SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2015
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
| Nevada | 20-2000871 |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
| 950 - 1130 West Pender Street, Vancouver, BC | V6E 4A4 |
| (Address of principal executive offices) | (Zip Code) |
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
[ ] YES [X] NO
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
[ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
44,553,286 common shares issued and outstanding as of December 22, 2015
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements.
Our unaudited interim consolidated financial statements for the three month period ended November 30, 2015 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. Dollars)
| November 30 | August 31 | ||||
| 2015 | 2015 | ||||
| (Unaudited) | (Audited) | ||||
ASSETS | ||||||
| ||||||
Current | ||||||
Cash and cash equivalents | $ | 84,031 | $ | 260,075 | ||
Accounts receivable | 34,833 | 31,382 | ||||
Inventory | 187,833 | 167,986 | ||||
Prepaid expenses and deposit | 149,493 | 215,290 | ||||
| 456,190 | 674,733 | ||||
| ||||||
Property, plant and equipments | 2,939 | - | ||||
Patent | 36,989 | 36,989 | ||||
| ||||||
TOTAL ASSETS | $ | 496,118 | $ | 711,722 | ||
| ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| ||||||
LIABILITIES | ||||||
| ||||||
Current | ||||||
Accounts payable and accrued liabilities | $ | 69,725 | $ | 33,073 | ||
Due to a related party (Note 10) | 107,665 | 22,052 | ||||
| ||||||
TOTAL LIABILITIES | 177,390 | 55,125 | ||||
| ||||||
STOCKHOLDERS' EQUITY | ||||||
| ||||||
Share Capital | ||||||
Authorized: 200,000,000 common voting shares with a par value of $0.001 per share Issued and outstanding: 39,952,984 common shares at November 30, 2015 and 39,852,984 common shares at August 31, 2015 | 39,952 | 39,852 | ||||
| ||||||
Additional paid-in capital | 10,856,219 | 10,818,446 | ||||
Shares to be issued | 36,000 | - | ||||
Deficit | (10,468,357 | ) | (10,085,889 | ) | ||
Equity attributable to shareholders of the Company | 463,814 | 772,409 | ||||
Non-Controlling Interest | (145,086 | ) | (115,812 | ) | ||
Total Stockholders' Equity | 318,728 | 656,597 | ||||
| ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 496,118 | $ | 711,722 |
The accompanying notes are an integral part of these consolidated financial statements.
F-1
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
| Quarter Ended | |||||
| November 30 | November 30 | ||||
| (Unaudited) | (Unaudited) | ||||
| ||||||
| 2015 | 2014 | ||||
Revenue | ||||||
Sales | 10,787 | - | ||||
Cost of Goods Sold | ||||||
Cost of Goods Sold | 14,383 | - | ||||
| 14,383 | - | ||||
| ||||||
Gross profit (loss) | (3,596 | ) | - | |||
| ||||||
Expenses | ||||||
Accounting and audit | 50,630 | 34,000 | ||||
Insurance | 1,567 | 1,518 | ||||
Advertising and promotions | 99,771 | 47,111 | ||||
Bank charges and exchange (gain)loss | 2,514 | (11,488 | ) | |||
Stock Based Compensation | 28,410 | - | ||||
Consulting | 157,461 | 155,603 | ||||
Fees and Dues | 14,529 | 11,647 | ||||
Interest expense from loan payable (note 6,8) | 77 | 31,544 | ||||
Legal and professional | 4,872 | 24,364 | ||||
Office and miscellaneous | 4,045 | 5,624 | ||||
Research and Development | 1,978 | 48,040 | ||||
Rent | 6,375 | 28,106 | ||||
Telephone | 2,130 | 1,342 | ||||
Travel | 22,323 | 5,662 | ||||
MMJ expense | - | 15,000 | ||||
Write-down of inventory | 11,464 | - | ||||
| 408,146 | 398,073 | ||||
(Loss) for the period before other income | (411,742 | ) | (398,073 | ) | ||
Income (Loss) from discontinued operations | - | 48,918 | ||||
| ||||||
Net (loss) for the period | (411,742 | ) | (349,155 | ) | ||
Net (loss) attributable to: | ||||||
Common Shareholders | (382,468 | ) | (347,249 | ) | ||
Non-Controlling Interest | (29,274 | ) | (1,906 | ) | ||
Basic and diluted (loss) per share | (0.01 | ) | (0.01 | ) | ||
Weighted average number of common shares outstanding | ||||||
- Basic and diluted | 39,873,532 | 23,369,040 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
| Quarter Ended | |||||
| November 30 | November 30 | ||||
| (Unaudited) | (Audited) | ||||
| ||||||
| 2015 | 2014 | ||||
Cash flows used in operating activities | ||||||
Net (loss) for the period | $ | (411,742 | ) | (398,073 | ) | |
Income (loss) from discontinued operations | - | 48,918 | ||||
Net (loss) from operations | (411,742 | ) | (349,155 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Consulting - Stock based compensation | 37,873 | - | ||||
Amortization | 155 | - | ||||
Write-down of inventory | 11,464 | - | ||||
MMJ Joint Venture | - | 15,000 | ||||
Other non-cash items | - | 48,040 | ||||
Change in operating assets and liabilities: | ||||||
(Increase)/Decrease in accounts receivable | (3,451 | ) | 21,669 | |||
(Increase)/Decrease in inventory | (31,311 | ) | (18,800 | ) | ||
(Increase)/ Decrease in prepaid expenses and deposit | 65,797 | 94,187 | ||||
Increase in accounts payable and accrued liabilities | 122,265 | 15,845 | ||||
Net cash used in operating activities | (208,950 | ) | (173,214 | ) | ||
| ||||||
Cash flows from investing activities | ||||||
Property, plant and equipments | (3,094 | ) | - | |||
Net cash from investing Activities | (3,094 | ) | - | |||
| ||||||
Cash flows from financing activities | ||||||
Payments of loan payable | - | (776,936 | ) | |||
Proceeds from private placement, convertible debt, options | 36,000 | 0 | ||||
Liabilities for sale | - | 678,193 | ||||
Net cash from financing Activities | 36,000 | (98,743 | ) | |||
| ||||||
Increase (Decrease) in cash and cash equivalents | (176,044 | ) | (271,957 | ) | ||
Cash and cash equivalents, beginning of year | 260,075 | 703,030 | ||||
Cash and cash equivalents, end of year | $ | 84,031 | 431,073 | |||
Supplemental information of cash flows: | ||||||
Interest paid in cash | $ | - | 165,790 | |||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(Expressed in U.S. Dollars)
| COMMON STOCK | ||||||||||||||||||||
| ADDITIONAL | TOTAL | |||||||||||||||||||
| PAID-IN | SHARES TO | STOCKHOLDERS' | ||||||||||||||||||
| SHARES | AMOUNT | CAPITAL | BE ret/issued | DEFICIT | NCI | EQUITY | ||||||||||||||
| |||||||||||||||||||||
Balance, August 31, 2014 | 34,249,690 | 34,249 | 10,033,438 | (35,200 | ) | ||||||||||||||||