Notes to Financial Statements
April 30, 2020
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS
Organization and Description of Business
Cannagistics, Inc. (Formerly FIGO Ventures,
Inc., formerly Precious Investments, Inc.) (‘The Company’) was incorporated under the laws of the State of Nevada on
May 26, 2004. The Company was an Exploration Stage Company with the principle business being the acquisition and exploration of
resource properties.
The Company had allowed its charter with the
state of Nevada to be revoked by the Secretary of State for failure to file the required annual lists and pay the required annual
fees. Its last known officers and directors reflected in the records of the Secretary of State were unresponsive or stated they
were no longer involved with the Company. The purported replacement officers and directors were unresponsive.
On September 14, 2012, NPNC Management, LLC
filed a petition in the Eighth Judicial District Court in Clark County, Nevada and was appointed custodian of the Company on January
15, 2012.
On October 24, 2012, the interim board authorized
the sale of 55,000,000 (2,200,000 split adjusted) shares of common stock for $6,000 to NPNC Management, LLC, in a private placement
transaction exempt from the Securities Act of 1933, as amended, pursuant to section 4(2) thereof and the rules and regulations
promulgated there under.
On March 1, 2017, the Company then entered
into a joint venture agreement with Eddeb Management (“Eddeb”). The purpose of the joint venture is to build a fund
for the purpose of trading in precious gems, notably, colored diamonds.
On November 16, 2017, the Company entered
into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with American Freight Xchange, Inc.,
a privately held New York corporation (“American Freight”), and Shipzooka Acquisition Corp. (“Shipzooka Sub”),
a newly formed wholly-owned Nevada subsidiary of Precious Investments, Inc. In connection with the closing of this merger transaction,
Shipzooka Sub merged with and into American Freight (the “Merger”) on December 5, 2017, with the filing of Articles
of Merger with the Nevada Secretary of State and Certificate of Merger with the New York Division of Corporations.
The transaction resulted in the Company acquiring
Subsidiary by the exchange of all of the outstanding shares of Subsidiary for 1,000,000 newly issued Series C Preferred shares
of stock, $0.001 par value (the “Preferred Stock”) of Parent which have conversion and voting rights of 72.5 votes
for each share, representing approximately 90.2% of the voting rights
For accounting purposes, the transaction was
treated as a reverse merger since the acquired entity now forms the basis for operations and the transaction resulted in a change
in control, with the acquired company electing to become the successor issuer for reporting purposes. The accompanying financial
statements have been prepared to reflect the assets, liabilities and operations of American Freight Xchange, Inc. exclusive of
Precious Investments, Inc since all predecessor operations were discontinued.
As part of the transaction, amounts due to
former officers were forgiven, with the balances recorded as Contributed Capital. For equity purposes, accumulated deficit shown
are those American Freight Xchange, Inc. Shipzooka Acquisition Corp. is a dormant corporation.
Cannagistics, Inc., also known as Precious Investments
Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
On July 23, 2018 the Company amended the name
of its subsidiary, KRG Logistics, Inc., to Global3pl, Inc. (an Ontario corporation).
On September 4, 2018 the Company incorporated
Cannagistics, Inc., in the province of Ontario, Canada. This is intended to be a possible new line of business for the Company
but is dormant at this time.
On April 17, 2019, we filed Articles of Merger
with the Secretary of State of Nevada in order to effectuate a merger with our wholly owned subsidiary, Cannagistics, Inc. Shareholder
approval was not required under Section 92A.180 of the Nevada Revised Statutes. As part of the merger, our board of directors authorized
a change in our name to “Cannagistics, Inc.” and our Articles of Incorporation have been amended to reflect this name
change.
On September 26, 2019, the Board of Directors approved the registered
spinout of its Global3pl, Inc., (a New York corporation) (“Global3pl”) subsidiary. Global3pl is a logistics technology
provider, along with the American Freight Xchange and UrbanX Platforms that have been under development by the Company.
For the spinout, the Board of Directors
declared a stock dividend for all shareholders, with a record date of October 10, 2019. For every 50 shares of common stock of
the Company, all shareholders of record on the record date will receive one share of common stock in Global3pl. Global3pl planned
to file a registration statement as part of its raise of capital to complete the development of American Freight Xchange, a North
American freight broker-driven 3pl network to handle the management of long haul LTL (less than truckload), and specialty freight
(white glove) services and Urbanx, a North American network of rush-messenger local trucking services for forward and reverse
last mile delivery (including white glove service).
However, on March 18, 2020, the Board of Directors resolved
to reverse its prior decision to spin-off Global3pl, Inc. and to instead continue with the development of its logistical operations.
The reversal came in the midst of performing the year-end audit. Because the audit was delayed, the Company continued its investment
in time and money in the development of the platforms mentioned. The decision to retain Global3pl also resulted from the design
to establish a Malta Project, and the change of focus to Supply Chain Management. With this project at the forefront, the board
determined that continued financial support for Global3pl was warranted. The Global3pl and AFX software and operating system are
expected to serve as the platform to which the Canangistics Supply Chain Management and Operating System will be based. Therefore,
the board decided to retain Global3pl and not spin off the company so that it may develop our SAAS (Service as a Software) system.
Despite the record date set for the spin-off on October 10, 2019, there were no shares of Global3pl tendered to the shareholders
of Cannagistics to complete the spin off transaction.
Effective October 1, 2019, the Company suspended operations of its
subsidiary Global3pl, Inc., formerly known as KRG Logistics, Inc., (an Ontario corporation), suspended future operations related
to the operations in Mississauga, Ontario. It is in the process of collecting accounts receivables still due and working on a plan
to pay its payables. It has entered into an agreement with 10451029 Canada Inc., d/b/a Reliable Logistics, for the assignment and
of the assets of Global3pl, Inc., (an Ontario Corporation). The transaction was completed on November 6, 2019. The Company anticipates
formally liquidating and dissolving the subsidiary in the next fiscal Quarter. This is a separate corporation from Global3pl, Inc.
(A New York corporation).
Current Projects in Development
Malta Project
The Company plans to become a complete end to end supply chain
management company focused on serving the pharmaceutical, OTC medical, nutraceutical, cosmetic, and CBD/Hemp-related (and other)
product industries as a gateway for products to penetrate the USA, E.U., Colombia and Canada marketplace through GMP certified
manufacturing facilities in Baton Rouge Malta, Bogotá, and Toronto. Currently, we have no GMP certified manufacturing facilities
in these areas or anywhere. We are developing plans to source production, or to joint venture with existing facilities, or potentially
to acquire or build GMP Certified facilities in those areas. These developing plans include seeking out already existing facilities
currently in operation, either already GMP Certified or willing to become GMP Certified, as well as preliminary discussions with
potential joint venture partners. We are also in the preliminary planning stages regarding the possibility of obtaining the license
to operate in Malta. While no specific plans have been finalized, the Company is continuing to pursue all options. Combining the
production through these facilities and compliance services with our proprietary information and transactional SAAS (Software
as a Service) platform (being developed by Corengine for our Global3PL, Inc. subsidiary), Cannagistics, Inc. plans to offers its
clients a true turn-key supply chain information and management platform.
With the current situation related to the COVID-19 pandemic,
our developmental plans to seek out existing GMP facilities have been delayed by the inability to travel. Regardless, we have
been able to conduct some due diligence in our search and we plan to conduct site visits and other due diligence once travel is
permitted. The Company believes as the ability to travel once again becomes possible, specifically including internationally travel,
that our above plans can be better implemented in locating suitable facilities.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
To
serve the EU market, we would like to have a GMP facility in Malta that will focus on
cosmetics, pharmaceutical, nutraceutical or “bioceutical” and medicinal products
for our clients, and plans to provide end to end tracking, manufacturing and testing.
We plan to have this Malta lab cater to customers in the EU. We also plan to have other
facilities that will cover our target customers in the US, Canada and Columbia in Baton
Rouge, Toronto and Bogotá, respectively.
Initially, the products we intend to focus
on are skin care and anti-aging creams and other over the counter products, and subsequently seeking to add products with hemp-based
application. Our services would include the production, under their requirements, distribution and handling of orders as a third-party.
We have discussed the plan to create the
Malta facility and other facilities with potential customers for products manufactured at these facilities. We have received positive
feedback on the initiative and commitments from at least two clients to which we plan to sell products.
Manufacturing areas description:
We have no manufacturing plant or GMP facilities
at the present time. As we continue our search to find suitable facilities, we believe that we will need to have the following
areas for the production process, which will implement the safety protocols required for the project to be developed.
Area of receipt: Area of the property that
has been destined for the receipt of the raw material and supplies that arrives for the manufacturing process.
Raw material area: Warehouse equipped with
the security measures required for the storage of the raw material.
Production and manufacturing area: Sector where
the manufacturing process will be carried out in which the transforming plant will be in order to obtain the final product.
Reagents and supplies area: Warehouse equipped
with the security measures required for the storage of reagents and supplies.
Solid waste area: Sector destined for the storage
of solid waste produced during the manufacturing process.
Finished product area: Warehouse equipped with
the security measures required for the storage of the finished product.
Dispatch area: Sector from where the process
of dispatch and delivery of the finished product to its final recipient will take place
Administrative area: Sector of the factory
where administrative, accounting and security activities will be developed.
Global3pl, Inc (New York Corporation)
Global 3PL, Inc. (NY) is a logistics subsidiary
focused on the development of a SaaS platform serving the just-in-time warehouse inventory & distribution
industry, as well as general and special commodities segment of the North American freight industry. It intends to operate three
integrated brands: AFX, G3PL, and Urban X
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Principles of consolidation
The consolidated financial statements include
the accounts of Cannagistics, Inc. and its wholly owned subsidiaries American Freight Xchange, Inc and Global3pl, Inc. (Ontario),
formerly known as KRG Logistics, Inc. All significant inter-company transactions and balances have been eliminated.
Basis of Presentation
We have summarized our most significant accounting
policies for the fiscal period ended July 31, 2019.
Unaudited Consolidated Interim Financial Statements
These unaudited condensed consolidated interim
financial statements have been prepared on the same basis as the annual financial statement and should be read in conjunction with
those annual financial statements filed on Form 10-K for the year ended July 31, 2019. In the opinion of management, these unaudited
condensed consolidated interim
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
financial statements reflect adjustments, necessary to present
fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations
for such periods are not necessarily indicative of the results for a full year or for any future period.
Unaudited Consolidated Interim Financial Statements
These unaudited condensed consolidated interim
financial statements have been prepared on the same basis as the annual financial statement and should be read in conjunction with
those annual financial statements filed on Form 10-K for the year ended July 31, 2019. In the opinion of management, these unaudited
condensed consolidated interim financial statements reflect adjustments, necessary to present fairly the Company’s financial
position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily
indicative of the results for a full year or for any future period.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting principles 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 the financial statements
and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Income Taxes
The Company accounts for income taxes under
ASC 740 "Income Taxes," which codified SFAS 109, "Accounting for Income Taxes" and FIN 48 “Accounting
for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” Under the asset and liability method
of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred
tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
Derivative Financial Instruments
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks.
The Company reviews the terms of convertible
loans, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including
embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument.
Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants to employees
and non-employees in connection with consulting or other services. These options or warrants may, depending on their terms, be
accounted for as derivative instrument liabilities, rather than as equity.
Derivative financial instruments are initially
measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at fair value and then re-valued at each reporting date, with changes in the fair value reported as charges
or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities
exceed the total proceeds received an immediate charge to income is recognized in
order to initially record the derivative instrument liabilities at their fair value.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
The discount from the face value of the convertible
debt instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated
rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the
effective interest method.
The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any
previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative
instrument could be required within twelve months of the balance sheet date.
Fair value of financial instruments
The Company’s financial instruments consist
of its liabilities. The carrying amount of payables and the loan payable – related party approximate fair value because of
the short-term nature of these items. The promissory notes, and convertible notes payables are measured at amortized cost using
the effective interest method, which approximates fair value due to the relationship between the interest rate on long-term debt
and the Company’s incremental risk adjusted borrowing rate.
Accounts receivable and allowance for doubtful
accounts
Accounts receivable are stated at the amount
management expects to collect. The Company generally does not require collateral to support customer receivables. The Company
provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection
information and existing economic conditions. As of April 30, 2020, and 2019 the allowance for doubtful accounts was $0 and $0,
respectively.
Revenue Recognition
The Company recognizes revenue related to transaction
from its third-party logistics sales when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing
the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no
significant obligation for future performance to directly bring about the resale of the product by the buyer as required by ASC
605 – Revenue Recognition. Cost of sales, rebates
In May 2014, the FASB issued ASU 2014-09 “Revenue
from Contracts with Customers” (Topic 606) which establishes revenue recognition standards. ASU 2014-09 was effective for
annual reporting periods beginning after December 15,2017. We adopted ASU 2014-09 effective August 1, 2018. ASU 2014-09 has not
had a significant effect on the Company’s financial position and results of operations.
FASB ASC Topic 830, Foreign Currency Matters
(formerly FASB Statement No. 52, Foreign Currency Translation) provides accounting guidance for transactions denominated in a foreign
currency, and for operations undertaken in a foreign currency environment. To prepare consolidated financial statements, an entity
translates all functional currency financial statements into a single reporting currency. The same applies if an entity uses different
currencies for reporting purposes and for its functional currency. The company reports its currency in US dollars.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
Leases
In February 2016, FASB issued ASU-2016-02 (Topic
842) “Leases”, provides accounting guidance for leases, recognizing lease assets and lease liabilities on the balance
sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning
after December 15, 2018.
NOTE 3 – GOING CONCERN
Management does not expect existing cash as
of April 30, 2020 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of
these April 30, 2020 financial statements. These financial statements have been prepared on a going concern basis which assumes
the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of April 30,
2020, the Company has incurred losses totaling $6,560,881 since inception, has not yet generated material revenue from operations,
and will require additional funds to maintain its operations. These factors raise substantial doubt regarding the Company’s
ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company’s
ability to continue as a going concern is dependent upon its ability to generate future profitable operations and obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company
intends to finance operating costs over the next twelve months through its existing financial resources and we may also raise additional
capital through equity offerings, debt financings, collaborations and/or licensing arrangements. If adequate funds are not available
on acceptable terms, we may be required to delay, reduce the scope of, or curtail, our operations. The accompanying consolidated
financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 – DISCONTINUED OPERATIONS
On November 6, 2019, the Company discontinued its operations of
subsidiary Global3pl, Inc., formerly known as KRG Logistics, Inc., (an Ontario corporation) and sold the assets of $54,315 for
$10 dollars. The transactions resulted in a loss of $119,081 as reported on the income statement as of April 30, 2020. The
assets and liabilities and results of operations for Global3pl, Inc. for each of the presented periods is as follows:
|
|
April
30, 2020
|
|
July
31, 2019
|
Assets
|
|
|
|
|
|
|
|
|
Equipment and improvements
|
|
$
|
—
|
|
|
$
|
54,296
|
|
Total assets
|
|
$
|
—
|
|
|
$
|
54,296
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
For
the Three Months Ended
|
|
For
the Nine Months Ended
|
|
|
April
30, 2020
|
|
April
30, 2019
|
|
April
30, 2020
|
|
April
30, 2019
|
Revenues
|
|
$
|
—
|
|
|
$
|
625,385
|
|
|
$
|
295,312
|
|
|
$
|
1,791,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
—
|
|
|
|
583,031
|
|
|
|
295,223
|
|
|
|
1,712,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
—
|
|
|
|
42,354
|
|
|
|
89
|
|
|
|
78,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
—
|
|
|
|
(14,976
|
)
|
|
|
32,546
|
|
|
|
153,719
|
|
Wages and benefits
|
|
|
—
|
|
|
|
77,861
|
|
|
|
24,070
|
|
|
|
217,219
|
|
Rent
|
|
|
—
|
|
|
|
2,877
|
|
|
|
—
|
|
|
|
21,753
|
|
Professional fees
|
|
|
—
|
|
|
|
86,767
|
|
|
|
3,016
|
|
|
|
49,105
|
|
Total operating expenses
|
|
|
—
|
|
|
|
152,529
|
|
|
|
59,632
|
|
|
|
441,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
—
|
|
|
|
(110,175
|
)
|
|
|
(59,543
|
)
|
|
|
(362,922
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,223
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations of discontinued operations
|
|
|
—
|
|
|
|
(110,175
|
)
|
|
|
(64,766
|
)
|
|
|
(362,922
|
)
|
Loss on disposal of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(54,315
|
)
|
|
|
—
|
|
Loss from discontinued operations
|
|
$
|
—
|
|
|
$
|
(110,175
|
)
|
|
$
|
(119,081
|
)
|
|
$
|
(362,922
|
)
|
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
NOTE 5 – PROMISSORY NOTES
Promissory notes payable as of April 30, 2020 and July 31, 2019
consisted of the following:
Description
|
|
April 30, 2020
|
|
April 30, 2019
|
Note payable dated January 15, 2014, matured January 15, 2015 bearing interest at 12% per annum.
|
|
$
|
—
|
|
|
$
|
3,000
|
|
Note payable dated February 14, 2014 matured February 14, 2015, bearing interest at 12% per annum.
|
|
$
|
—
|
|
|
$
|
3,750
|
|
Note payable dated April 1, 2014 matured April 1, 2015, bearing interest at 12% per annum.
|
|
$
|
—
|
|
|
$
|
4,700
|
|
Note payable dated January 30, 2014, matured January 30, 2015, bearing interest at 12% per annum.
|
|
$
|
—
|
|
|
$
|
5,000
|
|
Note payable dated March 8, 2018, matured March 8, 2019, bearing interest at 10% per annum.
|
|
$
|
30,000
|
|
|
$
|
23,900
|
|
Note payable dated July 18, 2018, matured July 18, 2019, bearing interest at 0% per annum. This note is still outstanding
|
|
$
|
135,000
|
|
|
$
|
175,000
|
|
Note payable dated February 4, 2020, matured March 10, 2020, bearing interest at 18% per annum.
|
|
$
|
5,000
|
|
|
$
|
—
|
|
Less current portion of long-term debt
|
|
$
|
170,000
|
|
|
$
|
215,350
|
|
Total long-term debt
|
|
|
—
|
|
|
|
—
|
|
Interest expense for the nine months ended April 30, 2020 and 2019
was $12,885 and $2,790 respectively.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
NOTE 6 - CONVERTIBLE DEBT
Convertible debt as of April 30, 2020 and July 31, 2019
consisted of the following:
Description
|
|
April 30, 2020
|
|
April 30, 2019
|
|
|
|
|
|
Convertible note agreement dated November 1, 2013 in the amount of $30,000 payable and due on demand bearing interest at 12% per annum. Principal and accrued interest is convertible at $.002250 per share.
|
|
$
|
11,041
|
|
|
$
|
11,041
|
|
Convertible note agreement dated February 20, 2018 in the amount of $1,034,000 payable and due on demand bearing interest at 10% per annum. Principal and accrued interest is convertible at $.028712 per share.
|
|
$
|
1,034,000
|
|
|
$
|
1,034,000
|
|
Convertible note agreement dated March 13, 2019 in the amount of $800,000 payable and due on March 20, 2020 bearing interest at 24% per annum.
|
|
$
|
800,000
|
|
|
$
|
700,000
|
|
Convertible note agreement dated June 28, 2019 in the amount of $300,000 payable and due on June 28, 2020 bearing interest at 20% per annum.
|
|
$
|
300,000
|
|
|
$
|
—
|
|
Convertible note agreement dated August 6, 2019 in the amount of $31,500 payable and due on August 6, 2020 bearing interest at 20% per annum.
|
|
$
|
31,500
|
|
|
$
|
—
|
|
Convertible note agreement dated August 19, 2019 in the amount of $3,800 payable and due on August 19, 2020 bearing interest at 24% per annum.
|
|
$
|
3,800
|
|
|
$
|
—
|
|
Convertible note agreement dated September 4, 2019 in the amount of $36,500 payable and due on September 4, 2020 bearing interest at 20% per annum.
|
|
$
|
36,500
|
|
|
$
|
—
|
|
Convertible note agreement dated December 4, 2019 in the amount of $95,000 payable and due on December 4, 2020 bearing interest at 12% per annum.
|
|
$
|
95,000
|
|
|
$
|
—
|
|
Convertible note agreement dated February 10, 2020 in the amount of $15,000 payable and due on February 10, 2021 bearing interest at 12% per annum.
|
|
$
|
15,000
|
|
|
$
|
—
|
|
Convertible note agreement dated February 21, 2020 in the amount of $47,500 payable and due on February 28, 2021 bearing interest at 12% per annum.
|
|
$
|
47,500
|
|
|
$
|
—
|
|
Convertible note agreement dated February 28, 2020 in the amount of $67.500 payable and due on November 28, 2020 bearing interest at 8% per annum.
|
|
$
|
67,500
|
|
|
$
|
—
|
|
Convertible note agreement dated April 15, 2020 in the amount of $95,000 payable and due on April 15, 2021 bearing interest at 10% per annum, net of discount.
|
|
$
|
31,500
|
|
|
$
|
—
|
|
Convertible notes, net of discount
|
|
$
|
2,475,341
|
|
|
$
|
1,745,041
|
|
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
The Company recognized $0 of debt
discount accretion expense on the above notes. Interest expense related to these notes for the nine months ended April 30, 2020
and 2019 was $284,564 and $57,806.
NOTE 7 - LINE OF CREDIT
The Company has a line of credit with a maximum
borrowing limit of $400,000, bearing an interest rate of prime plus 3.25% per annum and secured by a General Security Agreement.
As of April 30, 2020, and July 31, 2019, $289,242 and $258,708 were drawn on the line of credit, respectively. Interest expense
for the nine months ended April 30, 2020 and 2019 was $0 and $13,554 respectively. Beginning February 1, 2019, the Company is required
to maintain a cash collateral account in the amount of $200,000 in Canadian dollars. The Company has invested in a Guaranteed Investment
Certificate for a one-year term at an interest rate of .25%.
NOTE 8 – RELATED PARTY TRANSACTIONS
A shareholder of the Company has paid certain
expenses of the Company. These amounts are reflected as a loan payable to related party. The shareholder advanced $12,500 and $0
during the nine months ended April 30, 2020 and 2019, respectively. As of April 30, 2020, and 2019, there were $387,834 and $496,912
due to related parties, and a shareholder, respectively.
The Company has consulting agreements with
two of its shareholders to provide management and financial services that commenced on December 1, 2017. For the three months ended
April 30, 2020 and 2019 consulting fees paid were $87,792 and $68,465 respectively. For the nine months ended April 30, 2020
and 2019 consulting fees paid were $146,334 and $201,857 respectively. The consulting fees are included as part of professional
fees on the Company’s consolidated statements of operations.
The Company on February 20, 2018 entered into
a related party (that being Recommerce Group, Inc. and our President is a principal in Recommerce Group, Inc.) note receivable
in the amount of $1,034,000. The Company made an additional advance in the amount of $175,000 that is non-interest bearing. The
note is payable and due on demand and bears interest at the rate of 10%. A total of $153,217 has been applied as payments against
this Note. Interest expense in the amount of $25,496 and $21,475 for the three months ended April 30, 2020 and 2019, respectively,
has been recorded in the financial statements. Interest expense in the amount of $77,621 and $43,220 for the nine months
ended April 30, 2020 and 2019, respectively, has been recorded in the financial statements.
NOTE 9 – STOCKHOLDERS’ EQUITY
(DEFICIT)
On April 29, 2019 the Board of Directors,
by Written Consent of the Board of Directors, authorized the issuance of 8,000,000 shares of the Series D Preferred Shares to
Emerging Growth Advisors, Inc., an entity controlled by our President/Director, James W. Zimbler, as bonus compensation for the
services provided to the Company. The shares were valued at par value, for a total of $8,000. This value was determined based
on the following criteria, (i) the Preferred Series D Shares are restricted securities, as are any shares of common stock that
would be converted, absent a registration statement, (ii) on the date of issuance of the Series D Preferred Stock, there virtually
no liquidity in the shares of common stock of the Company, and (iii) based on the current capital authorized structure of the
Company and the current number of issued and outstanding shares of common stock would limit the ability to convert any significant
number of Preferred Series D stock into common stock.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
On March 31, 2020, the Board of Directors
approved the Agreement with Solid Bridge Investment LLC, an entity controlled by Carlos and Virginia Defex, as part of the compensation
for the work to be done by them regarding the Malta Project. The shares were valued at par value, for a total of $2,000. This
value was determined based on the following criteria, (i) the Preferred Series D Shares are restricted securities, as are any
shares of common stock that would be converted, absent a registration statement, (ii) on the date of issuance of the Series D
Preferred Stock, there virtually no liquidity in the shares of common stock of the Company, and (iii) based on the current capital
authorized structure of the Company and the current number of issued and outstanding shares of common stock would limit the ability
to convert any significant number of Preferred Series D stock into common stock.
Our valuation of the Series D Preferred
Stock has taken into consideration the valuation, reporting and accounting requirements of FASB ASC 718-10 and FASB ASC 505- 50,
based on the date of issue, the absence of any discounts or beneficial conversion provisions.
As enumerated in the Certificate of Designation
filed by the Company with the Secretary of State of the State of Nevada on May 8, 2019, and annexed as an Exhibit to the Current
Report on Form 8-K with the Securities and Exchange Commission on May 17, 2019, each one share of Series D Preferred Stock is
convertible into 72.5 shares of common stock and has immediate voting rights equal to the conversion amount. If converted, then
Emerging Growth Advisors, Inc., would be entitled to 580,000,000 shares of common stock and Solid Bridge Investment LLC would
be entitled to 145000,000 shares of common stock.
If all, or even a substantial portion,
of the shares of Series D Preferred Stock were converted, it would exceed the total authorized shares of common stock of the Company.
Therefore, effectively, the Series D Preferred Stock while having voting rights, is prohibited to be converted and can only be
used for voting control of the Company unless the Company were to increase the total authorized shares of common stock or do a
recapitalization involving a reverse split of the shares of common stock.
NOTE 10 – WARRANT
On April 15, 2020, the Company issued a five-year
Common Stock Purchase Warrant in connection with a $31,500 convertible promissory note. The warrant is convertible into 437,500
shares of the Company’s common stock at $.12 per share.
On April 23, 2020, the Company issued a three-year
Common Stock Purchase Warrant in connection with a $75,000 investment in the Company’s common stock. The warrant has a conversion
price of $.15 per share of the Company’s common stock.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Litigations, Claims and Assessments
The Company may become involved in various
lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any
such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its
business, financial condition or operating results.
Operating Leases
The Company in February 2019 assumed a lease
agreement for a facility site and entered into a lease agreement for office space. The facility site lease has a term of twenty-three
months expiring on December 31, 2020 and the office space lease has a five-year term and begins April 1, 2019 and ends March 31,
2024.
Effective October 1, 2019, the Company suspended
operations of its subsidiary Global3pl, Inc., (an Ontario corporation, formerly known as KRG Logistics, Inc.), suspended future
operations related to the operations in Mississauga, Ontario. It is in the process of collecting accounts receivables still due
and working on a plan to pay its payables. It has entered into an agreement with 10451029 Canada Inc., d/b/a Reliable Logistics,
for the assignment and of the assets of Global3pl, Inc., (an Ontario Corporation). The transaction has not yet been completed.
Cannagistics, Inc., also known as Precious
Investments Inc.
GLOBAL3PL INC and Subsidiaries
Notes to Financial Statements
April 30, 2020
The Company on July 31, 2019 entered into a
lease agreement for additional office space. The lease has a commencement date of June 1, 2019 and has a lease term of five years
expiring on May 31, 2024.
Future minimum lease payments, as set forth
in the lease, are below:
Year
|
|
Amount
|
|
2019-2020
|
|
|
$
|
3,363
|
|
|
2020-2021
|
|
|
$
|
22,737
|
|
|
2021-2022
|
|
|
$
|
23,415
|
|
|
2022-2023
|
|
|
$
|
24,122
|
|
|
2023-2024
|
|
|
$
|
14,314
|
|
NOTE 13 – SUBSEQUENT EVENTS
Management of the Company has evaluated
the subsequent events that have occurred through the date of the report and determined that the following subsequent events require
disclosure:
Sanguine Group, LLC, has loaned the Company
additional funds not already included in the established promissory note. These funds are not yet reduced to a written agreement.
Garden State Holdings loaned the Company $55,000
on December 4, 2019. There is no written note at this time, but Garden State Holdings has committed to loan the Company up to $175,000.
Sanguine Group, LLC and Garden State Holdings
are entities controlled by the same person, who is an investor in the Company.
Emerging Growth Advisors, Inc., controlled
by James W. Zimbler, our President/Director has loaned the company a total of $57,277.24. There is no terms or written note.
On May 6, 2020, the Company filed an Offering Statement under Regulation
A on form 1-A for a Tier II Offering of 43,000,000 shares.