Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Nov. 30, 2017 | Jan. 15, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | DOCASA Inc. | |
Entity Central Index Key | 1,619,055 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --08-31 | |
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 Common Stock, Shares Outstanding | 160,012,875 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Current assets: | ||
Cash | $ 202,133 | $ 93,400 |
Accounts receivable | 527,483 | 496,822 |
Prepaid expenses | 229,040 | 36,270 |
Inventory | 108,691 | 47,477 |
Total current assets | 1,067,347 | 673,969 |
Fixed assets, net | 1,966,992 | 1,672,176 |
Intangible assets, net | 12,685 | 10,134 |
Other receivables | 40,517 | 38,660 |
Investments | 1,289 | |
Goodwill | 2,185,012 | |
Deposits | 212,289 | 89,989 |
Total assets | 5,484,842 | 2,486,217 |
Current liabilities: | ||
Notes payable, current portion | 167,023 | 139,419 |
Accounts payable | 1,589,492 | 849,642 |
Accrued expenses | 587,812 | 59,561 |
Accounts payable to related parties | 50,582 | 95,213 |
Taxes payable | 100,131 | 151,676 |
Capital leases obligations, current portion | 116,146 | 116,146 |
Deferred revenue | 35,361 | 32,661 |
Total current liabilities | 2,646,547 | 1,444,318 |
Non-current liabilities: | ||
Notes payable (includes $11,417 and $39,540 to related parties for November 30, 2017 and August 31, 2017, respectively) | 11,417 | 372,926 |
Notes payable, non-current portion | 357,740 | |
Capital leases obligations, non-current portion | 163,596 | |
Other long-term liabilities | 70,275 | 207,003 |
Total long-term liabilities | 603,028 | 579,929 |
Total liabilities | 3,249,575 | 2,024,247 |
Shareholders' equity: | ||
Common stock, $0.001 par value, 250,000,000 shares authorized, 150,036,000 and 150,036,000 shares issued and outstanding, at November 30, 2017 and August 31, 2017, and 57,064,000 and 57,064,000 conditionally issuable, at November 30, 2017 and August 31, 2017, respectively | 207,100 | 207,100 |
Additional paid-in capital | 758,969 | 758,969 |
Accumulated other comprehensive income | 222,555 | 119,464 |
Non-controlling interest: | ||
Preference shares of DEPT-UK (25,000,000 shares authorized, £1 par value, value, 2,987,826 and 1,642,826 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively) | 4,086,539 | 2,142,804 |
Accumulated deficit | (3,039,896) | (2,766,367) |
Total DOCASA, Inc. shareholders' equity | 2,235,267 | 461,970 |
Total liabilities and shareholders' equity | 5,484,842 | 2,486,217 |
Common Class A [Member] | ||
Shareholders' equity: | ||
Ordinary shares | ||
Common Class B [Member] | ||
Shareholders' equity: | ||
Ordinary shares |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) | Nov. 30, 2017USD ($)$ / sharesshares | Nov. 30, 2017£ / shares | Aug. 31, 2017USD ($)$ / sharesshares | Aug. 31, 2017£ / shares |
Non-current liabilities: | ||||
Notes payable to related parties | $ | $ 11,417 | $ 39,540 | ||
Shareholders' equity: | ||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized | 250,000,000 | 250,000,000 | ||
Common stock, shares issued | 160,012,875 | 150,036,000 | ||
Common stock, shares outstanding | 160,012,875 | 150,036,000 | ||
Conditionally issuable | 47,087,125 | 57,064,000 | ||
Preference shares, shares outstanding | 1,662,826 | 1,642,826 | ||
Common Class A [Member] | ||||
Shareholders' equity: | ||||
Ordinary shares, par value | £ / shares | £ 1 | £ 1 | ||
Ordinary shares, shares authorized | 25,000,000 | 25,000,000 | ||
Ordinary shares, shares issued | 0 | 243,800 | ||
Ordinary shares, shares outstanding | 0 | 243,800 | ||
Common Class B [Member] | ||||
Shareholders' equity: | ||||
Ordinary shares, par value | £ / shares | £ 1 | £ 1 | ||
Ordinary shares, shares authorized | 10,000,000 | 10,000,000 | ||
Ordinary shares, shares issued | 0 | 0 | ||
Ordinary shares, shares outstanding | 0 | 0 | ||
DEPT UK [Member] | ||||
Shareholders' equity: | ||||
Preference shares, par value | $ / shares | $ 1 | $ 1 | ||
Preference shares, shares authorized | 25,000,000 | 25,000,000 | ||
Preference shares, shares issued | 2,987,826 | 1,642,826 | ||
Preference shares, shares outstanding | 2,987,826 | 1,642,826 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Condensed Consolidated Statements Of Operations | ||
Revenue, net | $ 1,522,886 | $ 916,625 |
Operating expenses | ||
Direct costs of revenue | 1,175,915 | 573,242 |
Professional fees | 65,004 | 43,620 |
Rent | 172,717 | 94,243 |
Depreciation and amortization | 74,024 | 32,503 |
Property taxes | 67,010 | 47,005 |
Other general and administrative expenses | 235,589 | 135,844 |
Operating loss | (267,373) | (9,832) |
Other income (expense) | ||
Interest expense | (6,154) | (2,448) |
Impairment expense | (46,566) | |
Loss before provision for income taxes | (273,529) | (58,846) |
Net loss | (273,529) | (58,846) |
Loss attributable to non-controlling interest | 281 | 26 |
Net loss attributable to common shareholders | (273,248) | (58,820) |
Foreign currency translation gain | 103,091 | (7,557) |
Total comprehensive loss | $ (170,157) | $ (66,377) |
Net loss attributable to common shareholders per share - basic | $ 0 | $ 0 |
Weighted average number of shares outstanding - basic | 150,036,000 | 146,800,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss before taxes and non-controlling interest | $ (273,529) | $ (58,846) |
Adjustments to reconcile net loss before taxes and non-controlling interest to net cash provided by operations: | ||
Depreciation and amortization expense | 74,024 | 32,503 |
Other comprehensive income | 103,091 | (7,557) |
Impairment expense | 46,566 | |
Non-controlling interest gain | 281 | 26 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (30,661) | (349,647) |
Other receivables | (1,857) | 107,986 |
Prepaid expenses | (100,718) | 63,051 |
Inventory | (9,803) | 1,264 |
Deposits | (2,301) | (30,183) |
Accounts payable | 739,850 | 244,065 |
Accounts payable to related parties | (44,631) | 26,151 |
Accrued expenses | 252,359 | 12,116 |
Taxes payable | (52,729) | (5,416) |
Deferred revenue | 2,700 | 9,745 |
Other non-current liabilities | 136,728 | (5,114) |
Net cash provided by operating activities | 792,804 | 86,710 |
Cash flows used in investing activities | ||
Acquisition of fixed assets | (291,994) | (167,292) |
Acqusition of intangible assets | (6,060) | |
Cash acquired from acquisition of Tapped | 200,582 | |
Acquisition of Tapped, net | (237,877) | |
Net cash used in investing activities | (335,349) | (167,292) |
Cash flows from (used in) financing activities: | ||
Proceeds from notes payable | 290,908 | |
Payment on capital leases | (43,407) | |
Sale of preference shares | 26,558 | |
Payments on notes payable | (331,873) | (177,641) |
Payments on notes payable to related parties | (37,456) | |
Net cash provided by (used in) financing activities | (348,722) | 75,811 |
Net increase (decrease) in cash | 108,733 | (4,771) |
Cash at beginning of period | 93,400 | 91,137 |
Cash at end of period | 202,133 | 86,366 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 5,376 | 2,448 |
Cash paid for taxes | 606 | |
Non-cash investing and financing activities: | ||
Issuance of note payable for treasury stock | 320,000 | |
Assets and liabilities assumed, net | 46,359 | |
Tapped - goodwill | (2,185,012) | |
Tapped - prepaid expenses | 92,052 | |
Tapped - inventory | 51,411 | |
Tapped - fixed assets, net | 73,337 | |
Tapped - deposits | 119,999 | |
Tapped - accrued expenses | 195,621 | |
Tapped - notes payable | 369,586 | |
Tapped - deferred taxes | 1,184 | |
Treasury stock acquired | (115,000) | |
Issuance of common stock for reverse acquisition | 110,000 | |
Issuable common stock for contribution | 300 | |
Issuance of preference shares for debt and services | 13,422 | |
Issuance of preference shares in exchange for common stock | 1,756,378 | |
Payment of debt by third party | $ (320,000) |
NATURE OF BUSINESS AND PRESENTA
NATURE OF BUSINESS AND PRESENTATION | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 1 - NATURE OF BUSINESS AND PRESENTATION | Organization DOCASA, Inc. (the Company, we, us, our, or DOCASA) was incorporated in the State of Nevada on July 22, 2014, under the name of FWF Holdings, Inc. The Company changed its name on August 4, 2016. The Company was originally engaged in the business of commercial production and distribution of hot sauce (see Note 3). On August 4, 2016, the Company changed its year end from July 31 to August 31. On July 8, 2016, the Company experienced a change in control. Atlantik LP (Atlantik), a related party, acquired a majority of the issued and outstanding common stock of the Company in accordance with a stock purchase agreement by and between Atlantik and Nami Shams (the Seller). On the closing date, July 8, 2016, pursuant to the terms of the stock purchase agreement, Atlantik purchased from the Seller 115,000,000 shares of the Companys outstanding restricted common stock for $200,000, representing 75.8% of the Companys outstanding common stock at that time. On September 1, 2016, the Company acquired 99.8% of the voting stock of the Department of Coffee and Social Affairs Limited, a United Kingdom corporation (the DEPT-UK), and the Company agreed to issue DEPT-UKs majority shareholder 170,000,000 shares of the Companys common stock110,000,000 shares initially and 60,000,000 shares at a time determined by the Companys Board of Directors but no later than August 31, 2017, which deadline was subsequently extended to August 31, 2018. Also on September 1, 2016, the Company acquired 115,000,000 shares of the Companys common stock from Atlantik in exchange for issuing Atlantik a promissory note for $320,000, which shares were then cancelled and which note has since been paid in full. As a result of the acquisition and the issuance of the initial 110,000,000 shares of common stock, and the cancellation of the 115,000,000 Atlantik shares, DEPT-UK is now the majority-owned subsidiary of the Company, and the Company experienced a change of control. DEPT-UK formed a wholly-owned subsidiary, Department of Coffee and Internal Affairs Limited (DCIA), on September 11, 2014, as filed with the Registrar of Companies for England and Wales. As of November 30, 2017, DCIA has had no operations or activity. On April 5, 2017, the Company formed Department of Coffee and Social Affairs IL, Inc. (DEPT-IL), an Illinois corporation. On May 18, 2017, the Company formed Department of Coffee and Social Affairs White Space Limited (DEPT-UKWS), as filed with the Registrar of Companies for England and Wales. DEPT-UKWS is a subsidiary of DEPT-UK. For financial reporting purposes, the acquisition of DEPT-UK and the change of control in connection with acquisition represented a reverse merger rather than a business combination, and DEPT-UK is deemed to be the accounting acquirer in the transaction. For the periods subsequent to August 31, 2016, the acquisition is being accounted for as a reverse-merger and recapitalization. DEPT-UK is the acquirer for financial reporting purposes, and the Company (DOCASA, Inc., f/k/a FWF Holdings, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the acquisition are those of DEPT-UK and have been recorded at the historical cost basis of DEPT-UK, and the financial statements after completion of the acquisition include the assets and liabilities of both the Company and DEPT-UK, and the historical operations of DEPT-UK prior to closing and operations of both companies from the closing of the acquisition. On January 2, 2018, with an effective date of November 1, 2017, DEPT-UK acquired Tapped and Packed Ltd (Tapped), an UK company, for a combination of cash and shares of common stock of the Company. See Note 2. Tapped became a subsidiary of DEPT-UK as a result of the transaction. Tapped has four shop locations in the UK which serve coffee and food. Nature of Operations We are currently devoting our efforts to the specialty coffee industry, specifically with company-operated stores. The Company will generate revenue through sales at nineteen existing company-operated coffee shop locations in the UK, with seven more locations under construction. The Company has expanded its operations to the United States and opened its first coffee shop in Chicago, Illinois in October 2017. Our objective is to continue to be recognized as one of the upper tier specialty coffee retail operations. Similar to other leading operators, we sell our proprietary coffee and related products, and complementary food and snacks. The Company, as of August 31, 2017, has discontinued its hot sauce products which had no activity in the year ended August 31, 2017 (see Note 3). Accounting for discontinued operations not required due to immateriality. Principles of Consolidation The consolidated financial statements include the accounts of DOCASA and its subsidiaries, DEPT-UK, DCIA, DEPT-IL and DEPT-UKs subsidiary, DEPT-UKWS. All significant inter-company balances and transactions have been eliminated in consolidation. Basis of Presentation The accompanying unaudited consolidated condensed financial statements of DOCASA have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and done under §240.13(a) of the Securities Act. The results of operations for the interim period ended November 30, 2017 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending August 31, 2018. In the opinion of the Companys management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments, unless otherwise indicated) necessary for a fair presentation of the Companys results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Companys Form 10-K for the year ended August 31, 2017, filed on December 18, 2017 and Managements Discussion and Analysis of Financial Condition and Results of Operations. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance for accounts receivable, estimated lives of intangible and fixed assets, and valuation of share-based payments. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Accounts Receivable Accounts receivable consisted of amounts due from customers primarily for management fees. The Company considered accounts more than 30 days old to be past due. The Company used the allowance method for recognizing bad debts. When an account was deemed uncollectible, it was written off against the allowance. The Company generally does not require collateral for its accounts receivable. Management has not recorded an allowance for doubtful accounts as of November 30, 2017 or August 31, 2017. Inventory Inventory is recorded at the lower of cost or market and the cost of sales are recorded utilizing the first in first out (FIFO) method. Fixed Assets Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the lease term or the useful life of the leased equipment. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred. Impairment of Long-Lived Assets The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities. We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Revenue Recognition The Company recognizes revenue for its services in accordance with Accounting Standards Codification (ASC) 605-10, Revenue Recognition. Under this guidance, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has three primary revenue streams as follows: · Sales of specialty coffee and complementary food products. · Coffee school. · Coffee services. Stock-Based Compensation The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model. Advertising Advertising is expensed as incurred and is included in other general and administrative expenses on the accompanying condensed consolidated statement of operations. For the three months ended November 30, 2017 and 2016 advertising expense was $8,137 and $6,038, respectively. Income Taxes The Company adopted the provisions of ASC 740, Income Taxes. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying condensed consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of November 30, 2017, tax years 2014 - 2017 remain open for IRS audit and tax years 20152017 remain open for HM Revenue & Customs (HMRC) audit. The Company has received no notice of audit from the IRS or HMRC for any of the open tax years. Net Earnings (Loss) Per Share In accordance with ASC 260-10, Earnings Per Share, basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common stock shares outstanding during the period. Foreign Currency Translation and Transactions The British Pound (£) is the functional currency of DEPT-UK and Tapped whereas the financial statements are reported in United States Dollar (USD, $). Assets and liabilities are translated based on the exchange rates at the condensed consolidated balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the period. Equity accounts are translated at historical exchange rates. The resulting translation gain and loss adjustments are accumulated as a component of stockholders equity and other comprehensive income. Comprehensive Loss The Company reports comprehensive loss and its components in its consolidated financial statements. Comprehensive loss consists of net loss on foreign currency translation adjustments affecting stockholders equity that, under U.S. GAAP, are excluded from net loss. As of November 30, 2017, the exchange rate between U.S. Dollars and British Pounds was US$1.35 = £1.00, and the weighted average exchange rate for the three months ended November 30, 2017 was US$1.32 = £1.00. As of August 31, 2017, the exchange rate between U.S. Dollars and British Pounds was US$1.29 = £1.00. Going Concern The Company has a net loss for the three months ended November 30, 2017 of $273,529 and a working capital deficit as of November 30, 2017 of $1,579,200, and has cash provided by operations of $792,804 for the three months ended November 30, 2017. In addition, as of November 30, 2017, the Company had a stockholders equity and accumulated deficit of $2,315,538 and $3,039,896, respectively. Without further funding, these conditions raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of managements plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements. There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Companys current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary. Effect of Recent Accounting Pronouncements The Company reviews new accounting standards and updates as issued. No new standards or updates had any material effect on these financial statements. The accounting pronouncements and updates issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does believe that some of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to November 30, 2017 through the date these financial statements were issued. In February 2016, the Financial Accounting Standards Board (FASB) issued an ASU on lease accounting. The ASU requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. The ASU is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating the ASU, the Company expects the adoption of the ASU to have a material effect on the Companys financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company expects the ASU to have a material effect on the Companys results of operations and financial position, and the ASU will have no effect on cash flows. ASU 2014-09, Revenue Revenue from Contracts with Customers. In May 2014, the FASB issued a new accounting standard that requires recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. The FASB has also issued several updates to ASU 2014-09. The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the present standards. It also requires additional disclosures. We will adopt the new revenue guidance effective January 1, 2017, by recognizing the cumulative effect of initially applying the new standard as an increase to the opening balance of retained earnings. We expect this adjustment to be less than $100 million, with an immaterial impact to our net income on an ongoing basis. Adoption of the new standard will also result in changes in classification between Revenues, Cost of sales, Non-Financial Services interest income and other income/(loss), net, and Financial Services other income/(loss), net. |
ENTRY INTO A DEFINITIVE AGREEME
ENTRY INTO A DEFINITIVE AGREEMENT | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 2 - ENTRY INTO A DEFINITIVE AGREEMENT | Acquisition of Tapped and Packed Ltd On November 1, 2017, DEPT-UK entered into an acquisition agreement (the Tapped Acquisition Agreement) with Tapped, a United Kingdom corporation. Richard Lilley, an individual (Lilley), was the owner of record of 100 capital shares of Tapped. Pursuant to the Tapped Acquisition Agreement, Tapped stock was transferred to DEPT-UK on November 1, 2017, in consideration of £175,000 and 1,546,875 shares of common stock of the Company. The £175,000 was paid in October 2017 as a prepayment to the completion date of November 1, 2017. Stefan Allesch-Taylor (Allesch-Taylor), Chairman of the Company, utilized his personally owned shares of common stock of the Company, and assigned the 1,546,875 shares (the Allesch-Taylor Shares) from his ownership to Lilley. In exchange for the use of the Allesch-Taylor Shares, which were provisionally valued at $1,918,125 (Provisional Share Compensation Value), the Board of Directors issued Allesch-Taylor 1,325,000 Preference Shares of DEPT-UK. The Provisional Share Compensation Value was determined by the previous days closing price of $1.24 per share. The Companys common stock is thinly-traded and an insignificant amount of stock traded has historically caused significant fluctuations in the price per share of the Companys common stock. The Company will utilize an independent third-party business valuation to determine the value of Tapped, as well as get an independent valuation of the Companys common stock as of the date of the transaction. Management believes that the separate valuations will determine a fair and reasonable valuation thereby reducing the provisional goodwill recorded, as of November 30, 2017, of $2,185,012. The Allesch-Taylor Shares of common stock were assigned to Lilley on or about October 19, 2017 and were released in accordance to the agreement. See Note 1, 8, 9 and 14. Also in connection with the Tapped Acquisition Agreement, Gill and Lopez were appointed to serve on Tappeds Board of Directors. The following table summarizes the consideration given for DEPT-UK and the fair values of the assets and liabilities assumed at the acquisition date. Consideration given: Cash given $ 237,877 Common stock shares given 1,918,125 Total consideration given $ 2,156,002 Fair value of identifiable assets acquired, and liabilities assumed: Cash $ 200,582 Prepaid expense 92,052 Inventory 51,411 Fixed assets, net 73,337 Deposits 119,999 Accrued expenses (195,621 ) Short-term note payable (200,804 ) Director note (168,782 ) Deferred taxes (1,184 ) Total identifiable net liabilities (29,010 ) Goodwill 2,185,012 Total consideration $ 2,156,002 The revenue and earnings for Tapped, as reflected in the unaudited condensed consolidated statement of operations, for the one month ended November 30, 2017, to reflect the period from acquisition, is $204,181 and $28,595, respectively. |
INVENTORY
INVENTORY | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 3 - INVENTORY | The Company has inventory of various items used for the sale of coffee and complementary products. As of November 30, 2017, and August 31, 2017, the Company had inventory of $108,691 and $47,477, respectively. The Company accounts for its inventory using the lower of cost or market and the cost of sales are recorded utilizing the first in first out (FIFO) method. The inventory is as follows: November 30, August 31, 2017 2017 Consumable products $ 71,915 $ 17,894 Food and drinks 30,262 24,117 Retail products 6,514 5,466 Total inventory $ 108,691 $ 47,477 |
FIXED ASSETS
FIXED ASSETS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 4 - FIXED ASSETS | The Company has fixed assets including computer equipment, office equipment, site equipment and machinery, site fit out costs, site furniture, fixtures and fittings. The fixed assets are as follows: November 30, August 31, 2017 2017 Computer equipment $ 66,429 $ 62,038 Office equipment 30,722 22,526 Site equipment and machinery 457,134 366,661 Site fit out costs 1,799,750 1,606,067 Site furniture, fixtures and fittings 310,752 236,972 Total fixed assets 2,664,787 2,294,264 Less: Accumulated depreciation 697,795 622,088 Fixed assets, net $ 1,966,992 $ 1,672,176 The depreciation expense for the three months ended November 30, 2017 and 2016, was $73,417 and $30,784, respectively. The variance between the expense and the increase in accumulated depreciation is due to timing of the currency translation calculation. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 5 - INTANGIBLE ASSETS | The Company has intangible assets related to website development. The amortization of the intangible assets is over a three-year period. The intangible assets are as follows: November 30, August 31, 2017 2017 Website development $ 35,488 $ 29,428 Total intangible assets 35,488 29,428 Less: Accumulated amortization 22,803 19,294 Intangible assets, net $ 12,685 $ 10,134 The amortization expense for the three months ended November 30, 2017 and 2016, was $607 and $1,719, respectively. The variance between the expense and the increase in accumulated amortization is due to timing of the currency translation calculation. Amortization, based on the currency translation calculation as of the date of this report, for the next five years, is as follows: 2018 $ 7,731 2019 4,954 2020 - 2021 - 2022 - Total $ 12,685 |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 6 - INVESTMENTS | On January 12, 2017, Allesch-Taylor purchased the Companys original investment of £5,000 for a 5% ownership of Radio Station (f/k/a Soho Radio Ltd.) for £5,000 of his issued preference shares in DEPT-UK. The relationship with Radio Station will continue to provide the Company with intangible benefits. As the Company had previously impaired £4,000 of the investment as of August 31, 2015, the exchange resulted in a gain on the transaction and will be recorded accordingly. The Company had previously impaired the investment as the investment would only provide intangible benefits, which, after this transaction, are still anticipated to be to the benefit of the Company. See Notes 8 and 9. |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 7 - NOTES PAYABLE | The Company has notes payable as of November 30, 2017 and August 31, 2017 are as follows: Notes payable - current November 30, 2017 August 31, 2017 Accrued Accrued Principal Interest Total Principal Interest Total Arch Investments $ 2,194 $ - $ 2,194 $ 2,194 $ - $ 2,194 Arch Investments 5,067 - 5,067 5,067 - 5,067 Arch Investments 5,065 - 5,065 5,065 - 5,065 Arch Investments 15,873 - 15,873 15,873 - 15,873 Arch Investments 4,349 - 4,349 4,349 - 4,349 HSBC 112,005 - 112,005 - - - Woodgrove Bank 22,470 - 22,470 - - - Total $ 167,023 $ - $ 167,023 $ 32,548 $ - $ 32,548 Notes payable - non-current November 30, 2017 August 31, 2017 Accrued Accrued Principal Interest Total Principal Interest Total Deij Capital Limited (1) $ 11,417 $ - $ 11,417 $ 70,079 $ - $ 70,079 Woodgrove Bank 68,348 - 68,348 - - - HSBC 289,394 - 289,394 409,718 - 409,718 Total $ 369,159 $ - $ 369,159 $ 479,797 $ - $ 479,797 (1) Related party On July 1, 2014, DEPT-UK entered into a business loan with Deij Capital Limited (Deij Capital), a related party in which Gill is the director and owner. The loan is for 3 years, with an interest rate of 0%. The note was extended to July 1, 2018. The imputed interest is deemed immaterial as of November 30, 2017. The facility loan was for $171,437 (£100,000) to be drawn down as and when required. On June 30, 2016, Deij Capital converted the balance due of $179,534 (£135,464) into 135,464 shares of Preference Shares (see Note 10). On May 31, 2017, Deij Capital converted of the balance due $63,990 (£51,500) into 51,500 shares of Preference Shares (see Note 10). The outstanding principal as of November 30, 2017 and August 31, 2017, was $11,417 (£8,454) and $70,079 (£56,454), respectively. The accrued interest as of November 30, 2017 and August 31, 2017, was $0 (£0) and $0 (£0), respectively. See Note 9. On July 31, 2014, DOCASA executed a promissory note for $2,194 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2017. As of November 30, 2017, and August 31, 2017, the principal was $2,194. This note was acquired by Arch Investments, LLC. See Notes 9. On April 30, 2015, DOCASA executed a promissory note for $5,067 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and is non-interest bearing. On July 20, 2016, Arch Investments, LLC acquired this promissory note due to Nami Shams. The imputed interest is deemed immaterial as of November 30, 2017. As of November 30, 2017, and August 31, 2017, the principal was $5,067. See Notes 2 and 9. On July 31, 2015, DOCASA executed a promissory note for $5,065 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2017. As of November 30, 2017, and August 31, 2017, the principal was $5,065. This note was acquired by Arch Investments, LLC. See Notes 2 and 9. On October 31, 2015, DOCASA executed a promissory note for $15,873 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2017. As of November 30, 2017, and August 31, 2017, the principal was $15,873. This note was acquired by Arch Investments, LLC. See Notes 2 and 9. On January 31, 2016, DOCASA executed a promissory note for $4,349 with Nami Shams, a former officer and director of the Company. The note has no set term of repayment and is non-interest bearing. The imputed interest is deemed immaterial as of November 30, 2017. As of November 30, 2017, and August 31, 2017, the principal was $4,349. This note was acquired by Arch Investments, LLC. See Notes 2 and 9. On July 28, 2016, DEPT-UK entered into a business loan with HSBC. The loan is a development loan drawn down against development invoices. The loan is for 4 years, with an interest rate of 4.5% over the Bank of England base rate. The loan repayment is monthly, interest-only payments for the first six months followed by monthly repayments of principal and interest over the remaining forty-two months. The loan was for $437,992 (£352,500) with an initial $115,767 (£93,178) drawn. The outstanding principal and accrued interest as of November 30, 2017, and August 31, 2017, was $401,399 (£297,206) and $409,718 (£317,941), respectively. As of November 30, 2017, the current portion was $112,006 (£82,932) and the non-current portion was $289,393 (£214,274). |
RELATED PARTIES TRANSACTIONS
RELATED PARTIES TRANSACTIONS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 8 - RELATED PARTIES TRANSACTIONS | On February 28, 2017, 51,500 Preference Shares were issued to Deij Capital in exchange for a debt of $63,990 (£51,500). See Note 9. For the three months ended November 30, 2017 and 2016, the Company purchased £11,150 and £28,235, respectively, of cakes from Dee Light, a company which Gill, the vice chairman of the Company, was a 50% shareholder (until November 2016). As of November 30, 2017, and August 31, 2017, the Company owed Dee Light £20,598 and £54,448, respectively. For the three months ended November 30, 2017 and 2016, the Company made sales or advances of £88,117 and £0, respectively, to The Roastery Department Ltd. (The Roastery Department), and made purchases from it of £85,888 and £40,451 for the three months ended November 30, 2017, and 2016, respectively. As of November 30, 2017, and August 31, 2017, the Company both has receivables and payables from The Roastery Department, which netted as receivables of $3,012 (£2,230) and $1,198,811 (£930,277), respectively. Gill, the Companys vice chairman, and Ashley Lopez (Lopez), the Companys chief executive officer, were both unpaid directors of The Roastery Department until they resigned on December 1, 2016. The Company, when purchasing products from The Roastery Department, was provided a discount due to the strategic relationship between the two parties which provided the Company its purchases at cost. The relationship between The Roastery Department and the Company, as stated, is classified as a barter transaction. Therefore, the Company, at August 31, 2017, expensed the net of the receivable and the payable, $417,436 (£323,930), resulted in an expense of $423,680, with the variance due to the currency translation. At August 31, 2017, the Company maintained a receivable for cash advance of $328,703 (£255,072). At November 30, 2017, the Company expensed the net of the receivable and the payable, $3,012 (£2,230), resulted in an expense of $2,952, with the variance due to the currency translation. At November 30, 2017, the Company maintained a receivable for cash advance of $351,407 (£260,191), as included in accounts receivable. On October 6, 2017, the Company issued 8,976,875 shares of common stock to Allesch-Taylor as part of the common stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK. On October 30, 2017, the Company issued 1,000,000 shares of common stock to Allesch-Taylor as part of the common stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK. As of November 30, 2017, and August 31, 2017, the Company owed Allesch-Taylor, the Companys chairman, payables of $54,086 (£40,047) and $41,174 (£31,951), respectively. As of November 30, 2017, and August 31, 2017, the Company owed Lopez, the Companys chief executive officer, payables of $898 (£665) and $893 (£693), respectively. As of November 30, 2017, and August 31, 2017, the Company owed Deij Capital, a company in which Gill, the deputy chairman of the Company, is the director and owner, notes payable of $11,417 (£8,454) and $70,079 (£56,454), respectively. The Company has an employment agreement with Lopez, our CEO, and did have a consulting agreement with Clearbrook Capital Partners LLP (Clearbrook), an entity where Kazi Shahid, our former CFO, was a partner and also served as CFO. Allesch-Taylor is a director of Clearbrook. The agreement with Clearbrook was terminated on March 15, 2017. The above related party transactions are not considered as arms length transactions for all circumstances. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 9 - STOCKHOLDERS’ EQUITY | Common Stock The Company is authorized to issue up to 250,000,000 shares of common stock. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights. On October 6, 2017, the Company issued 8,976,875 shares of common stock to Allesch-Taylor as part of the common stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK. On October 30, 2017, the Company issued 1,000,000 shares of common stock to Allesch-Taylor as part of the common stock owed to Allesch-Taylor in regards to the acquisition of DEPT-UK. After the issuances on October 6, 2017 and October 30, 2017, of the second tranche of 60,000,000 shares issuable to Allesch-Taylor pursuant to the acquisition terms, 47,087,125 remain issuable to him by no later than August 31, 2018. As of November 30, 2017, the Company has not granted any stock options and has not recorded any stock-based compensation. Preference Shares and Non-Controlling Interest The Articles of Association of DEPT-UK, pursuant to the Companies Act 2006, authorized DEPT-UK to issue up to 25,000,000 preference shares, par value £1.00 per share (such subsidiary preference shares referred to herein as Preference Shares). Such Preference Shares have no votes and limited distribution rights. Subject to the provisions of the Companies Act 2006, DEPT-UK shall have the right pursuant to Section 687-688 of the Companies Act 2006 to redeem at par the whole or any part of the Preference Shares at any time or times after the date of issue of the said Preference Shares upon giving to DEPT-UK not less than three months previous notice in writing. The Preference Shares, at the discretion of the Board of Director of DEPT-UK, can be purchased at the value they were issued or can be converted into contributed capital. The Preference Shares are accounted for as non-controlling interest. As of November 30, 2017, and August 31, 2017, 1,662,826 and 1,642,826 shares were outstanding, respectively. Of the outstanding shares, 905,826 and 885,826 were issued to related parties, as of November 30, 2017 and August 31, 2017, respectively. DEPT-UK has a non-controlling interest of 0.2%. For the three months ended November 30, 2017, the Company had a non-controlling interest of $281. For the three months ended November 30, 2016, the Company had a non-controlling interest of $26, which was not material therefore not recorded. Acquisition of Tapped and Packed Ltd On November 1, 2017, DEPT-UK entered into the Tapped Acquisition Agreement with Tapped, a United Kingdom corporation. See Note 2. The dollar amount of Preference Shares, as recorded, were recorded to non-controlling interest as part of consolidation. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | Legal Matters From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this report, there were no pending or threatened lawsuits. Lease Commitment We lease office space in Schaumburg, Illinois, pursuant to a lease that is monthly. This facility serves as our corporate office. Future minimum lease payments under leases with DEPT-UK, Tapped, and DEPT-IL, are as follows: 2018 $ 581,351 2019 775,490 2020 778,760 2021 746,502 2022 532,555 Future 1,241,852 Total $ 4,656,510 Note: The above table will change in each future filing due to currency translation as applicable. DEPT-UK has 20 leases, of which one is for the UK administrative office, and 19 operational leases. The Company has one lease in the United States for DEPT-IL. Various leases have break out dates prior to expiration. See Notes 2 and 8. The Company entered into no new leases during the three months ended November 30, 2017. The Company is a primary leaseholder on one lease which it has subleased to the Roastery and is responsible for the payments. Rent expense for the three months ended November 30, 2017 and 2016, was $172,717 and $94,243, respectively. |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 11 - CONCENTRATIONS | Concentration of Credit Risk Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments. The Company places its temporary cash investments with financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) for the United States and the Financial Services Compensation Scheme (FSCS) for the United Kingdom. No amounts exceeded federally insured limits as of November 30, 2017. There have been no losses in these accounts through November 30, 2017. Concentration of Customer The Company has one customer, which, for the three months ended November 30, 2017 and 2016, had sales of $180,626 (£136,436, 11.9% of total revenue) and $101,227 (£78,600, 11.0% of total revenue), respectively. The Company has a contract with the customer that expires in February 2020. |
REVENUE CLASSES
REVENUE CLASSES | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 12 - REVENUE CLASSES | Selected financial information for the Companys operating revenue classes are as follows: Revenues: For the three months ended For the three months ended November 30, 2017 November 30, 2016 Coffee and complementary food products $ 1,341,267 £ 1,013,128 $ 810,214 £ 629,111 Coffee school 993 750 5,184 4,025 Management fees 180,626 136,436 101,227 78,600 Total $ 1,522,886 £ 1,150,314 $ 916,625 £ 711,736 Direct costs of revenue: For the three months ended For the three months ended November 30, 2017 November 30, 2016 Coffee and complementary food products $ 1,172,001 £ 885,273 $ 539,611 £ 418,994 Coffee school 106 80 543 422 Management fees 3,808 2,876 33,088 25,692 Total $ 1,175,915 £ 888,229 $ 573,242 £ 445,108 The acquisition of Tapped, effective November 1, 2017, is reflective in the three months ended November 30, 2017 with revenue from Tapped for one month. |
CAPITAL LEASE OBLIGATIONS
CAPITAL LEASE OBLIGATIONS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 13 - CAPITAL LEASE OBLIGATIONS | The Company leases various assets under capital lease. As of November 30, 2017, and August 31, 2017, capital lease obligations consisted of the following: November 30, 2017 August 31, 2017 Computer equipment $ 57,128 $ 57,128 Office equipment 20,420 20,420 Site equipment and machinery 355,914 355,914 Site furniture, fixtures and fittings 233,669 233,669 Total fixed assets 667,131 667,131 Less: Accumulated depreciation 279,489 240,246 Fixed assets, net $ 387,642 $ 426,885 Aggregate future minimum rentals under capital leases are as follows: 2018 $ 74,934 2019 88,906 2020 65,083 2021 50,564 2022 13,543 Total 293,030 Less: Interest 13,288 Present value of minimum lease payments 279,742 Less: Current portion of capital lease obligations 116,146 Capital lease obligations, net of current portion $ 163,596 Note: The above schedule reflects only items that have payments associated with them. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Nov. 30, 2017 | |
Notes to Financial Statements | |
NOTE 14 - SUBSEQUENT EVENTS | Management has reviewed and evaluated subsequent events through the date on which the current financial statements were available to be issued and did not have any material recognizable subsequent events after November 30, 2017. On December 5, 2017, Borough Capital contributed $25,000 (£18,583) to DEPT-UK, in exchange for 18,583 Preference Shares. On December 14, 2017, Borough Capital contributed $45,000 (£33,488) to the DEPT-UK, in exchange for 33,488 Preference Shares. On January 17, 2018, Borough Capital, in regards to an October 2017 contribution of £175,000 to DEPT-UK, converted the liability into 175,000 Preference Shares. Acquisition of Tapped and Packed Ltd On November 1, 2017, DEPT-UK entered into the Tapped Acquisition Agreement. See Note 2. Pro-Forma Financial Information The following unaudited pro-forma data summarizes the result of the operations for the three months ended November 30, 2017 and 2016 as if the acquisition of Tapped had been completed on September 1, 2016. The pro-forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place on September 1, 2016. For the Three Months Ended November 30, 2017 Pro-forma DOCASA Tapped Adjustments Combined Revenue, net $ 1,318,705 $ 453,300 $ - $ 1,772,005 Operating expenses 1,614,673 538,644 - 2,153,317 Income (loss) from operations (295,968 ) (85,344 ) - (381,312 ) Other income (expense) (6,154 ) (260 ) - (6,414 ) Income before income taxes (302,122 ) (85,604 ) - (387,726 ) Loss attributable to non-controlling interest 281 - - 281 Foreign currency translation gain 103,091 - - 103,091 Net income (loss) $ (198,750 ) $ (85,604 ) $ - $ (284,354 ) Net income (loss) per common share - basic and diluted $ (0.00 ) $ (0.00 ) Weighted average number of common shares outstanding during the period - basic and diluted 150,036,000 150,036,000 For the Three Months Ended November 30, 2016 Pro-forma DOCASA Tapped Adjustments Combined Revenue, net $ 916,625 $ 500,794 $ - $ 1,417,419 Operating expenses 926,457 332,622 - 1,259,079 Loss from operations (9,832 ) 168,172 - 158,340 Other income (expense) (49,014 ) - - (49,014 ) Loss before income taxes (58,846 ) 168,172 - 109,326 Loss attributable to non-controlling interest 26 - - 26 Foreign currency translation gain (7,557 ) - - (7,557 ) Net loss $ (66,377 ) $ 168,172 $ - $ 101,795 Net loss per common share - basic and diluted $ (0.00 ) $ 0.00 Weighted average number of common shares outstanding during the period - basic and diluted 146,800,000 146,800,000 |
NATURE OF BUSINESS AND PRESEN20
NATURE OF BUSINESS AND PRESENTATION (Policies) | 3 Months Ended |
Nov. 30, 2017 | |
Nature Of Business And Presentation Policies | |
Organization | DOCASA, Inc. (the Company, we, us, our, or DOCASA) was incorporated in the State of Nevada on July 22, 2014, under the name of FWF Holdings, Inc. The Company changed its name on August 4, 2016. The Company was originally engaged in the business of commercial production and distribution of hot sauce (see Note 3). On August 4, 2016, the Company changed its year end from July 31 to August 31. On July 8, 2016, the Company experienced a change in control. Atlantik LP (Atlantik), a related party, acquired a majority of the issued and outstanding common stock of the Company in accordance with a stock purchase agreement by and between Atlantik and Nami Shams (the Seller). On the closing date, July 8, 2016, pursuant to the terms of the stock purchase agreement, Atlantik purchased from the Seller 115,000,000 shares of the Companys outstanding restricted common stock for $200,000, representing 75.8% of the Companys outstanding common stock at that time. On September 1, 2016, the Company acquired 99.8% of the voting stock of the Department of Coffee and Social Affairs Limited, a United Kingdom corporation (the DEPT-UK), and the Company agreed to issue DEPT-UKs majority shareholder 170,000,000 shares of the Companys common stock110,000,000 shares initially and 60,000,000 shares at a time determined by the Companys Board of Directors but no later than August 31, 2017, which deadline was subsequently extended to August 31, 2018. Also on September 1, 2016, the Company acquired 115,000,000 shares of the Companys common stock from Atlantik in exchange for issuing Atlantik a promissory note for $320,000, which shares were then cancelled and which note has since been paid in full. As a result of the acquisition and the issuance of the initial 110,000,000 shares of common stock, and the cancellation of the 115,000,000 Atlantik shares, DEPT-UK is now the majority-owned subsidiary of the Company, and the Company experienced a change of control. DEPT-UK formed a wholly-owned subsidiary, Department of Coffee and Internal Affairs Limited (DCIA), on September 11, 2014, as filed with the Registrar of Companies for England and Wales. As of November 30, 2017, DCIA has had no operations or activity. On April 5, 2017, the Company formed Department of Coffee and Social Affairs IL, Inc. (DEPT-IL), an Illinois corporation. On May 18, 2017, the Company formed Department of Coffee and Social Affairs White Space Limited (DEPT-UKWS), as filed with the Registrar of Companies for England and Wales. DEPT-UKWS is a subsidiary of DEPT-UK. For financial reporting purposes, the acquisition of DEPT-UK and the change of control in connection with acquisition represented a reverse merger rather than a business combination, and DEPT-UK is deemed to be the accounting acquirer in the transaction. For the periods subsequent to August 31, 2016, the acquisition is being accounted for as a reverse-merger and recapitalization. DEPT-UK is the acquirer for financial reporting purposes, and the Company (DOCASA, Inc., f/k/a FWF Holdings, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the acquisition are those of DEPT-UK and have been recorded at the historical cost basis of DEPT-UK, and the financial statements after completion of the acquisition include the assets and liabilities of both the Company and DEPT-UK, and the historical operations of DEPT-UK prior to closing and operations of both companies from the closing of the acquisition. On January 2, 2018, with an effective date of November 1, 2017, DEPT-UK acquired Tapped and Packed Ltd (Tapped), an UK company, for a combination of cash and shares of common stock of the Company. See Note 2. Tapped became a subsidiary of DEPT-UK as a result of the transaction. Tapped has four shop locations in the UK which serve coffee and food. |
Nature of Operations | We are currently devoting our efforts to the specialty coffee industry, specifically with company-operated stores. The Company will generate revenue through sales at nineteen existing company-operated coffee shop locations in the UK, with seven more locations under construction. The Company has expanded its operations to the United States and opened its first coffee shop in Chicago, Illinois in October 2017. Our objective is to continue to be recognized as one of the upper tier specialty coffee retail operations. Similar to other leading operators, we sell our proprietary coffee and related products, and complementary food and snacks. The Company, as of August 31, 2017, has discontinued its hot sauce products which had no activity in the year ended August 31, 2017 (see Note 3). Accounting for discontinued operations not required due to immateriality. |
Principles of Consolidation | The consolidated financial statements include the accounts of DOCASA and its subsidiaries, DEPT-UK, DCIA, DEPT-IL and DEPT-UKs subsidiary, DEPT-UKWS. All significant inter-company balances and transactions have been eliminated in consolidation. |
Basis of Presentation | The accompanying unaudited consolidated condensed financial statements of DOCASA have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and done under §240.13(a) of the Securities Act. The results of operations for the interim period ended November 30, 2017 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending August 31, 2018. In the opinion of the Companys management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments, unless otherwise indicated) necessary for a fair presentation of the Companys results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Companys Form 10-K for the year ended August 31, 2017, filed on December 18, 2017 and Managements Discussion and Analysis of Financial Condition and Results of Operations. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance for accounts receivable, estimated lives of intangible and fixed assets, and valuation of share-based payments. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Accounts Receivable | Accounts receivable consisted of amounts due from customers primarily for management fees. The Company considered accounts more than 30 days old to be past due. The Company used the allowance method for recognizing bad debts. When an account was deemed uncollectible, it was written off against the allowance. The Company generally does not require collateral for its accounts receivable. Management has not recorded an allowance for doubtful accounts as of November 30, 2017 or August 31, 2017. |
Inventory | Inventory is recorded at the lower of cost or market and the cost of sales are recorded utilizing the first in first out (FIFO) method. |
Fixed Assets | Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the lease term or the useful life of the leased equipment. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred. |
Impairment of Long-Lived Assets | The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Fair Value of Financial Instruments | The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities. We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. |
Revenue Recognition | The Company recognizes revenue for its services in accordance with Accounting Standards Codification (ASC) 605-10, Revenue Recognition. Under this guidance, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has three primary revenue streams as follows: · Sales of specialty coffee and complementary food products. · Coffee school. · Coffee services. |
Stock-Based Compensation | The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model. |
Advertising | Advertising is expensed as incurred and is included in other general and administrative expenses on the accompanying condensed consolidated statement of operations. For the three months ended November 30, 2017 and 2016 advertising expense was $8,137 and $6,038, respectively. |
Income Taxes | The Company adopted the provisions of ASC 740, Income Taxes. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying condensed consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of November 30, 2017, tax years 2014 - 2017 remain open for IRS audit and tax years 20152017 remain open for HM Revenue & Customs (HMRC) audit. The Company has received no notice of audit from the IRS or HMRC for any of the open tax years. |
Net Earnings (Loss) Per Share | In accordance with ASC 260-10, Earnings Per Share, basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common stock shares outstanding during the period. |
Foreign Currency Translation and Transactions | The British Pound (£) is the functional currency of DEPT-UK and Tapped whereas the financial statements are reported in United States Dollar (USD, $). Assets and liabilities are translated based on the exchange rates at the condensed consolidated balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the period. Equity accounts are translated at historical exchange rates. The resulting translation gain and loss adjustments are accumulated as a component of stockholders equity and other comprehensive income. |
Comprehensive Income (Loss) | The Company reports comprehensive loss and its components in its consolidated financial statements. Comprehensive loss consists of net loss on foreign currency translation adjustments affecting stockholders equity that, under U.S. GAAP, are excluded from net loss. As of November 30, 2017, the exchange rate between U.S. Dollars and British Pounds was US$1.35 = £1.00, and the weighted average exchange rate for the three months ended November 30, 2017 was US$1.32 = £1.00. As of August 31, 2017, the exchange rate between U.S. Dollars and British Pounds was US$1.29 = £1.00. |
Going Concern | The Company has a net loss for the three months ended November 30, 2017 of $273,529 and a working capital deficit as of November 30, 2017 of $1,579,200, and has cash provided by operations of $792,804 for the three months ended November 30, 2017. In addition, as of November 30, 2017, the Company had a stockholders equity and accumulated deficit of $2,315,538 and $3,039,896, respectively. Without further funding, these conditions raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of managements plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements. There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Companys current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary. |
Effect of Recent Accounting Pronouncements | The Company reviews new accounting standards and updates as issued. No new standards or updates had any material effect on these financial statements. The accounting pronouncements and updates issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does believe that some of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to November 30, 2017 through the date these financial statements were issued. In February 2016, the Financial Accounting Standards Board (FASB) issued an ASU on lease accounting. The ASU requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. The ASU is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating the ASU, the Company expects the adoption of the ASU to have a material effect on the Companys financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company expects the ASU to have a material effect on the Companys results of operations and financial position, and the ASU will have no effect on cash flows. ASU 2014-09, Revenue Revenue from Contracts with Customers. In May 2014, the FASB issued a new accounting standard that requires recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. The FASB has also issued several updates to ASU 2014-09. The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the present standards. It also requires additional disclosures. We will adopt the new revenue guidance effective January 1, 2017, by recognizing the cumulative effect of initially applying the new standard as an increase to the opening balance of retained earnings. We expect this adjustment to be less than $100 million, with an immaterial impact to our net income on an ongoing basis. Adoption of the new standard will also result in changes in classification between Revenues, Cost of sales, Non-Financial Services interest income and other income/(loss), net, and Financial Services other income/(loss), net. |
ENTRY INTO A DEFINITIVE AGREE21
ENTRY INTO A DEFINITIVE AGREEMENT (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Entry Into Definitive Agreement Tables | |
Fair values of the assets and liabilities assumed at the acquisition date. | The following table summarizes the consideration given for DEPT-UK and the fair values of the assets and liabilities assumed at the acquisition date. Consideration given: Cash given $ 237,877 Common stock shares given 1,918,125 Total consideration given $ 2,156,002 Fair value of identifiable assets acquired, and liabilities assumed: Cash $ 200,582 Prepaid expense 92,052 Inventory 51,411 Fixed assets, net 73,337 Deposits 119,999 Accrued expenses (195,621 ) Short-term note payable (200,804 ) Director note (168,782 ) Deferred taxes (1,184 ) Total identifiable net liabilities (29,010 ) Goodwill 2,185,012 Total consideration $ 2,156,002 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Inventory Tables | |
Inventory | The inventory is as follows: November 30, August 31, 2017 2017 Consumable products $ 71,915 $ 17,894 Food and drinks 30,262 24,117 Retail products 6,514 5,466 Total inventory $ 108,691 $ 47,477 |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Fixed Assets Tables | |
Fixed assets | The fixed assets are as follows: November 30, August 31, 2017 2017 Computer equipment $ 66,429 $ 62,038 Office equipment 30,722 22,526 Site equipment and machinery 457,134 366,661 Site fit out costs 1,799,750 1,606,067 Site furniture, fixtures and fittings 310,752 236,972 Total fixed assets 2,664,787 2,294,264 Less: Accumulated depreciation 697,795 622,088 Fixed assets, net $ 1,966,992 $ 1,672,176 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Intangible Assets Tables | |
Intangible assets | The intangible assets are as follows: November 30, August 31, 2017 2017 Website development $ 35,488 $ 29,428 Total intangible assets 35,488 29,428 Less: Accumulated amortization 22,803 19,294 Intangible assets, net $ 12,685 $ 10,134 |
Schedule of Finite Lived Intangible Assets Future Amortization Expense | Amortization, based on the currency translation calculation as of the date of this report, for the next five years, is as follows: 2018 $ 7,731 2019 4,954 2020 - 2021 - 2022 - Total $ 12,685 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Notes Payable Tables | |
Notes payable | The Company has notes payable as of November 30, 2017 and August 31, 2017 are as follows: Notes payable - current November 30, 2017 August 31, 2017 Accrued Accrued Principal Interest Total Principal Interest Total Arch Investments $ 2,194 $ - $ 2,194 $ 2,194 $ - $ 2,194 Arch Investments 5,067 - 5,067 5,067 - 5,067 Arch Investments 5,065 - 5,065 5,065 - 5,065 Arch Investments 15,873 - 15,873 15,873 - 15,873 Arch Investments 4,349 - 4,349 4,349 - 4,349 HSBC 112,005 - 112,005 - - - Woodgrove Bank 22,470 - 22,470 - - - Total $ 167,023 $ - $ 167,023 $ 32,548 $ - $ 32,548 Notes payable - non-current November 30, 2017 August 31, 2017 Accrued Accrued Principal Interest Total Principal Interest Total Deij Capital Limited (1) $ 11,417 $ - $ 11,417 $ 70,079 $ - $ 70,079 Woodgrove Bank 68,348 - 68,348 - - - HSBC 289,394 - 289,394 409,718 - 409,718 Total $ 369,159 $ - $ 369,159 $ 479,797 $ - $ 479,797 (1) Related party |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Commitments And Contingencies Tables | |
Future minimum lease payments | Future minimum lease payments under leases with DEPT-UK, Tapped, and DEPT-IL, are as follows: 2018 $ 581,351 2019 775,490 2020 778,760 2021 746,502 2022 532,555 Future 1,241,852 Total $ 4,656,510 |
REVENUE CLASSES (Tables)
REVENUE CLASSES (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Revenue Classes Tables | |
Operating revenue classes | Selected financial information for the Companys operating revenue classes are as follows: Revenues: For the three months ended For the three months ended November 30, 2017 November 30, 2016 Coffee and complementary food products $ 1,341,267 £ 1,013,128 $ 810,214 £ 629,111 Coffee school 993 750 5,184 4,025 Management fees 180,626 136,436 101,227 78,600 Total $ 1,522,886 £ 1,150,314 $ 916,625 £ 711,736 Direct costs of revenue: For the three months ended For the three months ended November 30, 2017 November 30, 2016 Coffee and complementary food products $ 1,172,001 £ 885,273 $ 539,611 £ 418,994 Coffee school 106 80 543 422 Management fees 3,808 2,876 33,088 25,692 Total $ 1,175,915 £ 888,229 $ 573,242 £ 445,108 |
CAPITAL LEASE OBLIGATIONS (Tabl
CAPITAL LEASE OBLIGATIONS (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Capital Lease Obligations Tables | |
Capital lease obligations | November 30, 2017 August 31, 2017 Computer equipment $ 57,128 $ 57,128 Office equipment 20,420 20,420 Site equipment and machinery 355,914 355,914 Site furniture, fixtures and fittings 233,669 233,669 Total fixed assets 667,131 667,131 Less: Accumulated depreciation 279,489 240,246 Fixed assets, net $ 387,642 $ 426,885 |
Capital lease obligations future minimum payment | Aggregate future minimum rentals under capital leases are as follows: 2018 $ 74,934 2019 88,906 2020 65,083 2021 50,564 2022 13,543 Total 293,030 Less: Interest 13,288 Present value of minimum lease payments 279,742 Less: Current portion of capital lease obligations 116,146 Capital lease obligations, net of current portion $ 163,596 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Subsequent Events Tables | |
Schedule of Pro-Forma financial information if acquisition of Tapped had been completed on September 1, 2016 | For the Three Months Ended November 30, 2017 Pro-forma DOCASA Tapped Adjustments Combined Revenue, net $ 1,318,705 $ 453,300 $ - $ 1,772,005 Operating expenses 1,614,673 538,644 - 2,153,317 Income (loss) from operations (295,968 ) (85,344 ) - (381,312 ) Other income (expense) (6,154 ) (260 ) - (6,414 ) Income before income taxes (302,122 ) (85,604 ) - (387,726 ) Loss attributable to non-controlling interest 281 - - 281 Foreign currency translation gain 103,091 - - 103,091 Net income (loss) $ (198,750 ) $ (85,604 ) $ - $ (284,354 ) Net income (loss) per common share - basic and diluted $ (0.00 ) $ (0.00 ) Weighted average number of common shares outstanding during the period - basic and diluted 150,036,000 150,036,000 For the Three Months Ended November 30, 2016 Pro-forma DOCASA Tapped Adjustments Combined Revenue, net $ 916,625 $ 500,794 $ - $ 1,417,419 Operating expenses 926,457 332,622 - 1,259,079 Loss from operations (9,832 ) 168,172 - 158,340 Other income (expense) (49,014 ) - - (49,014 ) Loss before income taxes (58,846 ) 168,172 - 109,326 Loss attributable to non-controlling interest 26 - - 26 Foreign currency translation gain (7,557 ) - - (7,557 ) Net loss $ (66,377 ) $ 168,172 $ - $ 101,795 Net loss per common share - basic and diluted $ (0.00 ) $ 0.00 Weighted average number of common shares outstanding during the period - basic and diluted 146,800,000 146,800,000 |
NATURE OF BUSINESS AND PRESEN30
NATURE OF BUSINESS AND PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | |||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | Jul. 08, 2016 | |
State of incorporation | Nevada | |||
Date of incorporation | Jul. 22, 2014 | |||
Restricted common stock, shares | 115,000,000 | |||
Restricted common stock, value | $ 200,000 | |||
Restricted common stock percentage of total shares | 75.80% | |||
Advertising expense | $ 8,137 | $ 6,038 | ||
Exchange rate | the exchange rate between U.S. Dollars and British Pounds was US$1.35 = £1.00, and the weighted average exchange rate for the three months ended November 30, 2017 was US$1.32 = £1.00. As of August 31, 2017, the exchange rate between U.S. Dollars and British Pounds was US$1.29 = £1.00. | |||
Net income (loss) | $ (273,529) | (58,846) | ||
Working capital deficit | (1,579,200) | |||
Accumulated deficit | (3,039,896) | $ (2,766,367) | ||
Shareholders' equity | 2,235,267 | $ 461,970 | ||
Cash used in operating activities | (792,804) | $ (86,710) | ||
Sep. 1, 2016 [Member] | ||||
Promissory note issued | $ 320,000 | |||
Shares acquired for cancellation | 115,000,000 | |||
Sep. 1, 2016 [Member] | Allesch-Taylor [Member] | ||||
Restricted common stock, shares | 170,000,000 | |||
Business Acquisition, Percentage of Voting Interests Acquired | 99.80% | |||
Initially shares | 110,000,000 | |||
Common stock shares reserved for future issuance | 60,000,000 | |||
Sep. 1, 2016 [Member] | Coffee and Social Affairs Limited [Member] | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 99.80% | |||
Office Equipment [Member] | ||||
Estimated useful lives of assets | 5 years | |||
Computer Equipment [Member] | ||||
Estimated useful lives of assets | 3 years |
ENTRY INTO A DEFINITIVE AGREE31
ENTRY INTO A DEFINITIVE AGREEMENT (Details) - USD ($) | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | |
Consideration given | |||
Cash given | $ (237,877) | ||
Fair value of identifiable assets acquired and liabilities assumed | |||
Cash | 202,133 | $ 93,400 | |
Prepaid expense | 229,040 | 36,270 | |
Fixed assets, net | 1,966,992 | 1,672,176 | |
Deposits | 212,289 | $ 89,989 | |
DEPT UK [Member] | |||
Consideration given | |||
Cash given | 237,877 | ||
Common stock given | 1,918,125 | ||
Total consideration given | 2,156,002 | ||
Fair value of identifiable assets acquired and liabilities assumed | |||
Cash | 200,582 | ||
Prepaid expense | 92,052 | ||
Inventory | 51,411 | ||
Fixed assets, net | 73,337 | ||
Deposits | 119,999 | ||
Accrued expenses | (195,621) | ||
Short-term note payable | (200,804) | ||
Director note | (168,782) | ||
Deferred taxes | (1,184) | ||
Total identifiable net liabilities | (29,010) | ||
Goodwill | 2,185,012 | ||
Total consideration | $ 2,156,002 |
ENTRY INTO A DEFINITIVE AGREE32
ENTRY INTO A DEFINITIVE AGREEMENT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | |
Goodwill | $ 2,185,012 | $ 2,185,012 | |||
Revenue | 204,181 | $ 28,595 | $ 1,522,886 | $ 916,625 | |
Tapped Acquisition Agreement [Member] | |||||
Business acquisition consideration transferred or transferrable, description | Pursuant to the Tapped Acquisition Agreement, Tapped stock was transferred to DEPT-UK on November 1, 2017, in consideration of £175,000 and 1,546,875 shares of common stock of the Company. The £175,000 was paid in October 2017 as a prepayment to the completion date of November 1, 2017. Stefan Allesch-Taylor ("Allesch-Taylor"), Chairman of the Company, utilized his personally owned shares of common stock of the Company, and assigned the 1,546,875 shares (the "Allesch-Taylor Shares") from his ownership to Lilley. In exchange for the use of the Allesch-Taylor Shares, which were provisionally valued at $1,918,125 ("Provisional Share Compensation Value"), the Board of Directors issued Allesch-Taylor 1,325,000 Preference Shares of DEPT-UK. The Provisional Share Compensation Value was determined by the previous day's closing price of $1.24 per share | ||||
Goodwill | $ 2,185,012 | $ 2,185,012 | |||
Richard Lilley [Member] | Tapped Acquisition Agreement [Member] | |||||
Business acquisition capital shares acquired by DEPT-UK | 100 | 100 | |||
Allesch-Taylor [Member] | Tapped Acquisition Agreement [Member] | |||||
Business acquisition consideration transferred, shares issued | 1,546,875 | ||||
Business acquisition consideration transferred, amount | $ 175,000 | ||||
Preference shares of DEPT-UK issued | 1,325,000 | 1,325,000 | |||
Share price used to determine provisional share compensation value | $ 1.24 | $ 1.24 | |||
Provisional share compensation value | $ 1,918,125 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Total inventory | $ 108,691 | $ 47,477 |
Consumable products [Member] | ||
Total inventory | 71,915 | 17,894 |
Food and drinks [Member] | ||
Total inventory | 30,262 | 24,117 |
Retail products [Member] | ||
Total inventory | $ 6,514 | $ 5,466 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Inventory Details Narrative | ||
Total inventory | $ 108,691 | $ 47,477 |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Total fixed assets | $ 2,664,787 | $ 2,294,264 |
Less: Accumulated depreciation | 697,795 | 622,088 |
Fixed assets, net | 1,966,992 | 1,672,176 |
Computer Equipment [Member] | ||
Total fixed assets | 66,429 | 62,038 |
Office Equipment [Member] | ||
Total fixed assets | 30,722 | 22,526 |
Site equipment and machinery [Member] | ||
Total fixed assets | 457,134 | 366,661 |
Site fit out costs [Member] | ||
Total fixed assets | 1,799,750 | 1,606,067 |
Site furniture, fixtures and fittings [Member] | ||
Total fixed assets | $ 310,752 | $ 236,972 |
FIXED ASSETS (Details Narrative
FIXED ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Fixed Assets Tables | ||
Depreciation expense | $ 73,417 | $ 30,784 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Total intangible assets | $ 35,488 | $ 29,428 |
Less: Accumulated amortization | 22,803 | 19,294 |
Intangible assets, net | 12,685 | 10,134 |
Website development [Member] | ||
Total intangible assets | $ 35,488 | $ 29,428 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | Nov. 30, 2017USD ($) |
Intangible Assets Details 1 | |
2,018 | $ 7,731 |
2,019 | 4,954 |
2,020 | |
2,021 | |
2,022 | |
Total | $ 12,685 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Intangible Assets Tables | ||
Amortization expense | $ 607 | $ 1,719 |
INVESTMENTS (Details Narrative)
INVESTMENTS (Details Narrative) - GBP (£) | Jan. 12, 2017 | Aug. 31, 2015 |
Investments Details Narrative | ||
Impaired investments | £ 4,000 | |
Investments | £ 5,000 | |
Ownership of Radio Station Percentage | 5.00% |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Nov. 30, 2017 | Aug. 31, 2017 | |
Arch Investments [Member] | ||
Principal | $ 2,194 | $ 2,194 |
Accrued Interest | ||
Total | 2,194 | 2,194 |
Arch Investments One [Member] | ||
Principal | 5,067 | 5,067 |
Accrued Interest | ||
Total | 5,067 | 5,067 |
Arch Investments Two [Member] | ||
Principal | 5,065 | 5,065 |
Accrued Interest | ||
Total | 5,065 | 5,065 |
Arch Investments Three [Member] | ||
Principal | 15,873 | 15,873 |
Accrued Interest | ||
Total | 15,873 | 15,873 |
Arch Investments Four [Member] | ||
Principal | 4,349 | 4,349 |
Accrued Interest | ||
Total | 4,349 | 4,349 |
HSBC [Member] | ||
Principal | 112,005 | |
Accrued Interest | ||
Total | 112,005 | |
Woodgrove Bank [Member] | ||
Principal | 22,470 | |
Accrued Interest | ||
Total | 22,470 | |
Current [Member] | ||
Principal | 167,023 | 32,548 |
Accrued Interest | ||
Total | $ 167,023 | $ 32,548 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2017 | Aug. 31, 2017 | ||
Deij Capital Limited (1) [Member] | |||
Principal | [1] | $ 11,417 | $ 70,079 |
Accrued Interest | [1] | ||
Total | [1] | 11,417 | 70,079 |
Woodgrove Bank [Member] | |||
Principal | 68,348 | ||
Accrued Interest | |||
Total | 68,348 | ||
HSBC [Member] | |||
Principal | 289,394 | 409,718 | |
Accrued Interest | |||
Total | 289,394 | 409,718 | |
Non current [Member] | |||
Principal | 369,159 | 479,797 | |
Accrued Interest | |||
Total | $ 369,159 | $ 479,797 | |
[1] | Related party |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Jul. 01, 2014 | Jul. 28, 2016 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2017 | Jan. 31, 2017 | Jun. 30, 2016 | Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jul. 31, 2014 |
Accrued interest | $ 587,812 | $ 59,561 | |||||||||
Notes payable - current | 167,023 | 139,419 | |||||||||
Notes payable - non current | 11,417 | 372,926 | |||||||||
Deij Capital [Member] | |||||||||||
Debt amount | $ 171,437 | ||||||||||
Debt Instrument, Term | 3 years | ||||||||||
Balance due converted into shares | $ 63,990 | $ 179,534 | |||||||||
Converted shares | 51,500 | 135,464 | |||||||||
Interest rate | 0.00% | ||||||||||
Outstanding principal | 11,417 | 70,079 | |||||||||
Accrued interest | 0 | 0 | |||||||||
Nami Shams [Member] | |||||||||||
Debt amount | $ 2,194 | ||||||||||
Outstanding principal | 2,194 | 2,194 | |||||||||
HSBC [Member] | |||||||||||
Debt amount | $ 437,992 | ||||||||||
Debt Instrument, Term | 4 years | ||||||||||
Interest rate | 4.50% | ||||||||||
Outstanding principal | 401,399 | 409,718 | |||||||||
Initially drawn | $ 115,767 | ||||||||||
Notes payable - current | 112,006 | ||||||||||
Notes payable - non current | 289,393 | ||||||||||
Nami Shams Four [Member] | |||||||||||
Debt amount | $ 4,349 | ||||||||||
Outstanding principal | 4,349 | 4,349 | |||||||||
Nami Shams Three [Member] | |||||||||||
Debt amount | $ 15,873 | ||||||||||
Outstanding principal | 15,873 | 15,873 | |||||||||
Nami Shams Two [Member] | |||||||||||
Debt amount | $ 5,065 | ||||||||||
Outstanding principal | 5,065 | 5,065 | |||||||||
Nami Shams One [Member] | |||||||||||
Debt amount | $ 5,067 | ||||||||||
Outstanding principal | $ 5,067 | $ 5,067 |
RELATED PARTIES TRANSACTIONS (D
RELATED PARTIES TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | May 31, 2017 | Feb. 28, 2017 | Jun. 30, 2016 | |
Bad debt expense | $ 2,952 | $ 423,680 | ||||
Net receivable and payable expense | 3,012 | 417,436 | ||||
Cash advances receivable | 351,407 | 328,703 | ||||
The Roastery Department [Member] | ||||||
Sales | 88,117 | $ 0 | ||||
Purchases of cakes, value | $ 85,888 | 40,451 | ||||
Allesch-Taylor [Member] | October 6, 2017 [Member] | ||||||
Additionally shares for directors | 8,976,875 | |||||
Allesch-Taylor [Member] | October 30, 2017 [Member] | ||||||
Additionally shares for directors | 1,000,000 | |||||
Deij Capital Limited (1) [Member] | ||||||
Balance due converted into shares | $ 63,990 | |||||
Converted shares | 51,500 | |||||
Dee light [Member] | ||||||
Purchases of cakes, value | $ 11,150 | $ 28,235 | ||||
Ownership percentage | 50.00% | |||||
Due to related party | $ 20,598 | 54,448 | ||||
Roastery Department [Member] | ||||||
Receivables to related party | 3,012 | 1,198,811 | ||||
Lopez [Member] | Chief Executive Officer [Member] | ||||||
Payables to related party | 898 | 893 | ||||
Deij Capital [Member] | ||||||
Balance due converted into shares | $ 63,990 | $ 179,534 | ||||
Converted shares | 51,500 | 135,464 | ||||
Deij Capital [Member] | Director and Owner [Member] | ||||||
Payables to related party | 11,417 | 70,079 | ||||
Allesch-Taylor [Member] | Chairman [Member] | ||||||
Payables to related party | $ 54,086 | $ 41,174 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | |
Common stock, shares authorized | 250,000,000 | 250,000,000 | |
Preference shares, Outstanding | 1,662,826 | 1,642,826 | |
Outstanding preference shares issued for related party | 905,826 | 885,826 | |
Non- controlling interest rate | 0.20% | ||
Non- controlling interest | $ 26 | $ 281 | |
Allesch-Taylor [Member] | October 30, 2017 [Member] | |||
Additionally shares for directors | 1,000,000 | ||
Allesch-Taylor [Member] | October 6, 2017 [Member] | |||
Additionally shares for directors | 8,976,875 | ||
Allesch-Taylor [Member] | |||
Acquired shares | 47,087,125 | ||
Common stock shares reserved for future issuance | 60,000,000 |
COMMITMENTS AND CONTINGENCIES46
COMMITMENTS AND CONTINGENCIES (Details) | Nov. 30, 2017USD ($) |
Commitments And Contingencies Details | |
2,018 | $ 581,351 |
2,019 | 775,490 |
2,020 | 778,760 |
2,021 | 746,502 |
2,022 | 532,555 |
Future | 1,241,852 |
Total | $ 4,656,510 |
COMMITMENTS AND CONTINGENCIES47
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Commitments And Contingencies Details | ||
Rent expense | $ 172,717 | $ 94,243 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Concentrations Details Narrative | ||
Sales revenue | $ 180,626 | $ 101,227 |
Sale revenue, percentage | 11.90% | 11.00% |
Contract expiry date | Feb. 28, 2020 |
REVENUE CLASSES (Details)
REVENUE CLASSES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | |
Revenues | $ 204,181 | $ 28,595 | $ 1,522,886 | $ 916,625 |
Direct costs of revenue | 1,175,915 | 573,242 | ||
Coffee and complementary food products [Member] | ||||
Revenues | 1,341,267 | 810,214 | ||
Direct costs of revenue | 1,172,001 | 539,611 | ||
Coffee school [Member] | ||||
Revenues | 993 | 5,184 | ||
Direct costs of revenue | 106 | 543 | ||
Management fees [Member] | ||||
Revenues | 180,626 | 101,227 | ||
Direct costs of revenue | $ 3,808 | $ 33,088 |
CAPITAL LEASE OBLIGATIONS (Deta
CAPITAL LEASE OBLIGATIONS (Details) - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Total fixed assets | $ 2,664,787 | $ 2,294,264 |
Less: Accumulated depreciation | 697,795 | 622,088 |
Fixed assets, net | 1,966,992 | 1,672,176 |
Computer Equipment [Member] | ||
Total fixed assets | 66,429 | 62,038 |
Office Equipment [Member] | ||
Total fixed assets | 30,722 | 22,526 |
Site equipment and machinery [Member] | ||
Total fixed assets | 457,134 | 366,661 |
Site furniture, fixtures and fittings [Member] | ||
Total fixed assets | 310,752 | 236,972 |
Capital Lease Obligations [Member] | ||
Total fixed assets | 667,131 | 667,131 |
Less: Accumulated depreciation | 279,489 | 240,246 |
Fixed assets, net | 387,642 | 426,885 |
Capital Lease Obligations [Member] | Computer Equipment [Member] | ||
Total fixed assets | 57,128 | 57,128 |
Capital Lease Obligations [Member] | Office Equipment [Member] | ||
Total fixed assets | 20,420 | 20,420 |
Capital Lease Obligations [Member] | Site equipment and machinery [Member] | ||
Total fixed assets | 355,914 | 355,914 |
Capital Lease Obligations [Member] | Site furniture, fixtures and fittings [Member] | ||
Total fixed assets | $ 233,669 | $ 233,669 |
CAPITAL LEASE OBLIGATIONS (De51
CAPITAL LEASE OBLIGATIONS (Details 1) - USD ($) | Nov. 30, 2017 | Aug. 31, 2017 |
Capital Lease Obligations Details 1 | ||
2,018 | $ 74,934 | |
2,019 | 88,906 | |
2,020 | 65,083 | |
2,021 | 50,564 | |
2,022 | 13,543 | |
Total | 293,030 | |
Less: Interest | 13,288 | |
Present value of minimum lease payments | 279,742 | |
Less: Current portion of capital lease obligations | 116,146 | $ 116,146 |
Capital lease obligations, net of current portion | $ 163,596 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | |
Revenue, net | $ 204,181 | $ 28,595 | $ 1,522,886 | $ 916,625 |
Income (loss) from operations | (267,373) | (9,832) | ||
Income before income taxes | (273,529) | (58,846) | ||
Loss attributable to non-controlling interest | 281 | 26 | ||
Net income (loss) | (273,529) | (58,846) | ||
Pro-forma Adjustments [Member] | ||||
Revenue, net | ||||
Operating expenses | ||||
Income (loss) from operations | ||||
Other income (expense) | ||||
Income before income taxes | ||||
Loss attributable to non-controlling interest | ||||
Foreign currency translation gain | ||||
Net income (loss) | ||||
Combined [Member] | ||||
Revenue, net | 1,772,005 | 1,417,419 | ||
Operating expenses | 2,153,317 | 1,259,079 | ||
Income (loss) from operations | (381,312) | 158,340 | ||
Other income (expense) | (6,414) | (49,014) | ||
Income before income taxes | (387,726) | 109,326 | ||
Loss attributable to non-controlling interest | 281 | 26 | ||
Foreign currency translation gain | 103,091 | (7,557) | ||
Net income (loss) | $ (284,354) | $ 101,795 | ||
Net income (loss) per common share - basic and diluted | $ 0 | $ 0 | ||
Weighted average number of common shares outstanding during the period - basic and diluted | 150,036,000 | 146,800,000 | ||
DOCASA [Member] | ||||
Revenue, net | $ 1,318,705 | $ 916,625 | ||
Operating expenses | 1,614,673 | 926,457 | ||
Income (loss) from operations | (295,968) | (9,832) | ||
Other income (expense) | (6,154) | (49,014) | ||
Income before income taxes | (302,122) | (58,846) | ||
Loss attributable to non-controlling interest | 281 | 26 | ||
Foreign currency translation gain | 103,091 | (7,557) | ||
Net income (loss) | $ (198,750) | $ (66,377) | ||
Net income (loss) per common share - basic and diluted | $ 0 | $ 0 | ||
Weighted average number of common shares outstanding during the period - basic and diluted | 150,036,000 | 146,800,000 | ||
Tapped [Member | ||||
Revenue, net | $ 453,300 | $ 500,794 | ||
Operating expenses | 538,644 | 332,622 | ||
Income (loss) from operations | (85,344) | 168,172 | ||
Other income (expense) | (260) | |||
Income before income taxes | (85,604) | 168,172 | ||
Loss attributable to non-controlling interest | ||||
Foreign currency translation gain | ||||
Net income (loss) | $ (85,604) | $ 168,172 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Borough Capital [Member] - USD ($) | Dec. 14, 2017 | Dec. 05, 2017 | Jan. 17, 2018 |
Proceeds from issuance of preferred stock | $ 45,000 | $ 25,000 | $ 175,000 |
Preferred stock, shares issued | 33,488 | 18,583 | 175,000 |