| Note 2 - Summary of significant accounting policies | Note 2 Summary of significant accounting policies Basis of presentation Company has elected a fiscal year ending on January 31. All intercompany balances and transactions have been eliminated in the consolidated financial statements. Going Concern and Managements Plan Our ability to continue as a going 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 capital that it is able to obtain, if any, will be sufficient to meet its needs, or that any such financing will be obtainable on acceptable terms. Use of estimates Cash and cash equivalents Prepaid expenses and other assets Tenant improvements and office equipment Tenant improvements and office equipment, net of accumulated amortization and depreciation are comprised of the following: January 31, 2019 2018 Leasehold improvements $ 2,200 $ 2,200 Office equipment, furniture and fixtures 26,276 26,276 28,476 28,476 Accumulated amortization and depreciation (25,709) (24,703) $ 2,767 $ 3,773 Tenant improvements are amortized over the term of the lease, and office equipment is depreciated over its useful lives, which has been deemed by management to be three years. Amortization and depreciation expense related to tenant improvements and office equipment for the fiscal years ended January 31, 2019 and 2018 was $1,006 and $1,576, respectively. Income taxes Investment in Unconsolidated Entity The Company acquired a 50% interest in Sentinel Strainwise, LLC (SSL) in June 2015 for $25,000. In accordance with Accounting Standard Codification 810-10, Consolidation-Overall On September 5, 2018, the Company entered into a Binding Term Sheet (BTS) with Michael Hornbeck for the acquisition of an interest in a yet to be established joint-venture entity that will hold the intellectual property assets related to HiLife Creative (et. al.) Pursuant to the BTS, the Company agreed to pay $25,000 within twenty-four (24) hours of execution of the BTS, $25,000 on or before November 1, 2018. 500,000 shares of common stock in STWC 500,000 common share purchase warrants STWC will also assume approximately $70,000 in debt owned by Hornbeck to various creditors. The $70,000.00 assumed by STWC will be paid to Hornbeck or his assigns pursuant to a yet to be executed promissory note with a maturity date of January 31, 2019. The joint-venture entity was established September 10, 2018 as Volume 2, LLC and was 51% owned by STWC and 49% by Michael Hornbeck. Notwithstanding the foregoing, the BTS called for Hornbeck to retain all control of and manage the day-to-day operations of Volume 2, LLC and draw a salary of $6,000 per month. The Company recognized an impairment on the investment effective day one as the entity is not able to funds its operations. Loss on impairment of $345,394 was recognized in other expense for the year-ended January 31, 2019. The Company recognized its share of the Volume 2s losses of $18,722 in other expense for the year-ended January 31, 2019. The consideration payment due November 1, 2018 has not been paid. During the year-ended January 31, 2019 the Company invested in 2600 Meridian, LLC as a 25% owner. The Company also loaned $29,368 to the entity during 2018. The loans are reflected on the balance sheet in notes receivable, related party. Long-Lived Assets Beneficial Conversion Feature - Debt with Conversion and Other Options Trademarks Trademarks 2019 2018 Gross carrying amount $ 13,260 $ 11,010 Accumulated amortization 3,809 2,989 Net intangible assets $ 9,451 $ 8,021 D iscontinued Operations During November 2017, the Company settled all remaining operations related to its rental activities with regulated entities. As a consequence of the disposition, 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. 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. No amounts related to discontinued operations remained on the balance sheet as of January 31, 2018. There was no discontinued operations activity during the year ended January 31, 2019. Discontinued Operations Income Statement Year Ended January 31, 2018 Rental income from the Regulated Entities (Affiliates) $ 2,342,391 Total revenues 2,342,391 Operating costs and expenses Reserve for amounts due from Regulated Entities (Affiliates) 657,402 Rents and other occupancy 1,762,858 Depreciation and amortization 146,150 Total operating costs and expenses 2,566,410 Loss from continuing operations (224,019) Other income and (expenses) Interest expense (171,636) Gain on settlement and cancellation of leases 1,959,177 Gain on sale of assets Income (loss) from discontinued operations $ 1,563,522 Comprehensive Income (Loss) Net income per share of common stock Earnings per Share Convertible notes, outstanding options and warrants underlying 4,150,000 and 2,224,700 shares, shares respectively, at January 31, 2109 and 2018 do not assume conversion, exercise or contingent exercise in the computation of diluted loss per share because the effect would be anti-dilutive. Revenue Recognition Effective February 1, 2018, the Company adopted ASC 606 Revenue from Contracts with Customers using the modified retrospective method. There was no adjustment required upon transition. Under ASC 606, the Company recognizes revenue applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. Consulting Services We generate revenues from professional services consulting agreements. These arrangements are generally entered into: (1) on an hourly basis for an hourly fee; or, (2) on a fixed fee basis; or (3) a monthly fee basis. Generally, we require a complete or partial prepayment or retainer prior to performing services for hourly or fixed fee contracts. For hourly based service contracts, we recognize revenue over time as services are performed and customers simultaneously consume such services. Any advances or retainers received from clients for hourly services are reflected in the Deferred revenue liability account until we recognize revenues as we incur and charge billable hours. Our fixed fee basis engagements are recognized at a point in time. Generally, our fixed fee arrangements are for completion of a final deliverable or act which is significant to the arrangement as a whole. Although fees are typically collected in advance and the services provided have no alternative use to the Company, there is not a specific enforceable right to payment for the cost of services provided plus a reasonable profit margin. Accordingly, advances received at contract inception are reflected in the Deferred revenue liability account until the end of the contract when revenue is recognized and the customer takes control of the deliverable. These engagements do not generally exceed a one-year term. Revenue recognition is affected by a number of factors that change the estimated amount of work required to complete the deliverable, such as changes in scope, timing, awaiting notification of license award from local government, and the level of client involvement. Losses, if any, on fixed-fee engagements are recognized in the period in which the loss first becomes probable and reasonably estimable. During the year ended January 31, 2019 we have refunded approximately $26,251 of advances or retainers from fixed fee and hourly engagements that terminated prior to completion. We believe if an engagement terminates prior to completion, we can recover the costs incurred related to the services provided. Certain of our fixed fee contracts assisting customers with license applications include a success fee which is earned if the customer is awarded a license. We exclude such variable consideration from the transaction price and recognize the revenue when and if the license is awarded as the uncertainty of the application process creates a probability of significant revenue reversal. Our monthly fee arrangements are billed on a monthly basis in arrears for a variety of services and are recognized over time as the customers simultaneously consume such services. The revenue by contract type for the periods ending January 31, 2019 and 2018 are listed in the table below: 2019 2018 Hourly fee contracts $ 3,749 $ - Fixed fee contracts 96,000 263,500 Monthly fee contracts 36,788 - $ 136,537 $ 263,500 Deferred revenue as of January 31, 2019 and 2018 was $192,500 and $150,000, respectively. The Company is unable to determine timing for revenue recognition at this time for its deferred revenue due to state regulation changes. Reclassifications- Certain account reclassifications have been made to prior period balances to reflect the current periods presentation format; such reclassifications had no impact on the Companys consolidated statements of operations or consolidated statements of cash flows and had no material impact on the Companys consolidated balance sheets. Stock-Based Compensation Significant assumptions utilized in determining the fair value of our stock options included the volatility rate, estimated term of the options, risk-free interest rate and forfeiture rate. The term of the options was assumed to be five years. The risk-free interest rate was determined utilizing the treasury rate with a maturity equal to the estimated term of the option grant. Finally, management assumed a 0% forfeiture rate in fiscal year 2018. Non-employee share-based compensation charges generally are immediately vested and have no future performance requirements by the non-employee and the total share-based compensation charge is recorded in the period of the measurement date. Recently Issued Accounting Pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Companys 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 Companys financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases ("ASU 2016-02"). The guidance in this new standard requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to the current accounting and eliminates the current real estate-specific provisions for all entities. The guidance also modifies the classification criteria and the accounting for sales-type and direct financing leases for lessors. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the standard effective February 1, 2019 by recording an immaterial transition adjustment and right of use assets and lease liabilities of approximately $150,000. In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. |
