| Nature of Business and Presentation | 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 Company’s outstanding restricted common stock for $200,000, representing 75.8% of the Company’s outstanding
common stock at that time. On September 1, 2016, the Company 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-UK’s majority shareholder 170,000,000 shares of the Company’s common stock—110,000,000
shares initially and 60,000,000 shares at a time determined by the Company’s Board of Directors but no later than August
31, 2017, which deadline was subsequently extended to August 31, 2018. Also, on September 1, 2016, the Company acquired 115,000,000
shares of the Company’s common stock from Atlantik in exchange for issuing Atlantik a promissory note for $320,000, which
shares were then cancelled 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 March 31, 2018, 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. On February 23, 2018, the Board of Directors
determined to change the Company’s fiscal year end to December 31 from August 31. The Company believes this change will benefit
the Company by aligning its reporting periods to be more consistent with peer coffee companies. 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, with three
more locations under construction. 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 or subsequently. Accounting for discontinued operations not required due to immateriality. Principles of Consolidation The consolidated financial statements
include the accounts of DOCASA and its subsidiaries, DEPT-UK, DCIA, DEPT-IL and DEPT-UK’s subsidiaries, Tapped and 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 March 31, 2018 shown in this report are not necessarily indicative of results to be
expected for the full fiscal year ending December 31, 2018. In the opinion of the Company’s management, the information contained
herein reflects all adjustments (consisting of normal recurring adjustments, unless otherwise indicated) necessary for a fair presentation
of the Company’s results of operations, financial position and cash flows. The unaudited interim financial statements should
be read in conjunction with the audited financial statements in the Company’s Form 10-K for the year ended August 31, 2017,
filed on December 18, 2017 and Management’s 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 March 31, 2018 or December 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 In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606). This update provides a comprehensive new revenue recognition model that requires
a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration
it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature,
amount, timing and uncertainty of revenue and cash flows arising from customer contracts. We have adopted this update. We do not
believe this guidance will impact the recognition of our primary source of revenue from company-owned coffee shops. The adoption
of this guidance did not have a material impact on our consolidated financial statements. 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 March 31, 2018 and February 28, 2017 advertising expense was $164 and $20,409, 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 March 31, 2018, tax years 2014 - 2017 remain open for IRS audit
and tax years 2015–2017 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. The Company does not currently have any potential
dilutive securities outstanding as of March 31, 2018 and February 28, 2017. 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 March 31, 2018, the exchange
rate between U.S. Dollars and British Pounds was US$1.40 = £1.00, and the weighted average exchange rate for the three months
ended March 31, 2018 was US$1.38 = £1.00. As of December 31, 2017, the exchange rate between U.S. Dollars and British Pounds
was US$1.35 = £1.00. Going Concern The Company had net income for the three
months ended March 31, 2018 of $9,657 and a working capital deficit as of March 31, 2018 of $1,222,717, and has cash provided by
operations of $148,786 for the three months ended March 31, 2018. In addition, as of March 31, 2018, the Company had a stockholders’
deficit and accumulated deficit of $2,218,332 and $2,473,251, respectively. Without further funding, these conditions raise substantial
doubt about the Company’s ability to continue as a going concern. The accompanying financial statements
have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization
of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations
is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity
markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company
were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying
value or the fair value estimates reflected in the balances set out in the preparation of the financial statements. There can be no assurances that the
Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations.
The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and
liabilities that might be necessary. Based on the Company’s current resources, the Company will not be able to continue to
operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund
its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets,
if necessary. Effect of Recent Accounting Pronouncements The Company reviews new accounting standards
and updates as issued. No new standards or updates had any material effect on these 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 March
31, 2018 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 Company’s 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 Company’s results of operations and financial position, and the ASU will have no effect on
cash flows. ASU 2014-09, Revenue – Revenue
from Contracts with Customers. In May 2014, the FASB issued a new accounting standard that requires recognition of revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect
to be entitled in exchange for those goods or services. The FASB has also issued several updates to ASU 2014-09. The new standard
supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the present standards.
It also requires additional disclosures. We adopted 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. The effect of the adoption
was immaterial, 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 and Direct costs of revenue. |
