manage all facets of a marijuana medical dispensary and cultivation facility. The Company will provide bookkeeping, accounts payable processing, cash management, general ledger processing, financial statement preparation, state and municipal sales tax filings, and state and federal income tax compilation and filings.●Compliance Services: The rules, regulations and state laws governing the production, distribution and retail sale of marijuana can be complex, and compliance may prove cumbersome. Thus, customers may contract with the Company to implement a compliance process, based upon the number and type of licenses and permits for their specific business. The Company will provide this service on both an hourly rate and stipulated monthly fee.●Lending: The Company will provide loans to individuals and businesses in the cannabis industry.The Company does NOT grow marijuana plants, produce marijuana infused products, sell marijuana plants and/or sell marijuana infused products of any nature in any state were such activity has not been legalized. Growing marijuana plants, producing marijuana infused products, selling marijuana plants and/or selling marijuana infused products of any nature is federally illegal under the Controlled Substances Act.The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2018 Form 10K.8generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosuredisclosures of contingent assets and liabilities atas of the date of the financial statements and the reported amountamounts of revenues and expenses during the reporting period.periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the period they are deemed to be necessary. Significant estimates made in the accompanying financial statements include but are not limited to following: those related to revenue recognition, allowance for doubtful accounts and notes receivable and unbilled services, lives and recoverability of equipment and other long-lived assets, realization of deferred tax assets, valuation of equity-based transactions, contingencies and litigation. The Company is subject to uncertainties, such as the impact of future events, economic, environmental and political factors, and changes in the business climate; therefore, actual results may differ from those estimates. When no estimate in a given range is deemed to be better than any other when estimating contingent liabilities, the low end of the range is accrued. Accordingly, the accounting estimates used in the preparation of the Company's financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. Changes in estimates are made when circumstances warrant. Such changes and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements.For purposes of the statement of cash flows, we considercompany considers all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents. Under Cash balances may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. For the periods presented no balances exceeded the federally insured limits.banking regulations, not all marijuana centric entitiesassets consist of various payments the Company has made in advance for goods or services to be received in the future. As of April 30, 2019, prepaid expenses were comprised of advance payments made to third parties for general expenses. Prepaid general expenses are afforded normal banking privileges. And thus, becauseamortized over the applicable periods which approximate the life of our perceived association with the Regulated Entities, we have not been able to maintain a corporate bank account at any federallycontract or state charted banking institution.service period. April 30, 2019 January 31, 2019 $ 10,951 $ 2,200 26,276 26,276 37,227 28,476 (25,960 ) (25,709 ) $ 11,267 $ 2,767 three monthsperiods ended October 31,April 30, 2019 and 2018 was $252. For the three months ended October 31, 2017 there was no amortization or depreciation expense. Amortization$251 and depreciation expense related to tenant improvements and office equipment for the nine months ended October 31, 2018 and 2017 was $755 and $1,325,$252, respectively.Income taxes – The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.entered into an agreementhas a significant and non-controlling investment in September 2018, whereby the Company owns a 51% interest in Volume 2, LLC ("V2L"), which the Company has agreed to invest $120,000 in cash, issue 500,000 shares of the Company"s stock, and grant 500,000 warrants for a total capital contribution of $185,000.several entities. The Company accounts for its investment V2L using the equity method based on the inability of the Companyownership interest and ability to control the acquired entity based on the terms of the Letter of Intent. Additionally, the Company has advanced $30,538 to fund operations.exert significant influence. Accordingly, the investment wasinvestments are recorded at cost, and adjustments to the carrying amount of the investment to recognizeare recognized in the Company'speriod incurred. The Company’s share of the earnings or losses are reported in the other income and expense section of V2L are made in each reporting period.the income statement.9Accumulated amortization was $3,538 and $2,989 at October 31, 2018 and January 31, 2018, respectively, and consisted of the following at October 31, 2018:Deferred Revenue – The Company periodically collects advances from customers related to consulting services. These advances are recorded as deferred revenue until the contracted services are completed. The Company has recorded deferred revenue of $176,000 and $150,000 as of October 31, 2018 and January 31, 2018, respectively.Share-Based Payments and Stock-Based Compensation – Share-based compensation awards, including warrants and restricted stock awards, are recorded at estimated fair value of the awards' grant date, based on estimated number of awards that are expected to vest. The grant date fair value is amortized on a straight-line basis over te time in which the awards are expected to vest, or immediately if no vesting is required. Share-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the fair value of the share-based payments, whichever is more readily determinable. The fair value of restricted stock awards is based on the fair value of the stock underlying the awards on the grant date as there is no exercise price.The fair value of warrants is estimated using the Black-Scholes option-pricing model. The determination of the fair value of each stock award using this option-pricing model is affected by the Company's assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards and the expected term of the awards based on an analysis of the actual and projected employee stock option exercise behaviors and the contractual term of the awards. The Company recognizes stock-based compensationAmortization expense over the requisite service period, which is generally consistent with the vesting of the awards, based on the estimated fair value of all stock-based payments issued to employees and directors that are expected to vest.Discontinued Operations – During November 2017, the Company settled all remaining operations related to its rental activities with regulated entities. As a consequence of the sale, the operating results and the assets and liabilities of the discontinued operations, which formerly comprised the rental operations, are presented separately in the Company's financial statements. There were no components of major assets and liabilities associated with the discontinued operations at October 31, 2018 and at January 31, 2018. Summarized financial information for the discontinued rental business is shown below. Prior period balances have been reclassified to present the operations of the rental business as a discontinued operation.periods ended April 30, 2019 and 2018 was $333 and $183, respectively.Trademarks April 30, 2019 January 31, 2019 Gross carrying amount $ 13,260 $ 13,260 Accumulated amortization 4,141 3,808 Net intangible assets $ 9,119 $ 9,452 108have adopted applicable FASB Codification regarding present earnings per share (“EPS”) in accordance with ASC 260 Earnings per Share, which requirerequires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. 2019 2018 Hourly fee contracts $ - $ - Fixed fee contracts 19,500 42,500 Monthly fee contracts 1,045 1,313 $ 20,545 $ 43,813 Company'sCompany’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and ensure that there are proper controls in place to ascertain that the Company'sCompany’s financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below:evaluatedadopted the standard effective February 1, 2019 by recording an immaterial transition adjustment and right of use assets and lease liabilities of approximately $150,000.newexpected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. In addition, the ASU amends the accounting pronouncementsfor credit losses on available-for-sale debt securities and deemed none resultedpurchased financial assets with credit deterioration. ASU 2016-13 is effective for periods beginning after December 15, 2019, and interim periods within those fiscal years. The Company is in changesthe process of evaluating the impact of the pronouncement.financial statementsOctober 31, 2018 April 30, 2019 of $7.1 $8.9 million. OurThe Company’s losses to date raise substantial doubt about ourthe Company’s ability to continue as a going concern. OurThe Company’s ability to continue as a going concern is dependent upon ourthe Company’s achieving a sustainable level of profitability. The Company intends to continue financing its future development activities and its working capital needs largely from the private sale of ourthe Company’s securities, with additional funding from other traditional financing sources, including convertible term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. However, the financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.- Operating Leases– Commitments and contingenciesCompany'sCompany’s corporate office needs, consisting of 6,1764,000 square feet of office space. The lease originally providedis for a 31-month period, that commenced in January 2014 through October 31, 2016. The lease was extended in November 2016 for a 5-year4-year period ending October 31, 2021. This lease to the Company is on the same terms and conditions as is the direct lease between the affiliate and the independent lessor. Consequently,The office space lease includes in-substance fixed lease payments, and does not provide an implicit rate, the Company believes thatremaining lease term for the office space is 30 months.terms to the Companyliability are comparable to lease terms the Company would receive directly from third party lessors in the Company's market, because the related party terms mirror the terms of the direct lease between the independent, third party lessor and the affiliated entity. 2020 41,227 2021 56,250 2022 42,750 Thereafter — Total minimum lease payments $ 140,227 three monthsperiods ended October 31,April 30, 2019 and 2018, and 2017, rent expense was $13,500$17,963 and $28,143,$12,516, respectively.During the nine months ended October 31, 2018 and 2017, rent expense was $39,516 and $56,445, respectively.As of October 31, 2018, future minimum lease payments are as follows:For the Fiscal Year Ending January 31,NoteNotes Receivableentered intohas management and licensing agreements with a private entity in Puerto Rico COPR Enterprises, LLC, 49%39% owned by the Company’s CEO, Erin Phillips, to operate fivefour dispensaries and twoone cultivation operationsoperation in Puerto Rico. In conjunction with these agreements, the Company as begun providing funds to operate the Puerto Rico operations, which will be evidenced by a promissory note. The terms have not been finalized on this note and currently there is no specified terms to the agreement. Through April 30, 2019 the Company has advanced $280,607 related to the note.which is evidenced by a promissory note. The note provides for a 36-month payment schedule bearing interest at 12%. The principal amountthe balance as of the loan has not been determined. Through October 31, 2018April 30, 2019 was $65,499. In addition, the Company has advanced $275,107 related toreceived $50,000 for the note.The Company entered into management and licensing agreements with a private entity to establish a joint venture in Oklahoma,benefit of 2600 Meridian LLC, thatthe funds have been used to cover start-up and development costs, the balance as of April 30, 2019 was $25,502. The funds held for related party entities is owned 25% byheld in restricted cash liabilities on the Company. In conjunction with this joint venture the Company has agreed to provide funds to operate the operations. The note provides for a 36-month payment schedule bearing interest at 12%. The principal amount of the loan has not been determined. Through October 31, 2018 the Company has advanced $228,227 related to the note.Note 7 – Due to Related Party12The Company borrowed $49,562 from related parties to fund operations during the nine months ended October 31, 2018. One of the related parties converted $322,006 in loans to common stock during the nine months ended October 31, 2018. The loans do not carry an interest rate and do not have a maturity date. As of October 31, 2018 and January 31, 2018, the Company owed related parties $218,526 and $490,970, respectively.Richland (the "Purchase Agreement") with Richland Fund, LLC., a Delaware limited liability company ("Richland").company. Pursuant to the Agreement, Richland agreed (collectively, the "Notes"), in the aggregate principal amount of $225,000, funded in three tranches, (i) $100,000.00 (the "First Note"), (ii) $67,000.00 (the "Second Note"), and (iii) the balance of $58,000.00 (the "Third Note"). The Notes bear 12% interest per annum, with the last payment under the Notes due JanuaryDecember 15, 2020. The Notes are secured by all assets of the Company and guarantees from Shawn and Erin Phillips. The Notes may be prepaid without penalty with 30 days' advance notice to Richland.12Green Acres Noteorderconnection with the funding agreement, the Company agreed to continueform and organize a subsidiary. The Company and lender are in discussions regarding the assets to fund ongoing California operations, on or aroundbe held in the subsidiary, nothing has been finalized as of the issuance date.("Loan Agreement") with Green Acres Partners A, LLC, a California limited liability company ("Green Acres"(the “lender”) whereby Green Acresthe lender agreed to loan to the Company $205,000$205,000. The loan proceeds are to be used specifically for the capital needs of two related party projects in exchange forSan Diego, California. The interest rate on the notes is 12% per annum and monthly interest payments are due the first day beginning no later than August 1, 2019; thereafter the Company shall pay interest and principal on 60% of the Company’s ownership percentage of the available profits from the San Diego projects. The loan is personally guaranteed by Shawn Phillips, the husband of Erin Phillips, our CEO.("Note") issued by the company in the principalface amount of $205,000.$103,000. On February 15, 2019, the Company issued the Note. The Note matures no later than September 1,on February 13, 2020, and bears interest at 12% per annum, increasing to 22% after maturity.paymentsPower Up. The Company entered into a second Securities Purchase Agreement pursuant to begin no later than September 1, 2018; however, payments may begin sooner than such datewhich Power Up agreed to purchase a convertible promissory note in the event operations in San Diego begin sooner.face amount of $53,000. On March 18, 2019, the Company issued the Note. The Note carries anmatures on March 18, 2020, and bears interest rate ofat 12% per year, with an 18% default interest rate. Theannum, increasing to 22% after maturity. balance of the Note into shares of common stock of the Company beginning on the date which is 180 days from the date of the Note, at a price equal to 61% of the lowest trading price during the 20 trading day period ending on the last complete trading date prior to the date of conversion; provided, however, that Power Up may not convert the Note to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock.acceleratedprepaid after the 180th day following the date of the Note.default or transfer. This noteconversion of the Note, six times the number of shares that would be issuable upon full conversion of the Note, assuming the 4.99% limitation were not in effect. In connection with the Note, the Company has not been fundedcaused its transfer agent to reserve initially 1,494,276 shares of Common Stock. The Company received a net amount of $150,000, with $6,000 paid for Power Up’s legal and as of October 31, 2018 there was no balance due under this note.diligence expenses.CommonAugust 29, 2018, in conjunction with the Richland Note,February 4, 2019, the Company issued Richland warrants to purchase 100,000 shares of the Company's common stock for $18,000. Richland exercised the warrants on October 3, 2018.From approximately September 24, 2018 to October 16, 2018, the Company issuedinitiated a total of 281,000 shares of its common stock for $42,150 resulting from the exercise of outstanding warrants with an exercise price of $0.15 per share. These shares were issued pursuant to Section 4(a)(2) of the Securities Act.On October 15, 2018, the Company entered into an Exchange Agreement (the "Exchange Agreement") with Shawn Phillips ("Mr. Phillips"), pursuant to which the Company issued Mr. Phillips 2,012,539 shares of the Company's Common Stock in exchange for $322,006 of debt owed to Mr. Phillips (the "Exchange"). The Exchange agreement otherwise contains standard terms and conditions. During the three and nine months ended October 31, 2018 the Company recognized an expense of $80,502 related to the conversion of these notes as a result of the stock being issued at a discount below the private offering price.On or around October 18, 2018, the Company completed a privateequity offering to accredited investors (the "Offering") in accordance with Regulation D under the Securities Act of 1933 ("Securities Act"). The Offering consisted of 3,416,000 shares2,000,000 units with each unit consisting of one share of the Company's Common Stock and a warrant to purchase an additional share of common for $2.00 at any time prior to January 31, 2022. During the three months ended April 30, 2019, 80,000 units were sold at a price per shareunit of $0.20,$1.00, for offering proceeds of $683,200. All securities sold in$80,000. The company allocated proceeds at the Offering were sold in reliance upon the exemption from securities registration afforded by Section 4(a)(2)estimated fair value of the Securities Actcommon shares and warrants for value of 1933, as amended,$41,353 and Regulation D promulgated thereunder.On October 15, 2018, Number of Warrants Exercise Price Wtgd Avg Calculation Wtgd Avg Remining Life Balance at 1/31/2018 2,224,700 $ 5.00 $ 11,123,500 1.00 Granted 2,000,000 0.16 $ 322,000 Exercised (311,000) 0.16 $ (49,650) Cancelled (2,013,700) 5.00 $ (11,091,850) Balance at 1/31/2019 1,900,000 $ 0.16 $ 304,000 1.71 Granted 80,000 2.00 $ 160,000 Exercised - - - Cancelled - - - Balance at 4/30/19 1,980,000 $ 0.23 $ 464,000 1.52 issued warrantshas $184,538 in unrecognized stock compensation expense.purchase 1,900,000 sharesestimate the fair value of its common stock to three individuals in exchange for services, respectively.unit-based awards at the date of grant. The warrants all carry two-year terms and an exercise priceBlack-Scholes model requires the use of $0.16 per share. Forty percent of each warrant may be exercised pursuant to a cashless exercise formula. The warrants otherwise contain standard terms and conditions. During the three and nine months ended October 31, 2018 the Company recognized $76,000 in expense related to the issuance of these warrants. These warrants were issued pursuant to Section 4(a)(2)highly subjective assumptions, including value of the Securities Act.On October 26, 2018 the Company issued a totalenterprise, expected life, expected volatility, and expected risk-free rate of 25,000 shares to Tysadco Partners LLC as compensation for services.The shares shall vest at a schedule of 10,000 shares at on November 1, 2018, 7,500 shares on the 120th day from November 1, 2018, and 7,500 shares on the 180th day from November 1, 2018, subject to the investor relations agreement being in effect as of each applicable vesting date.1314Expected term (years) 5 Risk-free interest rate 2.73% Volatility 218% Expected dividend yield 0.00% 1110 – Subsequent Events("(“subsequent events"events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, ("(“recognized subsequent events"events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date ("(“non-recognized subsequent events"events”).Recognized Subsequent EventsNoneUnrecognized Subsequent EventsCompany was namedmaturity date of the Note is 12 months from April 18, 2019. The Note bears interest at 12% per annum at its face amount, with a default rate of 15% per annum (or the maximum amount permitted by law). If we prepay the Note through the 180th day following the date thereof, we must pay all of the principal and interest with a prepayment penalty ranging from 135% to 150%. After the 180th day we have no further right of prepayment.defendantdiscount of 65%, assuming no other adjustments except for the 15% discount due to the conversion price below $0.35). Crown Bridge may not convert the Note to the extent that such conversion would result in one civil suit filedbeneficial ownership by Crown Bridge and its affiliates of more than 4.99% of our issued and outstanding common stock. We have also granted piggy-back registration rights for the shares issuable upon conversion of the Note.District CourtSEC. In the event of a default, at the Cityoption of Crown Bridge, it may consider the Note immediately due and County of Denver, Colorado. This matter has been resolved.On October 15, 2018, the Company entered into an Executive Employment Agreement (the "Phillips Employment Agreement") with Erin Phillips ("Ms. Phillips"). Pursuant to the Phillips Employment Agreement, Ms. Phillips agreed to continue to serve as the Company's CEO for a term commencing on October 15, 2018 and continuing until terminated by either party. The Company acknowledged that Ms. Phillips had $165,000 deferred compensation as of July 31, 2018 and Ms. Phillips agreed to continue to defer payment until November 1, 2018. The deferred compensation is recorded in accounts payable and accrued expenses on the balance sheet. Ms. Phillips will receive a base salary of $180,000 per year. If the Agreement is terminated by Ms. Phillips with "good reason" or by the Company without "cause," Ms. Phillips will be entitled to severance pay equal to $500,000 plus her base salary for twelve months. The Phillips Employment Agreement otherwise contains standard terms and conditions.On October 15, 2018, the Company entered into an Employment Agreement (the "Kotzker Employment Agreement") with Jay Kotzker ("Mr. Kotzker"). Pursuant to the Employment Agreement, Mr. Kotzker agreed to continue to serve as the Company's general counsel for a term commencing on October 15, 2018 and continuing until terminated by either party. The Company acknowledged that Mr. Kotzker had $43,750 deferred compensation as of September 15, 2018 and $1,571.27 in unpaid expenses. Mr. Kotzker will receive a base salary of $150,000 per year. If the Agreement is terminated by the Company without "cause," Mr. Kotzker shall be entitled to severance pay equal to four months' salary. The Kotzker Employment Agreement otherwise contains standard terms and conditions.On October 18, 2018, the Company entered into an Employment Agreement (the "SPhillips Employment Agreement") with Shawn Phillips ("Mr. Phillips"). Pursuant to the Employment Agreement, Mr. Phillips agreed to serve as the Company's Senior Business Development Strategist for a term commencing on October 18, 2018 and continuing until terminated by either party. Mr. Phillips will receive a base salary of $96,000 per year. If the Agreement is terminated by the Company without "cause," Mr. Phillips shall be entitled to severance pay equal to three months' salary. During the term of the Agreement, Mr. Phillips shall receive a vehicle stipend in the amount of $800repayment increases to 150% of the outstanding balance of the Note. The Note also grants Crown Bridge a right of first refusal for any future capital raises or financings by us. It also contains a most favored nations provision for any more favorable terms in future financing transactions by us.month.share of common stock under the Warrant is $1.65 per share, subject to adjustment, including cashless exercise. The SPhillips Employment Agreement otherwiseWarrant also contains standard terms and conditions.a most favored nations provision.1415ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 2. Fulfillment Servicesfulfillment services to medical and retail stores, and cultivation facilities in the regulated cannabis industry throughout the United States. Such Fulfillment Services arefulfillment services would only be provided to stores and facilities located in geographical areas where the governing state and local ordinances allow for the provisionunfettered provisions of such services.Fulfillment Servicesfulfillment services that we currently are able to provide are summarized, as follows:· · Application Filing Assistance: Based upon our knowledge of the various rules and regulations of respective state and local jurisdictions, we will provide turn-key application preparation and submission services for a client, and/or provide consulting assistance to a client who is self-preparing their application. · Branding, Marketing and Administrative Consulting Services: Customers may contract with us to use the Strainwise name, logo and affinity images in their retail store locations. A monthly fee will permit a branding customer to use the Strainwise brand at a specific location. In addition, we will assist operators in marketing and managing their businesses, setting up new retail locations and general business planning and execution at an hourly rate. This includes services to establish an efficient, predictable production process, as well as, nutrient recipes for consistent and appealing marijuana strains. · Accounting and Financial Services: For a monthly fee, we will provide customers with a fully implemented general ledger system, with an industry centric chart of accounts, which enables management to readily monitor and manage all facets of a marijuana medical dispensary and cultivation facility. We will provide bookkeeping, accounts payable processing, cash management, general ledger processing, financial statement preparation, state and municipal sales tax filings, and state and federal income tax compilation and filings. · Compliance Services: The rules, regulations and state laws governing the production, distribution and retail sale of marijuana can be complex, and compliance may prove cumbersome. Thus, customers may contract with us to implement a compliance process, based upon the number and type of licenses and permits for their specific business. We will provide this service on both an hourly rate and stipulated monthly fee. · Lending: We will provide loans to individuals and businesses in the cannabis industry. For a standard fee, we will complete an Opportunity Assessment for a client, which would include financial modeling, completed with our proprietary assessment software.●Application Filing Assistance: Based upon our knowledge of the various rules and regulations of respective state and local jurisdictions, we will provide turn-key application preparation and submission services for a client, and/or provide consulting assistance to a client who is self-preparing their application. ●Branding, Marketing and Administrative Consulting Services: Customers may contract with us to use the Strainwise® name, logo and affinity images in their retail store locations. A monthly fee will permit a branding customer to use the Strainwise® brand at a specific location. In addition, we will assist operators in marketing and managing their businesses, setting up new retail locations and general business planning and execution at an hourly rate. This includes services to establish an efficient, predictable production process, as well as, nutrient recipes for consistent and appealing marijuana strains. ●Accounting and Financial Services: For a monthly fee, we will provide customers with a fully implemented general ledger system, with an industry centric chart of accounts, which enables management to readily monitor and manage all facets of a marijuana medical dispensary and cultivation facility. We will provide bookkeeping, accounts payable processing, cash management, general ledger processing, financial statement preparation, state and municipal sales tax filings, and state and federal income tax compilation and filings. ●Compliance Services: The rules, regulations and state laws governing the production, distribution and retail sale of marijuana can be complex, and compliance may prove cumbersome. Thus, customers may contract with us to implement a compliance process, based upon the number and type of licenses and permits for their specific business. We will provide this service on both an hourly rate and stipulated monthly fee. ●Lending: We will provide loans to individuals and businesses in the cannabis industry.Prior to December 2017, we provided rental and operational support-related activities to regulated entities, that have been discontinued.15Comparison of the three months ended October 31, 2018 to the three months ended October 31, 2017Comparison of the nine months ended October 31, 2018 to the nine months ended October 31, 2017— For the three months ended April 30, 2019 2018 Change Consulting services $ 20,545 $ 43,813 $ (23,268 ) -53 % Product sales 9,822 - 9,822 100 % Cost of consulting services (11,467 ) (10,000 ) (1,467 ) -15 % Gross profit 18,900 33,813 (14,913 ) -44 % Operating costs and expenses Rents and other occupancy 17,963 12,516 5,447 44 % Compensation 162,892 146,204 16,688 11 % Professional, legal and consulting 114,977 49,896 65,081 130 % General and administrative 60,960 52,511 8,449 16 % Depreciation and amortization 584 435 149 34 % Total operating costs and expenses 357,376 261,562 95,814 37 % Other income (expense) Interest expense (67,602 ) (612 ) (66,990 ) 10946 % Impairment on investment (2,739 ) - (2,739 ) 100 % Loss on investment in affiliate (22,667 ) - (22,667 ) -100 % Total other income (expense) (93,008 ) (612 ) (92,396 ) 15097 % Loss from continuing operations, before provision for taxes on income (431,484 ) (228,361 ) (203,123 ) 89 % Provision for taxes on income - - - 0 % Net income (loss) $ (431,484 ) $ (228,361 ) $ (203,123 ) 89 % three and nine monthsperiods ended October 31, 2018April 30, 2019 as compared to the same period last year, are discussed below:� ● Rent· · other occupancyCapital Resources– During 2017 rent included various back chargesManagement believes the change in focus along with our substantial industry knowledge, defined growth strategy, and minimal expense structure will allow us to ultimately achieve profitability. We have restructured our operating expenses sufficiently and believe that resulted in higher rent. As a resultour planned sources of not having similar charges during revenue will be sufficient to cover these expenses for the foreseeable future.201818, rent decreasednine months during 2018.� ● Compensation – Compensation increasedsatisfaction of liabilities in the ordinary course of business. Accordingly, they do not give effect to adjustments that could be necessary should we be required to liquidate assets.result ofgoing concern and raise capital for specific strategic initiatives could also depend on obtaining adequate capital to fund operating losses until it becomes profitable. We can give no assurances that any additional headcount for operations andcapital that it is able to expand our consulting services.� ● Professional, legal, and consulting – Professional fees increased dueobtain, if any, will be sufficient to significantly higher fees during the three months due to our efforts to bring our SEC filings into compliance and the issuance of stock-based compensation related to professional services provided to us. ●General and administrative – General and administrative expenses include marketing, travel, and office expenses. These expenses fluctuate from period to period but have been driven by our shift in focus of our operations to consulting services.� ● Other – Other includes costs related tomeet its needs, or that any such financing expense related to the conversion of payables, and the amortization of debt discount related to the will be obtainable on acceptable terms. beneficial conversion feature.Liquidity and Capital Resources 2019 2018 Consolidated Statements of Cash Flows Data: Net cash used in operating activities $ (363,848) $ (36,103 ) Net cash used in investing activities (8,751) - Net cash provided by financing activities 419,369 8,765 Net change in cash $ 46,770 $ (27,338 ) Ouris driven primarily by consulting revenuewas due to the significant investment in affiliates and vendor provided credit. Our primary uses of cash from operating activities have been for inventory purchases, compensation expenditures, professional fees, rent expense, and general and administrative expenses. Our cash flows from operating activities will continueloans to be affected principally by the results of operations and the extent to which we increase spending on personnel expenditures and our working capital requirements.we acquired a trademark for $2,250 and made total cash investments of $152,983 into a equity investment in an unconsolidated subsidiary.primarily$425,369 compared to cash provided of $8,765 from continuing operations.resultyear ended January 31, 2019 the company entered into convertible debt funding from tranche one in the amount of advances made$100,000 and $50,000 received in tranche two. The debt becomes convertible into the Company’s common shares on the Puerto Rico and Oklahoma notes receivable, proceeds180th day from the Richland convertible promissory notes, borrowingsreceipt of the tranche.parties,party loans.from the issuanceof $80,000 and issued 80,000 shares of common stock and conversion of80,000 warrants to purchase common stock.Indebtedness AgreementsOn August 29, 2018, we entered into a Note Purchasestock at an exercise price of $2.00 per share.Security Agreement (the "Purchase Agreement") with Richland Fund, LLC., a Delaware limited liability company ("Richland"). Pursuantis disbursing these funds to operate the Agreement, Richland agreed to purchase our Convertible Promissory Notes (collectively, the "Notes"), in the aggregate principal amount of $225,000, funded in three tranches, (i) $100,000.00 (the "First Note"), (ii) $67,000.00 (the "Second Note"), and (iii)Puerto Rico operations, the balance as of $58,000.00 (the "Third Note").April 30, 2019 was $65,499. In addition, the Company received $50,000 for the benefit of 2600 Meridian LLC, the funds have been used to cover start-up and development costs, the balance as of April 30, 2019 was $25,502. The Notes bear 12% interest per annum, withfunds held for related party entities is held in restricted cash liabilities on the last payment under the Notes due January 15, 2020. The Notes are secured by all of our assets and guarantees from Shawn and Erin Phillips. The Notes may be prepaid without penalty with 30 days' advance notice to Richland. In conjunction with the Richland Note, we issued Richland warrants to purchase 100,000 shares of the Company's common stock for $18,000. Richland exercised the warrants on October 3, 2018.balance sheet.1719The NotesOff Balance Sheet Arrangementsconvertible intoreasonably likely to have a current or future effect on our common stock. The conversion price will be equal to the lowerfinancial condition, changes in financial condition, revenues or expenses, results of (i) $0.15 cents per share (ii)operations, liquidity, capital expenditures or the average of the closing bid price of our common stock taken over the three trading days prior to conversion or (iii) upon any issuance by the Company of common stock, or a security that is convertible into common stock, at a price lower than a net receipt to the Company of $0.15 per share, at such price that shall be at the same discount ratio as on the Funding Date. The conversion price of the Notes will be further subject to proportional adjustment for stock splits, reverse stock splits or combinations of shares, stock dividends, and the like. There are penalties for failure to timely deliver conversion shares.capital resources.For additional information see our Current Report on Form 8-K filed with the SEC on October 19, 2018.Company'sCompany’s significant accounting policies.ITEM 3. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 4. the Company'sour management, the Companywe carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of October 31, 2018. The Company maintainsApril 30, 2019. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in its periodic reports with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and regulations, and that such information is accumulated and communicated to the Company'sour management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Company'sour disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching its desired disclosure control objectives. Based upon this evaluation, management concluded that the Company'sour disclosure controls and procedures were not effective as of October 31, 2018,April 30, 2019 primarily based on these criteria, due to material weaknesses resulting from our failure to 1) provide correct responsibilities to adequately segregate activity in the area of cash receipts and cash disbursements, 2) effectively implement comprehensive entity level internal controls, and 3) adequately segregate duties within the accounting department due to an insufficient number of staff.Company'sCompany’s internal control over financial reporting during the quarter ended October 31, 2018,April 30, 2019, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.18PART IINone.1A. Risk FactorsThere have been no material changes to the Risk Factors as disclosed in3 of our 2018annual report on Form 10-K for the year ended January 31, 2018 filed with2019, we are current in our settlement payments to the Securities and Exchange Commission on October 9, 2018.Unregistered SalesIn February 2019 we commended an offering of Equity SecuritiesOn or around October 18, 2018, 23 completedup to 2,000,000 units at a private offeringprice per unit of $1.00. Each unit is comprised of one share of common stock and one three-year warrant to accreditedpurchase an additional share of common stock at $2.00 per share. During the quarter ended April 30, 2019, we sold 80,000 units to two investors (the "Offering") in accordance with Regulation Dfor gross proceeds of $80,000. We issued 80,000 common shares and issued warrants to purchase an additional 80,000 shares to these investors. The securities were sold without registration under the Securities Act by reason of 1933 ("Securities Act"). The Offering consisted of 3,416,000 shares of the Company's Common Stock at a price per share of $0.20, for offering proceeds of $683,200. All securities sold in the Offering were sold in reliance upon the exemption from securities registration afforded by the provisions of Section 4(a)(5) and Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. At the time of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.From approximately September 24, 2018 to October 16, 2018, we issued a total of 281,000 shares of its common stock for $42,150 resulting from the exercise of outstanding warrants with an exercise price of $0.15 per share. These shares were issued pursuant to Section 4(a)(2)sale of the Securities Act.Use of ProceedsWe utilized these funds forshares, we reasonably believed that each purchaser was an equity investmentaccredited investor as defined in Volume 2, LLC, loans to fund joint venturesRegulation D. No underwriting discounts or commissions were paid in Oklahoma and Puerto Rico, and to fund day to day operations.Item 3. Defaults Upon Senior Securities.None.Item 4. Mine Safety DisclosuresNone.Item 5. Other Information.None.19connection with the transactions. Item 6. Exhibit IndexIncorporated by ReferenceExhibitNo.DescriptionFormSEC File NumberExhibitFiling Date31.1**Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2**Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1***Certification of the Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101**The following materials from STWC Holdings, Inc.'s quarterly report on Form 10-Q for the three months ended October 31, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Statement of Changes in Stockholders' Deficit; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements. *Indicates management contract or compensatory plan or arrangement.**Filed herewith***Furnished herewithregistrantRegistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.December 14, 2018 June 19, 2019 By:/s/ /s/ Erin PhillipsPresident, ChiefCEOOfficerOfficer)2122