(Expressed in U.S. dollars)
Notes to the Condensed Consolidated Financial Statements
6
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Condensed Consolidated Balance Sheets
(Expressed in U.S. dollars)
|
|
|
|
June 30,
2016
$
|
March 31,
2016
$
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash
|
220
|
129
|
Accounts receivable, net of allowance of $72,960 and $436,000 respectively
|
|
|
Prepaid expenses
|
|
540
|
|
|
|
Total current assets
|
220
|
669
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property, plant, and equipment, net of accumulated depreciation of $17,051 and $14,601, respectively
|
277,841
|
280,291
|
|
|
|
Total assets
|
278,061
|
280,960
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
205,702
|
109,099
|
Convertible notes payable
|
469,370
|
436,512
|
Due to related party
|
280
|
|
|
|
|
Total current liabilities
|
675,352
|
545,611
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Deferred vendor incentive
|
|
3,049
|
Due to related parties
|
|
85,932
|
|
|
|
Total non-current liabilities
|
|
88,981
|
|
|
|
Total liabilities
|
675,352
|
634,592
|
|
|
|
Nature of operations and continuance of business (Note 1)
|
|
|
|
|
|
|
|
|
Stockholders deficit
|
|
|
|
|
|
Common stock
|
|
|
Authorized: 400,000,000 common shares, $0.001 par value 52,633,027 and 2,633,027 shares issued and outstanding, respectively
|
52,633
|
2,633
|
Additional paid-in capital
|
142,022,003
|
114,539,145
|
Deficit
|
(142,471,927)
|
(114,895,410)
|
|
|
|
Total stockholders deficit
|
(397,291)
|
(353,632)
|
|
|
|
Total liabilities and stockholders deficit
|
278,061
|
280,960
|
(The accompanying notes are an integral part of these condensed consolidated financial statements)
3
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Condensed Consolidated Statements of Operations
(Expressed in U.S. dollars)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
|
Three Months
|
|
|
|
|
Ended
|
Ended
|
|
|
|
|
June 30,
|
June 30,
|
|
|
|
|
2016
|
2015
|
|
|
|
|
$
|
$
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Rental income
|
|
|
|
78,960
|
104,000
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
2,450
|
2,454
|
Bad debt expense
|
|
|
|
72,960
|
|
General and administrative
|
|
|
|
19,901
|
5,781
|
Land lease
|
|
|
|
3,000
|
3,000
|
Management fees
|
|
|
|
6,000
|
4,040
|
Professional fees
|
|
|
|
11,545
|
11,860
|
Repairs and maintenance
|
|
|
|
93
|
1,251
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
115,949
|
28,386
|
|
|
|
|
|
|
Net income (loss) from operations
|
|
|
|
(36,989)
|
75,614
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of intangible assets
|
|
|
|
(27,500,000)
|
|
Interest expense
|
|
|
|
(39,528)
|
(47,905)
|
|
|
|
|
|
|
Total other expenses
|
|
|
|
(27,539,528)
|
(47,905)
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
(27,576,517)
|
27,709
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
|
|
(2.20)
|
0.02
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
|
|
(2.20)
|
0.00
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
|
12,523,137
|
1,408,820
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
12,523,137
|
6,269,460
|
|
|
|
|
|
|
(The accompanying notes are an integral part of these condensed consolidated financial statements)
4
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
|
|
|
|
Three Months
|
Three Months
|
|
Ended
|
Ended
|
|
June 30,
|
June 30,
|
|
2016
|
2015
|
|
$
|
$
|
|
|
|
Operating activities
|
|
|
|
|
|
Net income (loss)
|
(27,576,517)
|
27,709
|
|
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
Bad debt expense
|
72,960
|
|
Depreciation
|
2,450
|
2,454
|
Impairment of intangible assets
|
27,500,000
|
|
Non-cash interest expense
|
38,434
|
42,310
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
(72,960)
|
(95,000)
|
Prepaid expenses
|
253
|
|
Deferred tenant inducement
|
|
(29,000)
|
Accounts payable and accrued liabilities
|
2,513
|
8,251
|
Deferred vendor incentive
|
|
(286)
|
|
|
|
Net cash used in operating activities
|
(32,867)
|
(43,562)
|
|
|
|
Investing activities
|
|
|
|
|
|
Buildings and infrastructure
|
|
(796)
|
|
|
|
Net cash used in investing activities
|
|
(796)
|
|
|
|
Financing activities
|
|
|
|
|
|
Advances from related parties
|
100
|
|
Advances for convertible notes payable
|
32,858
|
42,310
|
Repayments to related parties
|
|
(400)
|
|
|
|
Net cash provided by financing activities
|
32,958
|
41,910
|
|
|
|
Change in cash
|
91
|
(2,448)
|
|
|
|
Cash, beginning of period
|
129
|
4,469
|
|
|
|
Cash, end of period
|
220
|
2,021
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
Interest paid
|
1,094
|
5,595
|
Income taxes paid
|
|
|
(The accompanying notes are an integral part of these condensed consolidated financial statements)
5
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Notes to the Condensed Consolidated Financial Statements
June 30, 2016
(Expressed in U.S. dollars)
(unaudited)
1.
Nature of Operations and Continuance of Business
Viking Minerals Inc., (the Company), was incorporated in the State of Nevada on March 24, 2006 with 75,000,000 authorized common shares with a par value of $0.001 per share. In January 2011, the Company filed an amendment with the State of Nevada to increase the authorized shares to 400,000,000 common shares with a par value of $0.001 per share.
On April 14, 2014, the Company changed its name to Indie Growers Association and completed a 1:200 reverse stock consolidation.
The Company was originally organized for the purpose of acquiring and developing mineral claims (SIC Code: 1000). On June 30, 2014, the Company acquired River Ridge Sunshine Farms LLC (River Ridge), a Washington State corporation, and in so doing, changed its business to that of real estate development for the purpose of leasing and agricultural buildings to licensed cannabis producers (SIC Code: 5319).
On April 4, 2016, the Company changed its name to Nexgen Applied Solutions Inc. and completed a 1:100 reverse stock consolidation. All share amounts in these interim condensed consolidated financial statements have been restated to reflect stock consolidations on April 14, 2014 and April 4, 2016.
These interim condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at June 30, 2016, the Company has a working capital deficiency of $675,132 and accumulated losses of $142,471,927 since inception. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. While the Company is attempting to generate sufficient revenue, the Companys cash position may not be enough to support the Companys daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate sufficient revenues. These interim 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.
2.
Significant Accounting Policies
(a)
Basis of Presentation and Consolidation
The accompanying interim condensed consolidated financial statements of the Company should be read in conjunction with the financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2016. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Companys financial position and the results of its operations and its cash flows for the periods shown.
These interim condense consolidated financial statements are expressed in U.S. dollars and include the accounts of the Company and those of its wholly-owned subsidiary, River Ridge. All intercompany balances and transactions are eliminated on consolidation.
6
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Notes to the Condensed Consolidated Financial Statements
June 30, 2016
(Expressed in U.S. dollars)
(unaudited)
2.
Significant Accounting Policies
(continued)
(b)
Use of Estimates
The preparation of these interim condensed consolidated financial statements are in accordance with accounting principles generally accepted in the United States and requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimates. The results of operations and cash flows for the period shown are not necessarily indicative of the results to be expected for the full year.
(c)
Accounts Receivable and Concentration of Credit Risk
The Company has extended unsecured credit to its only tenant. Accounts receivable related to lease revenue is recorded monthly in accordance with the sublease agreement between the tenant and our subsidiary. At March 31, 2016, the tenant was unable to meet its financial obligations due to low crop yield and dropping cannabis prices. Consequently, the company wrote down accounts receivable from the tenant in its entirety.
As we currently only have one tenant and the cannabis industry is still in a state of unpredictable change, there is the potential risk that this could occur again. However, to mitigate the risk, commencing May 1, 2016, the monthly lease rate has been reduced and the tenant to making minimum monthly payments to pay down a portion of the receivable.
The Company will continue to evaluate the need for an allowance for doubtful accounts on a regular basis.
(d)
Property, Plant, and Equipment
Property, plant, and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of operations during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the statement of operations.
Depreciation of capital assets is computed as follows:
|
|
Buildings and infrastructure
|
30 year straight line
|
(e)
Intangible Assets
Intangible assets are carried at the purchased costs less accumulated amortization. Amortization is computed over the estimated useful lives of the assets.
(f)
Convertible Debentures
According to ASC 470-20-25-5 Recognition General Beneficial Conversion Features, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital.
Paragraph 470-20-30-4 provides guidance on measuring intrinsic value that applies to both the determination of whether an embedded conversion feature is beneficial and the allocation of proceeds and paragraph 470-20-30-5 states that the effective conversion price based on the proceeds received for or allocated to the convertible instrument shall be used to compute the intrinsic value, if any, of the embedded conversion option.
7
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Notes to the Condensed Consolidated Financial Statements
June 30, 2016
(Expressed in U.S. dollars)
(unaudited)
2.
Significant Accounting Policies
(continued)
(f)
Convertible Debentures (continued)
According to paragraphs intrinsic value shall be calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible.
In accordance with the convertible debt agreement, the conversion price is at par value of $0.001 per share. Accordingly, the Company assessed the conversion option and determined that during the period the notes had a beneficial conversion feature with intrinsic values in excess of the debt. Therefore, the Company fully amortized the conversion benefit in each fiscal year and recorded is as an interest expense. During the period ended June 30, 2016, the Company recognized a beneficial conversion feature of $32,858 (June 30, 2015 - $42,310).
(g)
Revenue Recognition
The Company recognizes revenue pursuant to revenue recognition principles presented in
ASC 605,
Revenue Recognition,
which requires that there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sellers price to the buyer is fixed or determinable, and collectability is reasonably assured.
(h)
Basic and Diluted Earnings (Loss) per Share
The Company computes earnings (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at June 30, 2016, the Company has 469,370,000 (2015 486,064,000) potentially dilutive shares outstanding.
(i)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
(j)
Reclassifications
Certain of the prior period figures have been reclassified to conform to the current periods presentation.
3.
Property, Plant, and Equipment
|
|
|
|
|
|
Cost
$
|
Accumulated depreciation
$
|
Net book
value as at
June 30,
2016
$
|
Net book
value as at
March 31,
2016
$
|
|
|
|
|
|
Buildings and infrastructure
|
294,892
|
17,051
|
277,841
|
280,291
|
8
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Notes to the Condensed Consolidated Financial Statements
June 30, 2016
(Expressed in U.S. dollars)
(unaudited)
4.
Intangible Assets
|
|
|
|
|
|
|
Cost
$
|
Accumulated amortization
$
|
Impairment
$
|
Net book
value as at
June 30,
2016
$
|
Net book
value as at
March 31,
2016
$
|
|
|
|
|
|
|
Intangible assets
|
27,500,000
|
|
(27,500,000)
|
|
|
On April 18, 2016, the Company acquired a business development contract, an exclusive software technology license to a bingo-themed Class II game recognized by the Indian Gaming Regulatory Act, and related television broadcast rights. Under the term of the agreement, the Company issued 50,000,000 restricted common shares of the Company. Refer to Note 8.
As at June 30, 2016, the Company had not put these assets into use and has not yet recorded any amortization. At as June 30, 2016, the Company reviewed the assets for indication of impairment. Due to the inability to estimate future cash flows, the assets have been written-off.
5.
Accounts payable
|
|
|
|
|
|
|
|
June 30,
2016
$
|
March 31,
2016
$
|
|
|
|
|
|
Trade accounts payable
|
|
|
205,702
|
109,099
|
6.
Vendor Incentive
In December 2013, the Companys transfer agent paid off the outstanding balance of $5,717 owed to the former transfer agent which had been recorded as deferred vendor incentive. It is being amortized on a straight-line base
over the contract term of five years
and offset against transfer agent fees in the statement of operations.
During the period ended June 30, 2016, the Company changed transfer agents. As a result of the early termination, the Company was required to pay back the original amount of the vendor incentive which has been added to the termination fees charged by the outgoing transfer agent.
7.
Convertible Notes Payable
As of June 30, 2016, the Company had recorded $469,370 (March 31, 2016 - $436,512) in convertible notes payable. The amounts are unsecured, bear interest at 5% per annum, due on demand, and convertible at a price of $0.001 per share. The shares are not subject to forward or reverse stock splits unless the shares have been converted and issued prior to any such forward or reverse stock split. Therefore, if the balance outstanding was converted into common shares, the amount of stock to be issued would be 469,370,000 (March 31, 2016 436,512,000) common shares.
During the period ended June 30, 2016, the Company
received $32,858 (March 31, 2016 - $107,258). The Company assessed the conversion option and determined that during the period the debenture had a beneficial conversion feature with intrinsic value in excess of the debt. Therefore, the Company fully amortized a conversion benefit of $32,858 (March 31, 2016 - $107,258) for the current period which was recorded as interest expense.
During the period ended June 30, 2016, the Company issued nil (March 31, 2016 1,150,000) common shares for the settlement of $nil (March 31, 2015 - $115,000) of convertible notes payable. As at June 30, 2016, the Company has accrued $5,576 (March 31, 2016 - $41,784) in interest expense which has been recorded in accounts payable and accrued liabilities.
9
NEXGEN APPLIED SOLUTIONS INC.
(formerly Indie Growers Association)
Notes to the Condensed Consolidated Financial Statements
June 30, 2016
(Expressed in U.S. dollars)
(unaudited)
8.
Rental Income
On April 13, 2015, the Company entered into a sublease agreement with a tenant effective May 1, 2015, whereby the Company will earn rental income of $52,500 per month for the sublease of land and buildings. On May 1, 2016, the Company and the tenant entered into an amendment to the agreement reducing the rental fees to $13,230 per month and requiring a minimum monthly payment of $3,000 per month with the balance accruing until the harvest and sale of the tenants crops. For the period ended June 30, 2016, the Company recorded $78,960 (June 30, 2015 - $104,000) in revenue in accordance with the sublease agreement. As at June 30, 2016, the Company had $nil (March 31, 2016 - $nil) recorded in accounts receivable net of allowance for uncollectable accounts of $72,960 (March 31, 2016 - $416,000).
9.
Related Party Transactions
As at June 30, 2016, the Company owed $280 (March 31, 2016 - $180) to the Chief Executive Officer of the Company, which is unsecured, non-interest bearing, and due on demand.
10.
Share Capital
Authorized: 400,000,000 common shares with $0.001 par value
On April 18, 2016, the Company issued 50,000,000 common shares with a fair value of $27,500,000 based on the market price of the shares issued for the acquisition of various intangible assets. Refer to Note 4.
11.
Subsequent Events
We have evaluated subsequent events through to the date of issuance of the interim financial statements, and did not have any material recognizable subsequent events after June 30, 2016.
10