Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jul. 31, 2015 | Nov. 10, 2015 | Jan. 31, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Grand Perfecta, Inc. | ||
Entity Central Index Key | 1,550,053 | ||
Document Type | 10-K | ||
Document Period End Date | Jul. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --07-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 4,575,000 | ||
Entity Common Stock, Shares Outstanding | 30,500,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Current assets | ||
Cash | $ 75,778 | $ 1,882,272 |
Accounts receivable, net | 612,553 | 634,455 |
Current portion due from related parties | 487,852 | 1,481,811 |
Current portion of notes receivable | 1,537,869 | 1,682,327 |
Deferred tax assets, current portion | 303,024 | 1,039,489 |
Prepaid expenses and other current assets | 417,208 | 66,659 |
Total current assets | 3,434,284 | 6,787,013 |
Property and equipment, net | 273,263 | 376,055 |
Other assets | ||
Long-term notes receivables, net of current portion | 547,372 | 632,124 |
Long-term portion due from related parties, net of current portion | 1,471,932 | 0 |
Deferred tax assets, long-term portion | 222,423 | 232,757 |
Goodwill | 6,257,112 | 7,549,434 |
Other assets | 496,019 | 617,413 |
Total other assets | 8,994,858 | 9,031,728 |
Total assets | 12,702,405 | 16,194,796 |
Current liabilities | ||
Accounts payable and accrued expenses | 1,458,735 | 2,617,037 |
Deferred revenues | 1,189,437 | 1,390,210 |
Current portion of notes payable | 3,489,541 | 9,113,727 |
Notes payable to related parties | 993,918 | 0 |
Convertible note payable | 1,620,000 | 0 |
Taxes payable | 612,102 | 755,867 |
Total current liabilities | 9,363,733 | 13,876,841 |
Long-term portion of notes payable, net of current portion | 1,174,500 | 728,846 |
Total liabilities | $ 10,538,233 | $ 14,605,687 |
Commitments and contingencies | ||
Stockholders' equity (deficit) | ||
Preferred stock, $0.001 par value, 100,000,000 shares authorized, 100,000 shares issued and outstanding as of July 31, 2015 and 2014 | $ 100 | $ 100 |
Common stock, $0.001 par value, 500,000,000 shares authorized, 30,500,000 shares issued and outstanding as of July 31, 2015 and 2014 | 30,500 | 30,500 |
Additional paid-in capital | 4,121,034 | 4,121,034 |
Other comprehensive income | 439,265 | 736,356 |
Accumulated deficit | (2,645,873) | (3,564,512) |
Total GPI stockholders' equity | 1,945,026 | 1,323,478 |
Noncontrolling interest | 219,146 | 265,631 |
Total stockholders' equity (deficit) | 2,164,172 | 1,589,109 |
Total liabilities and stockholders' equity | $ 12,702,405 | $ 16,194,796 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 31, 2015 | Jul. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $ .001 | $ .001 |
Preferred stock shares authorized | 100,000,000 | 100,000,000 |
Preferred stock shares issued | 100,000 | 100,000 |
Preferred stock shares outstanding | 100,000 | 100,000 |
Common stock par value | $ .001 | $ .001 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 30,500,000 | 30,500,000 |
Common stock shares outstanding | 30,500,000 | 30,500,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Income Statement [Abstract] | ||
Net sales | $ 17,736,064 | $ 22,233,442 |
Total revenues | 17,736,064 | 22,233,442 |
Operating expenses: | ||
Cost of sales | 4,473,096 | 6,858,818 |
Depreciation expense | 110,383 | 238,487 |
Advertising | 911,562 | 1,711,855 |
Rent expense | 812,747 | 845,058 |
Salaries and wages | 5,151,504 | 5,234,053 |
Other general and administrative expenses | 4,303,062 | 4,326,663 |
Total operating expenses | 15,762,354 | 19,214,934 |
Income from operations | 1,973,710 | 3,018,508 |
Other income (expense): | ||
Other income | 131,371 | 9,861 |
Gain on exchange | 40,275 | 32,116 |
Interest income | 12,620 | 17,798 |
Interest expense | (790,427) | (1,190,842) |
Total other income (expense) | (606,161) | (1,131,067) |
Net income before provision for income taxes | 1,367,549 | 1,887,441 |
Provision for income taxes | 449,316 | 882,009 |
Net income | 918,233 | 1,005,432 |
Less: net loss attributable to noncontrolling interest | (406) | 0 |
Net income attributable to GPI | $ 918,639 | $ 1,005,432 |
Net income per share, basic and diluted | $ .03 | $ .04 |
Weighted average number of common shares outstanding, basic and diluted | 30,500,000 | 27,869,863 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Income Statement [Abstract] | ||
Net income (loss) | $ 918,233 | $ 1,005,432 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | (297,091) | 93,108 |
Total other comprehensive income, net of tax | (297,091) | 93,108 |
Comprehensive income | 621,142 | 1,098,540 |
Comprehensive income (loss) attributable to noncontrolling interest | (46,079) | (10,842) |
Comprehensive income attributable to GPI stockholders | $ 575,063 | $ 1,087,698 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning balance, shares at Jul. 31, 2013 | 100,000 | 27,500,000 | |||||
Beginning balance, value at Jul. 31, 2013 | $ 100 | $ 27,500 | $ 1,285,120 | $ 643,248 | $ (4,569,944) | $ 276,473 | $ (2,337,503) |
Stock issued for cash, shares | 3,000,000 | ||||||
Stock issued for cash, value | $ 3,000 | 2,937,000 | 2,940,000 | ||||
Foreign currency translation adjustment | 93,108 | (10,842) | 82,266 | ||||
Net income | 1,005,432 | 1,005,432 | |||||
Ending balance, shares at Jul. 31, 2014 | 100,000 | 30,500,000 | |||||
Ending balance, value at Jul. 31, 2014 | $ 100 | $ 30,500 | 4,121,034 | 736,356 | (3,564,512) | 265,631 | 1,589,109 |
Foreign currency translation adjustment | (297,091) | (46,079) | (343,170) | ||||
Net income | 918,639 | (406) | 918,233 | ||||
Ending balance, shares at Jul. 31, 2015 | 100,000 | 30,500,000 | |||||
Ending balance, value at Jul. 31, 2015 | $ 100 | $ 30,500 | $ 4,121,034 | $ 439,265 | $ (2,645,873) | $ 219,146 | $ 2,164,172 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Cash flows from operating activities | ||
Net income | $ 918,233 | $ 1,005,432 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 110,383 | 238,487 |
Loss on sale of property and equipment | 0 | 22,531 |
Loss on write-off of notes receivable | 89,188 | 0 |
Provision for (benefit from) deferred taxes | 558,578 | 280,255 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (93,557) | (241,720) |
Prepaid expenses and other current assets | (383,965) | 9,216 |
Other assets | 15,578 | (118,008) |
Accounts payable and accrued expenses | (786,567) | (768,659) |
Deferred revenue | 42,878 | 50,443 |
Taxes payable | (13,426) | 356,995 |
Net cash provided by operating activities | 457,323 | 834,972 |
Cash flows from investing activities | ||
Purchase of property and equipment | (70,507) | (100,031) |
Proceeds (payments) for lending to related parties, net | 274,876 | (328,684) |
Proceeds from collection of notes receivables | 891,305 | 302,689 |
Payments for notes receivable lending | (1,163,402) | (770,940) |
Proceeds from acquisition of subsidiary | 0 | 4,657 |
Net cash used in investing activities | (67,728) | (892,309) |
Cash flows from financing activities | ||
Proceeds from sale of stock | 0 | 2,940,000 |
Proceeds from notes payable | 1,433 | 2,571 |
Proceeds from convertible notes payable | 1,720,000 | 0 |
Payments on note payable | (3,686,849) | (1,177,648) |
Net cash provided by (used in) financing activities | (1,965,416) | 1,764,923 |
Effect of exchange rate fluctuations on cash | (230,673) | 6,463 |
Net change in cash | (1,806,494) | 1,714,049 |
Cash, beginning of the period | 1,882,272 | 168,223 |
Cash, end of the period | 75,778 | 1,882,272 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 783,425 | 1,190,842 |
Income taxes paid | $ 199,015 | $ 247,696 |
1. Description of Business
1. Description of Business | 12 Months Ended |
Jul. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. Description of Business | Organization Grand Perfecta, Inc. (Grand Perfecta or GPI) was incorporated in the State of Nevada on March 25, 2002, as STI Holdings, Inc. (STI). On May 12, 2012, the Company completed an Agreement and Plan of Reorganization whereby it acquired 100% of the issued and outstanding shares of Link Bit Consulting Co, Ltd. (LinkBit or the Company), a Japanese corporation, for 25,000,000 common shares in a transaction accounted for as a recapitalization of LinkBit. Effective March 29, 2013, STI amended its Articles of Incorporation to change its name to Grand Perfecta, Inc. On May 27, 2013, the Company issued 272,668 shares in exchange for 100% of the issued and outstanding shares of Umajin Hong Kong Ltd. (Umajin HK), a Hong Kong corporation that maintains an office in Hong Kong. In August 2015 we formed a California subsidiary, Sports Perfecta, Inc., for the purpose of seeking opportunities to conduct business in the United States. Through the date of this filing Sports Perfecta has had no activity or operations. The operations of Grand Perfecta, LinkBit, Umajin HK and Sports Perfecta, Inc. are collectively referred to as the Company. Nature of Business The Company is engaged in the business of transmitting and providing horse racing information via various types of media, including multiple websites owned and operated by the wholly owned subsidiaries of LinkBit and Umajin HK. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Jul. 31, 2015 | |
Accounting Policies [Abstract] | |
2. Summary of Significant Accounting Policies | Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with principles generally accepted in the United States of America (GAAP) and include the accounts of Grand Perfecta and its wholly-owned subsidiaries LinkBit and Umajin HK. The Company has determined that two affiliated entities, Space Cultivation Mobile and Japan Horse Circle, which LinkBit conducts business with are variable interest entities and that the Company is the primary beneficiary of each entity. As a result, the Company has consolidated the accounts of these variable interest entities into the accompanying consolidated financial statements. As the Company does not have any ownership interest in these variable interest entities, the Company has allocated the contributed capital in these variable interest entities as a component of noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP 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 reported periods. Amounts could materially change in the future. Liquidity As of July 31, 2015, we had cash of $75,778 and a working capital deficit of $5,929,449 as compared to cash of $1,882,272 and a working capital deficit of $7,089,828 as at July 31, 2014. The decrease in cash as of July 31, 2015 was primarily the result of $2,940,000 in proceeds from sale of common stock received during the year ended July 31, 2014, of which a portion was used to fund the operating activities of the Company, as well as to pay down outstanding notes payable with higher interest rates during the year ended July 31, 2015. In March 2015, we issued a convertible debenture in the face amount of Japanese JPY200,000,000, approximately US$1,620,000 at July 31, 2015, (see Note 9). We intend to continue to improve our balance sheet by reducing short term liabilities and invest in promoting and expanding our services. The funds obtained through the debenture placement will facilitate that effort. The funding received in March 2015 notwithstanding, we continue to have a significant working capital deficit that adversely affects our business by limiting the resources we have available to pursue the promotion of our information services and develop new information service opportunities for potential users. Historically we have relied on extensions of note payment due dates and new debt financing to repay note obligations as they came due in order to continue operations. Going forward we will continue to use extensions and new debt financing, such as the recent debenture offering, to address note obligations that come due, endeavor to gradually reduce obligations with cash flow provided by operations, and pursue over the next 12 months equity financing that we can apply to debt reduction and business development. Nevertheless, the shortage of working capital adversely affects our ability to develop, sponsor, or participate in activities that promote our information services to prospective users and to develop new content, because a substantial portion of cash flow goes to reduce debt rather than to advance operating activities. There is no assurance that our plans for addressing our working capital shortages will be successful, and our failure to be reasonably successful should be expected to result in a significant contraction of our operations and potentially a failure of the business. Foreign Exchange The Companys primary operations are conducted in Japan and performed by its wholly owned subsidiaries LinkBit and Umajin HK. LinkBits functional currency is the Japanese Yen and Umajin HKs functional currency is the Hong Kong Dollar. The financial statements of each entity are prepared using the applicable functional currencies, and have been translated into U.S. dollars (USD). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in the Companys stockholders equity. The following rates were used to translate the accounts of LinkBit and Umajin HK into USD at the following balance sheet dates. Balance Sheet Dates July 31, July 31, 2015 2014 Japanese Yen to USD 0.0081 0.0098 Hong Kong Dollars to USD 0.1290 0.1290 The following rates were used to translate the accounts of LinkBit and Umajin HK into USD for the following operating periods. For the Year Ended July 31, July 31, 2015 2014 Japanese Yen to USD 0.0086 0.0099 Hong Kong Dollars to USD 0.1290 0.1290 Cash and Cash Equivalents The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents as of July 31, 2015 and 2014. Accounts Receivable Accounts receivable are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's financial condition and credit history, as well as current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The Company had no allowance for doubtful accounts as of July 31, 2015 and 2014. Property and Equipment Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives once the individual assets are placed in service. Estimated useful lives for the assets are as follows. Buildings and fixtures 8 - 43 years Autos and trucks 2 - 6 years Tools and equipment 4 - 10 years Computer software 5 years Intangible Assets The Companys intangible assets include goodwill, which represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from business acquisitions. Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level. As required by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-20, the Company conducted an analysis of the goodwill on its single reporting unit using the Company. For the fiscal years ending July 31, 2015 and 2014, the assessment for impairment found that there is no impairment of goodwill. The Company has no accumulated impairment losses on goodwill. Long-Lived Assets In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There was no impairment of assets identified during the years ended July 31, 2015 and 2014. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Companys principal or, in the absence of a principal, most advantageous market for the specific asset or liability. GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows: Level 1 Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: Quoted prices for similar assets or liabilities in active markets Quoted prices for identical or similar assets or liabilities in markets that are not active Inputs other than quoted prices that are observable for the asset or liability Inputs that are derived principally from or corroborated by observable market data by correlation or other means Level 3 Inputs that are unobservable and reflect the Companys own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). The Company has determined that the book value of its outstanding financial instruments as of July 31, 2015 and 2014 approximates the fair value. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk include cash, accounts receivable, notes receivable, and amounts due from related parties. The Company maintains its cash in banks located in Japan and Hong Kong in financial institutions with high credit ratings. Substantially all of the Companys revenues are generated from customers in Japan. The Company conducts periodic reviews of the financial condition and payment practices of its customers and note receivable holders. The Company has not experienced significant losses relating to these concentrations in the past. Revenue Recognition The Companys revenue consists primarily of sales of comprehensive horse racing information through multiple websites focusing on all aspects of the horse racing industry in Japan. Publication of horse racing digital magazines, providing support for print publications, and participating in other public events and media programs related to the horse racing industry do not generate significant revenue directly. These activities are undertaken for the purpose of increasing the number of horse racing fans and driving potential customers to our websites so as to hopefully eventually convert them to paying customers. The Company recognizes revenue on arrangements in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The majority of the Companys revenue is generated by per-item sales. For all users, payment is received at the time of purchase. The Company recognizes revenue for per-item sales when the requested information is supplied to the user. For information packages that span a period of time, the Company recognizes revenue over the term of the package. Revenues are presented net of refunds, credits and known and estimated credit card chargebacks. The Company reports revenue net of any required taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Rights to content purchased by customers in advance of the content being provided are recorded as deferred revenue. Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective 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. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs incurred amounted to $911,562 and $1,711,855 for the years ended July 31, 2015 and 2014, respectively. Basic and Diluted Earnings Per Share In accordance with ASC 260, Earnings Per Share, the basic income per common share is computed by dividing the net income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. No dilutive potential common shares were included in the computation of diluted net income per share because their impact was anti-dilutive. As of July 31, 2015 and 2014, the Company had total options of 3,000,000 which were excluded from the computation of net income per share because they are anti-dilutive. As of July 31, 2015 and 2014, the Company had convertible notes convertible into 1,472,727 and 0, respectively, shares of common stock which were excluded from the computation because they are anti-dilutive. As a result, the basic and diluted earnings per share were the same for each of the periods presented. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 creates a new topic in the ASC Topic 606 and establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics, and expands and improves disclosures about revenue. In addition, ASU 2014-09 adds a new Subtopic to the Codification, ASC 340-40, Other Assets and Deferred Costs: Contracts with Customers, to provide guidance on costs related to obtaining a contract with a customer and costs incurred in fulfilling a contract with a customer that are not in the scope of another ASC Topic. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016, including interim periods therein. Early application is not permitted. Management is in the process of assessing the impact of ASU 2014-09 on the Companys financial statements. |
3. Property and Equipment, net
3. Property and Equipment, net | 12 Months Ended |
Jul. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
3. Property and Equipment, net | The Companys property and equipment consisted of the following. July 31, July 31, 2015 2014 Buildings and fixtures $ 262,126 $ 272,079 Autos and trucks 294,513 356,324 Tools and equipment 427,469 569,152 Computer software 1,284,209 1,560,267 Horses 24,454 41,347 2,292,771 2,799,169 Less: accumulated depreciation (2,019,508 ) (2,423,114 ) $ 273,263 $ 376,055 Depreciation expense amounted to $110,383 and $238,487 for the year ended July 31, 2015 and 2014, respectively. |
4. Due from Related Parties
4. Due from Related Parties | 12 Months Ended |
Jul. 31, 2015 | |
Related Party Transactions [Abstract] | |
4. Due from Related Parties | The Company made short-term revolving advances to executive officers, directors and other related parties. All loans are unsecured and due within one year of the issuance date, and earn interest at rates ranging from 0% to 3% per annum. The total amounts outstanding from related parties amounted to $1,959,784 and $1,481,811 as of July 31, 2015 and 2014, respectively. Of the total related party receivables, the amounts outstanding directly from officers and directors amounted to $0 and $1,144,647 as of July 31, 2015 and 2014, respectively. Subsequent to the year ended July 31, 2014, the Company settled the amounts due directly from officers and directors of the Company in full. The remaining outstanding receivables amounting to $1,959,784 and $337,164 as of July 31, 2015 and 2014, respectively, represented amounts outstanding from a related party entity owned by one of the directors of the Company. Of the amount outstanding from this related party as of July 31, 2015, $1,471,932 of the outstanding balance bears interest at 0.48% and is due in full on February 28, 2018. The remaining portion of $487,852 is non-interest bearing and due on demand. Subsequent to the year ended July 31, 2015, the Company settled $1,471,932 of the outstanding balance (see Note 14). Management considers all of these outstanding advances to be fully collectible and has determined that no allowance is necessary. |
5. Notes Receivable
5. Notes Receivable | 12 Months Ended |
Jul. 31, 2015 | |
Receivables [Abstract] | |
5. Notes Receivable | The Companys outstanding notes receivable consist of unsecured advances, including interest ranging from 0% to 8% per annum, payable in full on dates extending through 2039. As of July 31, 2015 and 2014, the Company had total outstanding notes receivable of $2,085,241 and $2,314,451, respectively. The portion of these outstanding notes receivables that were either due on demand or had scheduled due dates within one year amounted to $1,537,869 and $1,682,327 as of July 31, 2015 and 2014, respectively. The future scheduled maturities of outstanding notes receivables as of July 31, 2015 based on contractual due dates are as follows. Year Ended July 31, 2016 $ 1,537,869 2017 2018 2019 8,492 2020 16,756 Thereafter 522,124 Total $ 2,085,241 |
6. Goodwill
6. Goodwill | 12 Months Ended |
Jul. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
6. Goodwill | The Company has recorded goodwill relating to the purchase of Media 21, Inc. in 2011, as well as the acquisition of Umajin HK on May 27, 2013. The following is a summary of the activity relating to goodwill for the years ended July 31, 2014 and 2015. Balance as of July 31, 2013 $ 7,853,432 Foreign currency translation adjustment (303,998 ) Balance as of July 31, 2014 7,549,434 Foreign currency translation adjustment (1,292,322 ) Balance as of July 31, 2015 $ 6,257,112 |
7. Notes Payable
7. Notes Payable | 12 Months Ended |
Jul. 31, 2015 | |
Debt Disclosure [Abstract] | |
7. Notes Payable | A summary of the Companys outstanding notes payable is as follows: Unsecured note payable issued on March 26, 2012, due on demand, bearing interest at 1% per annum due monthly. 810,000 980,000 Unsecured note payable issued on January 30, 2013, due on demand, bearing interest at 1% per annum due monthly. 405,000 490,000 Unsecured note payable issued on July 23, 2013, due on July 5, 2016, bearing interest at 1.2% per annum due monthly. 136,728 327,712 Unsecured note payable issued on September 30, 2013, due on September 30, 2014, bearing interest at 15% per annum due monthly. 784,000 Unsecured note payable issued on December 20, 2011, due on October 31, 2015, bearing interest at 15% per annum due monthly. 1,539,000 2,058,000 Unsecured note payable issued on June 28, 2013, due on October 31, 2015, bearing interest at 15% per annum due monthly. 162,000 196,000 Unsecured note payable issued on August 2, 2010, due on July 31, 2015, bearing interest at 12% per annum due monthly. 1,715,000 Unsecured note payable issued on January 20, 2011, due on June 30, 2017, bearing interest at 12% per annum due monthly. 931,500 1,960,000 Unsecured note payable resulting from the Company co-signing for debt of a vendor in 2010. The note is due on demand, bearing interest at 18% per annum due monthly. 348,300 774,200 Unsecured note payable issued on July 20, 2011, due on July 20, 2018, bearing interest at 12% per annum due monthly. 243,000 294,000 Unsecured notes payable, non-interest bearing, due on demand 48,855 58,527 Total notes payable 4,664,041 9,842,573 Less: current portion of notes payable 3,489,541 9,113,727 Long-term portion of notes payable $ 1,174,500 $ 728,846 Substantially all of the above outstanding notes payable are personally guaranteed by the Companys Chief Executive Officer. Future scheduled maturities of long-term debt are as follows: Year Ended July 31, 2016 $ 3,489,541 2017 931,500 2018 243,000 Total $ 4,664,041 |
8. Notes Payable from Related P
8. Notes Payable from Related Parties | 12 Months Ended |
Jul. 31, 2015 | |
Notes Payable From Related Parties | |
8. Notes Payable from Related Parties | As of July 31, 2015, the Company had an outstanding note payable balance due to its Chairman and CEO amounting to $831,918 and an outstanding note payable balance due to its President amounting to $162,000. The note payable balances are non-interest bearing and are due on demand. |
9. Convertible Note Payable
9. Convertible Note Payable | 12 Months Ended |
Jul. 31, 2015 | |
Convertible Notes Payable [Abstract] | |
9. Convertible Note Payable | On March 5, 2015, the Company entered into a convertible note agreement for total principal borrowings of JPY 200,000,000 (US $1,620,000 at July 31, 2015). The amounts are due one year after the issuance of the note on March 5, 2015, and bear interest at a rate of 1% per annum. At the option of the debt holder, beginning 40 days after the issuance of the note, the debt holder may convert the outstanding balance of the note into shares of the Companys common stock at a conversion rate equal to one share per JPY130.90 or $1.10 of outstanding principal and accrued interest. The conversion feature associated with the convertible note payable created a derivative liability as of April 14, 2015, the date in which the note became convertible. The Company valued the derivative as of the initial date and as of the year-end date of July 31, 2015 using the Black-Scholes pricing model. The value at each of these dates amounted to $0. The assumptions used in the Black-Scholes model during the year ended July 31, 2015 were as follows. Year Ended July 31, 2015 Expected life in years 0.60 - 0.89 Stock price volatility 32.0% - 32.4% Risk-free interest rate 0.23% - 0.33% Expected dividends None Forfeiture rate NA |
10. Stockholders' Equity
10. Stockholders' Equity | 12 Months Ended |
Jul. 31, 2015 | |
Equity [Abstract] | |
10. Stockholders' Equity | Preferred Stock The Company is authorized to issue up to 100,000,000 shares of preferred stock with a par value of $0.001, with 100,000 shares designated as Series A Preferred Stock. The Series A Preferred Stock receive a 10 to 1 voting preference over common stock. Accordingly, for every share of Series A Preferred Stock held, the holder receives the voting rights equal to 10 shares of common stock. As such, the holders of the Series A Preferred Stock have the equivalent voting capability of 1,000,000 shares of common stock. The Series A Preferred Stock also has a $0.05 per share liquidation preference over common stock, and can be redeemed by the Company at any time, upon thirty days notice, for $0.05 per share. The Company had 100,000 shares of Series A Preferred Stock issued and outstanding as of July 31, 2015 and 2014. Common Stock Transactions On June 11, 2014 the Company sold 3,000,000 common shares of stock for cash proceeds of $2,940,000. There were no such transactions during the year ended July 31, 2015. In connection with the sale of stock on June 11, 2014, the Company granted an option to the buyer to purchase an additional 3,000,000 shares of common stock for a purchase price of $3 million at any time prior to June 11, 2019. |
11. Income Taxes
11. Income Taxes | 12 Months Ended |
Jul. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
11. Income Taxes | The Company records its deferred taxes under the liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective 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. Net deferred tax assets consisted of the following as of July 31, 2015 and 2014. July 31, July 31, 2015 2014 Deferred tax assets: Commission expenses $ 273,730 $ 285,443 Allowance for doubtful accounts 40,762 37,839 Deposits 151,102 515,907 Accrued salary 90,528 Other 125,491 397,065 Deferred tax liabilities: Depreciation (27,465 ) (22,413 ) Business tax receivable (12,874 ) Others (1,457 ) (1,850 ) Valuation allowance (23,842 ) (30,273 ) Net deferred tax assets $ 525,447 $ 1,272,246 The income tax provision differs from the amount of income tax determined by applying the Japanese income tax rate to pretax income from continuing operations for the years ended July 31, 2015 and 2014 due to the following. July 31, July 31, 2015 2014 Income tax based on book income at Japanese statutory rate $ 527,350 $ 751,503 Entertainment expense 121,904 136,953 Additional taxes 2,487 1,611 Tax loss carry-forwards utilized only for local tax (122,837 ) (53,424 ) Tax rate difference between current tax and deferred tax assets (42,187 ) 56,329 Others (37,401 ) (10,963 ) Total income tax provision $ 449,316 $ 882,009 |
12. Commitments and Contingenci
12. Commitments and Contingencies | 12 Months Ended |
Jul. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
12. Commitments and Contingencies | Operating Leases The Company leases its corporate headquarters and administrative offices in Toyko Japan, as well as the administrative offices of Umajin HK in Hong Kong under operating leases extending through April 15, 2019. The Company incurred rent expense of $812,747 and $845,058 for the years ended July 31, 2015 and 2014, respectively. Future minimum lease payments under non-cancelable operating leases are as follows. Years ending July 31, 2016 $ 626,761 2017 117,302 2018 71,317 2019 53,487 Total $ 868,867 Litigation In the ordinary course of business, the Company may be or has been involved in legal proceedings from time to time. As of the date of this annual report, there have been no material legal proceedings relating to the Company. |
13. Related Party Transactions
13. Related Party Transactions | 12 Months Ended |
Jul. 31, 2015 | |
Related Party Transactions [Abstract] | |
13. Related Party Transactions | As of July 31, 2015 and 2014, the Company had $1,959,784 and $1,481,811, respectively, of notes receivable due from related parties (see Note 4). As of July 31, 2015, the Company had an outstanding note payable balance due to its Chairman and CEO amounting to $831,918 and an outstanding note payable balance due to its President amounting to $162,000 (see Note 8). The Company pays a monthly fee to a related party entity owned by one of its directors for providing content. For the years ended July 31, 2015 and 2014, the fee paid to the related party amounted to $1,242,222 and $1,457,238, respectively, and is included as a component of cost of sales in the accompanying consolidated statements of operations. |
14. Subsequent Events
14. Subsequent Events | 12 Months Ended |
Jul. 31, 2015 | |
Subsequent Events [Abstract] | |
14. Subsequent Events | Effective November 2, 2015, the Company entered into a Note Payable and Satisfaction Agreement (the Agreement) with Umajin Co., Ltd. (Umajin Japan), a related party company owned a director of the Company. The Company was a holder of a promissory note made by Umajin Japan in the principal amount of JPY 181,720,000 ($1,471,932 as of July 31, 2015). The promissory note was secured by 1,400,000 shares of the Companys common stock, which were owned by Umajin Japan. Pursuant to the Agreement, Umajin Japan agreed to sell its shares of common stock to the Company, and the Company has agreed to release Umajin Japan from any further obligation due under the promissory note. |
2. Summary of Significant Acc22
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jul. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with principles generally accepted in the United States of America (GAAP) and include the accounts of Grand Perfecta and its wholly-owned subsidiaries LinkBit and Umajin HK. The Company has determined that two affiliated entities, Space Cultivation Mobile and Japan Horse Circle, which LinkBit conducts business with are variable interest entities and that the Company is the primary beneficiary of each entity. As a result, the Company has consolidated the accounts of these variable interest entities into the accompanying consolidated financial statements. As the Company does not have any ownership interest in these variable interest entities, the Company has allocated the contributed capital in these variable interest entities as a component of noncontrolling interest. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP 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 reported periods. Amounts could materially change in the future. |
Liquidity | Liquidity As of July 31, 2015, we had cash of $75,778 and a working capital deficit of $5,929,449 as compared to cash of $1,882,272 and a working capital deficit of $7,089,828 as at July 31, 2014. The decrease in cash as of July 31, 2015 was primarily the result of $2,940,000 in proceeds from sale of common stock received during the year ended July 31, 2014, of which a portion was used to fund the operating activities of the Company, as well as to pay down outstanding notes payable with higher interest rates during the year ended July 31, 2015. In March 2015, we issued a convertible debenture in the face amount of Japanese JPY200,000,000, approximately US$1,620,000 at July 31, 2015, (see Note 9). We intend to continue to improve our balance sheet by reducing short term liabilities and invest in promoting and expanding our services. The funds obtained through the debenture placement will facilitate that effort. The funding received in March 2015 notwithstanding, we continue to have a significant working capital deficit that adversely affects our business by limiting the resources we have available to pursue the promotion of our information services and develop new information service opportunities for potential users. Historically we have relied on extensions of note payment due dates and new debt financing to repay note obligations as they came due in order to continue operations. Going forward we will continue to use extensions and new debt financing, such as the recent debenture offering, to address note obligations that come due, endeavor to gradually reduce obligations with cash flow provided by operations, and pursue over the next 12 months equity financing that we can apply to debt reduction and business development. Nevertheless, the shortage of working capital adversely affects our ability to develop, sponsor, or participate in activities that promote our information services to prospective users and to develop new content, because a substantial portion of cash flow goes to reduce debt rather than to advance operating activities. There is no assurance that our plans for addressing our working capital shortages will be successful, and our failure to be reasonably successful should be expected to result in a significant contraction of our operations and potentially a failure of the business. |
Foreign Exchange | Foreign Exchange The Companys primary operations are conducted in Japan and performed by its wholly owned subsidiaries LinkBit and Umajin HK. LinkBits functional currency is the Japanese Yen and Umajin HKs functional currency is the Hong Kong Dollar. The financial statements of each entity are prepared using the applicable functional currencies, and have been translated into U.S. dollars (USD). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in the Companys stockholders equity. The following rates were used to translate the accounts of LinkBit and Umajin HK into USD at the following balance sheet dates. Balance Sheet Dates July 31, July 31, 2015 2014 Japanese Yen to USD 0.0081 0.0098 Hong Kong Dollars to USD 0.1290 0.1290 The following rates were used to translate the accounts of LinkBit and Umajin HK into USD for the following operating periods. For the Year Ended July 31, July 31, 2015 2014 Japanese Yen to USD 0.0086 0.0099 Hong Kong Dollars to USD 0.1290 0.1290 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents as of July 31, 2015 and 2014. |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's financial condition and credit history, as well as current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The Company had no allowance for doubtful accounts as of July 31, 2015 and 2014. |
Property and Equipment | Property and Equipment Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives once the individual assets are placed in service. Estimated useful lives for the assets are as follows. Buildings and fixtures 8 - 43 years Autos and trucks 2 - 6 years Tools and equipment 4 - 10 years Computer software 5 years |
Intangible Assets | Intangible Assets The Companys intangible assets include goodwill, which represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from business acquisitions. Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level. As required by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-20, the Company conducted an analysis of the goodwill on its single reporting unit using the Company. For the fiscal years ending July 31, 2015 and 2014, the assessment for impairment found that there is no impairment of goodwill. The Company has no accumulated impairment losses on goodwill. |
Long-Lived Assets | Long-Lived Assets In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There was no impairment of assets identified during the years ended July 31, 2015 and 2014. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Companys principal or, in the absence of a principal, most advantageous market for the specific asset or liability. GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows: Level 1 Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: Quoted prices for similar assets or liabilities in active markets Quoted prices for identical or similar assets or liabilities in markets that are not active Inputs other than quoted prices that are observable for the asset or liability Inputs that are derived principally from or corroborated by observable market data by correlation or other means Level 3 Inputs that are unobservable and reflect the Companys own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). The Company has determined that the book value of its outstanding financial instruments as of July 31, 2015 and 2014 approximates the fair value. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk include cash, accounts receivable, notes receivable, and amounts due from related parties. The Company maintains its cash in banks located in Japan and Hong Kong in financial institutions with high credit ratings. Substantially all of the Companys revenues are generated from customers in Japan. The Company conducts periodic reviews of the financial condition and payment practices of its customers and note receivable holders. The Company has not experienced significant losses relating to these concentrations in the past. |
Revenue Recognition | Revenue Recognition The Companys revenue consists primarily of sales of comprehensive horse racing information through multiple websites focusing on all aspects of the horse racing industry in Japan. Publication of horse racing digital magazines, providing support for print publications, and participating in other public events and media programs related to the horse racing industry do not generate significant revenue directly. These activities are undertaken for the purpose of increasing the number of horse racing fans and driving potential customers to our websites so as to hopefully eventually convert them to paying customers. The Company recognizes revenue on arrangements in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The majority of the Companys revenue is generated by per-item sales. For all users, payment is received at the time of purchase. The Company recognizes revenue for per-item sales when the requested information is supplied to the user. For information packages that span a period of time, the Company recognizes revenue over the term of the package. Revenues are presented net of refunds, credits and known and estimated credit card chargebacks. The Company reports revenue net of any required taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Rights to content purchased by customers in advance of the content being provided are recorded as deferred revenue. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective 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. |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. Advertising costs incurred amounted to $911,562 and $1,711,855 for the years ended July 31, 2015 and 2014, respectively. |
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings Per Share In accordance with ASC 260, Earnings Per Share, the basic income per common share is computed by dividing the net income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. No dilutive potential common shares were included in the computation of diluted net income per share because their impact was anti-dilutive. As of July 31, 2015 and 2014, the Company had total options of 3,000,000 which were excluded from the computation of net income per share because they are anti-dilutive. As of July 31, 2015 and 2014, the Company had convertible notes convertible into 1,472,727 and 0, respectively, shares of common stock which were excluded from the computation because they are anti-dilutive. As a result, the basic and diluted earnings per share were the same for each of the periods presented. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 creates a new topic in the ASC Topic 606 and establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics, and expands and improves disclosures about revenue. In addition, ASU 2014-09 adds a new Subtopic to the Codification, ASC 340-40, Other Assets and Deferred Costs: Contracts with Customers, to provide guidance on costs related to obtaining a contract with a customer and costs incurred in fulfilling a contract with a customer that are not in the scope of another ASC Topic. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016, including interim periods therein. Early application is not permitted. Management is in the process of assessing the impact of ASU 2014-09 on the Companys financial statements. |
2. Summary of Significant Acc23
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of foreign translation rates | The following rates were used to translate the accounts of LinkBit and Umajin HK into USD at the following balance sheet dates. Balance Sheet Dates July 31, July 31, 2015 2014 Japanese Yen to USD 0.0081 0.0098 Hong Kong Dollars to USD 0.1290 0.1290 The following rates were used to translate the accounts of LinkBit and Umajin HK into USD for the following operating periods. For the Year Ended July 31, July 31, 2015 2014 Japanese Yen to USD 0.0086 0.0099 Hong Kong Dollars to USD 0.1290 0.1290 |
Schedule of estimated useful lives of property and equipment | Buildings and fixtures 8 - 43 years Autos and trucks 2 - 6 years Tools and equipment 4 - 10 years Computer software 5 years |
3. Property and Equipment, net
3. Property and Equipment, net (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | July 31, July 31, 2015 2014 Buildings and fixtures $ 262,126 $ 272,079 Autos and trucks 294,513 356,324 Tools and equipment 427,469 569,152 Computer software 1,284,209 1,560,267 Horses 24,454 41,347 2,292,771 2,799,169 Less: accumulated depreciation (2,019,508 ) (2,423,114 ) $ 273,263 $ 376,055 |
5. Notes Receivable (Tables)
5. Notes Receivable (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Receivables [Abstract] | |
Schedule of future maturities of notes receivable | Year Ended July 31, 2016 $ 1,537,869 2017 2018 2019 8,492 2020 16,756 Thereafter 522,124 Total $ 2,085,241 |
6. Goodwill (Tables)
6. Goodwill (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Balance as of July 31, 2013 $ 7,853,432 Foreign currency translation adjustment (303,998 ) Balance as of July 31, 2014 7,549,434 Foreign currency translation adjustment (1,292,322 ) Balance as of July 31, 2015 $ 6,257,112 |
7. Notes Payable (Tables)
7. Notes Payable (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Unsecured note payable issued on March 26, 2012, due on demand, bearing interest at 1% per annum due monthly. 810,000 980,000 Unsecured note payable issued on January 30, 2013, due on demand, bearing interest at 1% per annum due monthly. 405,000 490,000 Unsecured note payable issued on July 23, 2013, due on July 5, 2016, bearing interest at 1.2% per annum due monthly. 136,728 327,712 Unsecured note payable issued on September 30, 2013, due on September 30, 2014, bearing interest at 15% per annum due monthly. 784,000 Unsecured note payable issued on December 20, 2011, due on October 31, 2015, bearing interest at 15% per annum due monthly. 1,539,000 2,058,000 Unsecured note payable issued on June 28, 2013, due on October 31, 2015, bearing interest at 15% per annum due monthly. 162,000 196,000 Unsecured note payable issued on August 2, 2010, due on July 31, 2015, bearing interest at 12% per annum due monthly. 1,715,000 Unsecured note payable issued on January 20, 2011, due on June 30, 2017, bearing interest at 12% per annum due monthly. 931,500 1,960,000 Unsecured note payable resulting from the Company co-signing for debt of a vendor in 2010. The note is due on demand, bearing interest at 18% per annum due monthly. 348,300 774,200 Unsecured note payable issued on July 20, 2011, due on July 20, 2018, bearing interest at 12% per annum due monthly. 243,000 294,000 Unsecured notes payable, non-interest bearing, due on demand 48,855 58,527 Total notes payable 4,664,041 9,842,573 Less: current portion of notes payable 3,489,541 9,113,727 Long-term portion of notes payable $ 1,174,500 $ 728,846 |
Schedule of future long-term debt maturities | Year Ended July 31, 2016 $ 3,489,541 2017 931,500 2018 243,000 Total $ 4,664,041 |
9. Convertible Note Payable (Ta
9. Convertible Note Payable (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Convertible Note Payable Tables | |
Assumptions used | Year Ended July 31, 2015 Expected life in years 0.60 - 0.89 Stock price volatility 32.0% - 32.4% Risk-free interest rate 0.23% - 0.33% Expected dividends None Forfeiture rate NA |
11. Income Taxes (Tables)
11. Income Taxes (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred income taxes | July 31, July 31, 2015 2014 Deferred tax assets: Commission expenses $ 273,730 $ 285,443 Allowance for doubtful accounts 40,762 37,839 Deposits 151,102 515,907 Accrued salary 90,528 Other 125,491 397,065 Deferred tax liabilities: Depreciation (27,465 ) (22,413 ) Business tax receivable (12,874 ) Others (1,457 ) (1,850 ) Valuation allowance (23,842 ) (30,273 ) Net deferred tax assets $ 525,447 $ 1,272,246 |
Income tax reconcilation | July 31, July 31, 2015 2014 Income tax based on book income at Japanese statutory rate $ 527,350 $ 751,503 Entertainment expense 121,904 136,953 Additional taxes 2,487 1,611 Tax loss carry-forwards utilized only for local tax (122,837 ) (53,424 ) Tax rate difference between current tax and deferred tax assets (42,187 ) 56,329 Others (37,401 ) (10,963 ) Total income tax provision $ 449,316 $ 882,009 |
12. Commitments and Contingen30
12. Commitments and Contingencies (Tables) | 12 Months Ended |
Jul. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimim lease payments | Years ending July 31, 2016 $ 626,761 2017 117,302 2018 71,317 2019 53,487 Total $ 868,867 |
1. Description of Business (Det
1. Description of Business (Details Narrative) | Jul. 31, 2015 |
LinkBit | |
Equity ownership percentage | 100.00% |
Umajin HK | |
Equity ownership percentage | 100.00% |
2. Summary of Significant Acc32
2. Summary of Significant Accounting Policies (Details - Foreign currency rates) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Japan, Yen | ||
Foreign currency rates | .0081 | .0098 |
Foreign currency rates over duration | .0086 | .0099 |
Hong Kong, Dollars | ||
Foreign currency rates | .1290 | .1290 |
Foreign currency rates over duration | .1290 | .1290 |
2. Summary of Significant Acc33
2. Summary of Significant Accounting Policies (Details - Estimated useful lives) | 12 Months Ended |
Jul. 31, 2015 | |
Building and fixtures [Member] | |
Estimated useful lives | 8-43 years |
Autos and trucks [Member] | |
Estimated useful lives | 2-6 years |
Tools and equipment [Member] | |
Estimated useful lives | 4-10 years |
Computer software [Member] | |
Estimated useful lives | 5 years |
2. Summary of Significant Acc34
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Jul. 31, 2015 | Jul. 31, 2014 | Jul. 31, 2013 | |
Cash | $ 75,778 | $ 1,882,272 | $ 168,223 |
Working capital | (5,929,449) | (7,089,828) | |
Proceeds from sale of stock | 0 | 2,940,000 | |
Cash equivalents | 0 | 0 | |
Allowance for doubtful accounts | 0 | 0 | |
Accumulated impairment losses on goodwill | 0 | 0 | |
Advertising expenses | $ 911,562 | $ 1,711,855 | |
Options [Member] | |||
Anti-dilutive shares excluded from computation of net income per share | 3,000,000 | 3,000,000 | |
Convertible Notes Payable [Member] | |||
Anti-dilutive shares excluded from computation of net income per share | 1,472,727 | 0 |
3. Property and Equipment (Deta
3. Property and Equipment (Details) - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Property and equipment, gross | $ 2,292,771 | $ 2,799,169 |
Less: accumulated depreciation | (2,019,508) | (2,423,114) |
Property and equipment, net | 273,263 | 376,055 |
Building and fixtures [Member] | ||
Property and equipment, gross | 262,126 | 272,079 |
Autos and trucks [Member] | ||
Property and equipment, gross | 294,513 | 356,324 |
Tools and equipment [Member] | ||
Property and equipment, gross | 427,469 | 567,354 |
Computer software [Member] | ||
Property and equipment, gross | 1,284,209 | 1,560,267 |
Horses [Member] | ||
Property and equipment, gross | $ 24,454 | $ 41,347 |
3. Property and Equipment (De36
3. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 110,383 | $ 238,487 |
4. Due from Related Parties (De
4. Due from Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Due from related parties | $ 1,959,784 | $ 1,481,811 |
Officers and directors | ||
Due from related parties | 0 | 1,144,647 |
Other related party | ||
Due from related parties | 1,959,784 | $ 337,164 |
Amount subject to interest | $ 1,471,932 | |
Interest rate | 0.48% | |
Maturity date | Feb. 28, 2018 |
5. Notes Receivable (Details -
5. Notes Receivable (Details - Notes Receivable) - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Receivables [Abstract] | ||
2,016 | $ 1,537,869 | |
2,017 | 0 | |
2,018 | 0 | |
2,019 | 8,492 | |
2,020 | 16,756 | |
Thereafter | 522,124 | |
Total | $ 2,085,241 | $ 2,314,451 |
5. Notes Receivable (Details Na
5. Notes Receivable (Details Narrative) - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Receivables [Abstract] | ||
Notes receivable outstanding | $ 2,085,241 | $ 2,314,451 |
Notes receivable current | $ 1,537,869 | $ 1,682,327 |
6. Goodwill (Details)
6. Goodwill (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning balance | $ 7,549,434 | $ 7,853,432 |
Foreign currency translation adjustment | (1,292,322) | (303,998) |
Goodwill, ending balance | $ 6,257,112 | $ 7,549,434 |
7. Notes Payable (Details - Sch
7. Notes Payable (Details - Schedule of debt) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Unsecured notes payable | $ 4,664,041 | $ 9,842,573 |
Notes payable, current portion | 3,489,541 | 9,113,727 |
Notes payable, long-term portion | 1,174,500 | 728,846 |
Note 1 | ||
Unsecured notes payable | $ 810,000 | 980,000 |
Debt maturity date | Mar. 26, 2012 | |
Stated interest rate | 1.00% | |
Note 2 | ||
Unsecured notes payable | $ 405,000 | 490,000 |
Debt maturity date | Jan. 30, 2013 | |
Stated interest rate | 1.00% | |
Note 3 | ||
Unsecured notes payable | $ 136,728 | 327,712 |
Debt maturity date | Jul. 5, 2016 | |
Stated interest rate | 1.20% | |
Note 4 | ||
Unsecured notes payable | $ 0 | $ 784,000 |
Debt maturity date | Sep. 30, 2014 | |
Stated interest rate | 1.20% | 15.00% |
Note 5 | ||
Unsecured notes payable | $ 1,539,000 | $ 2,058,000 |
Debt maturity date | Oct. 31, 2015 | |
Stated interest rate | 15.00% | |
Note 6 | ||
Unsecured notes payable | $ 162,000 | 196,000 |
Debt maturity date | Oct. 31, 2015 | |
Stated interest rate | 15.00% | |
Note 7 | ||
Unsecured notes payable | $ 0 | 1,715,000 |
Debt maturity date | Jul. 31, 2015 | |
Stated interest rate | 12.00% | |
Note 8 | ||
Unsecured notes payable | $ 931,500 | 1,960,000 |
Debt maturity date | Jun. 30, 2017 | |
Stated interest rate | 12.00% | |
Note 9 | ||
Unsecured notes payable | $ 348,300 | 774,200 |
Stated interest rate | 18.00% | |
Note 10 | ||
Unsecured notes payable | $ 243,000 | 294,000 |
Debt maturity date | Jul. 20, 2018 | |
Stated interest rate | 12.00% | |
Note 11 | ||
Unsecured notes payable | $ 48,855 | $ 58,527 |
7. Notes Payable (Details - Mat
7. Notes Payable (Details - Maturities of debt) - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Debt Disclosure [Abstract] | ||
2,016 | $ 3,489,541 | |
2,017 | 931,500 | |
2,018 | 243,000 | |
Total notes payable | $ 4,664,041 | $ 9,842,573 |
8. Notes Payable From Related43
8. Notes Payable From Related Parties (Details Narrative) - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Note payable to related party | $ 993,918 | $ 0 |
Chairman and Chief Executive Officer [Member] | ||
Note payable to related party | 831,918 | |
President [Member] | ||
Note payable to related party | $ 162,000 |
9. Convertible Note Payable (De
9. Convertible Note Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Convertible note payable | $ 1,620,000 | $ 0 |
Convertible Debt [Member] | ||
Convertible note payable | $ 1,680,000 | |
Debt maturity date | Mar. 5, 2016 | |
Stated interest rate | 1.00% |
11. Income Taxes (Details - Def
11. Income Taxes (Details - Deferred taxes) - USD ($) | Jul. 31, 2015 | Jul. 31, 2014 |
Deferred tax assets: | ||
Commission expenses | $ 273,730 | $ 285,443 |
Allowance for doubtful accounts | 40,762 | 37,839 |
Deposits | 151,102 | 515,907 |
Accrued salary | 0 | 90,528 |
Other | 125,491 | 397,065 |
Deferred tax liabilities: | ||
Depreciation | (27,465) | (22,413) |
Business tax receivable | (12,874) | 0 |
Others | (1,457) | (1,850) |
Valuation allowance | (23,842) | (30,273) |
Net deferred tax assets | $ 525,447 | $ 1,272,246 |
11. Income Taxes (Details - Tax
11. Income Taxes (Details - Tax reconciliation) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Income tax based on book income at Japanese statutory rate | $ 527,350 | $ 751,503 |
Entertainment expense | 121,904 | 136,953 |
Additional taxes | 2,487 | 1,611 |
Tax loss carry-forwards utilized only for local tax | (122,837) | (53,424) |
Tax rate difference between current tax and deferred tax assets | (42,187) | 56,329 |
Others | (37,401) | (10,963) |
Total income tax provision | $ 449,316 | $ 882,009 |
12. Commitments and Contingen47
12. Commitments and Contingencies (Details) | Jul. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 626,761 |
2,017 | 117,302 |
2,018 | 71,317 |
2,019 | 53,487 |
Total | $ 868,867 |
12. Commitments and Contingen48
12. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 812,747 | $ 845,058 |
13. Related Party Transactions
13. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Due from related parties | $ 1,959,784 | $ 1,481,811 |
Fee paid to related party | 1,242,222 | $ 1,457,238 |
Chairman and Chief Executive Officer [Member] | ||
Due from related parties | $ 831,918 |