NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JANUARY 31, 2017
(UNAUDITED)
NOTE
1 – ORGANIZATION
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for
interim financial information. Accordingly, they do not include all of the information necessary for a comprehensive presentation
of financial position and results of operations. The interim results for the period ended January 31, 2017 are not necessarily
indicative of results for the full fiscal year and should be read in junction with the annual financial statements filed on July
29, 2016. It is management's opinion, however that all material adjustments (consisting of normal recurring adjustments) have
been made which are necessary for a fair financial statements presentation.
Huntwicke Capital Group
Inc. formerly known as Magnolia Lane Income Fund (the “Company,” “We,” “Ours,” “Us”),
was incorporated on May 12, 2009 under the laws of the State of Delaware. On November 12, 2015, the Company changed domicile from
the State of Delaware to the State of Nevada by filing Articles of Domestication and Articles of Incorporation with the Secretary
of State of Nevada. The Company was originally formed to commence business as a stock agent in the wool trade.
On
December 23, 2013, a shareholder of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase
and Sale Agreements for the acquisition of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC
(the “
Acquisition Agreements
”). Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100%
of the equity interests in Grove Realty Partners, LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia
Lane Financial transferred 134,574 shares of our Common Stock to WS Advantage and Phalanx Wealth Management (the “
Consideration
Shares
”). For purposes of the Acquisition Agreements, the parties valued the shares at $16.60 per share for a total
purchase price of $2,233,928. Prior to this transaction, Magnolia Lane Financial owned 1,250,000 shares of our common stock and
now owns 1,115,426 shares of our common stock. WS Advantage, LP owns 115,347 shares of our common stock and Phalanx Partners,
LLC owns 19,227 shares of our common stock.
On
January 16, 2014, we entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial, Inc. (the
“
Agreement
”). Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia
Lane Financial, including the assets acquired in the Acquisition Agreements, for a total purchase price of $3,000.
On
October 15, 2015, the Company paid a total of $761,355 for the purchase of 64% of Butler Cabin LLC. This entity is controlled by
our President, a principal of Butler Cabin LLC.
On
November 12, 2016, the Company changed its name to Huntwicke Capital Group, Inc.
On
August 11, 2016, Huntwicke the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary,
Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of
real property located at 6 Park Street, Topsfield, MA 01983 from a related party. As consideration for the purchase, the Company
agreed to issue Butler 61,396 shares of common stock of the Company with a historical cost of $431,050. The Company now owns a
100% interest in 6 Park Street, Topsfield, MA 01983. The transaction was recorded at the net asset value of the non-controlling
interest on the date of acquisition.
On August 11, 2016,
the Company entered into a “Magnolia Lane Share Issuance Agreement" with Founders Circle Partners, LLC (“Founders”)
(Related Party) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield,
MA 01983. The purchase was recorded at the historical cost of the net assets of $1,190,815 acquired for 170,831 shares of common
stock of the Company from a related party.
On November 1, 2016,
the Company entered into a Share Agreement with Phalanx Partners, LLC (Related Party), whereby the Company issued 1,384,487 shares
of the Company’s common stock to Phalanx Partners, LLC. (Related Party) in exchange for all the interest in Huntwicke Securities
LLC and Huntwicke Advisors, LLC. The acquisition of Huntwicke Securities, LLC is subject to approval by the Financial Industry
Regulatory Authority. Phalanx Partners, LLC is owned and managed by the Company’s President. The purchase was recorded at
the historical cost of the net assets of $199,576 acquired for 1,384,487 shares of common stock of the Company from a related party.
Huntwicke Advisors,
LLC formerly known as Phalanx Wealth Management, LLC provides investment and financial advice and services to individual and institutional
clients. Client’s Investments are held by an unrelated carrying broker-dealer. The Company is registered as an investment
advisor with the Securities and Exchange Commission, and is licensed in several states.
Huntwicke Securities LLC formerly known as Phalanx Trading, LLC Company is a broker-dealer registered
with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority, Inc.(FINRA).
NOTE
2 – SUMMARY OF ACCOUNTING POLICIES
Principles
of consolidation
The
accompanying consolidated financial statements represent the consolidated financial position and results of operations of the
Company and include the accounts and results of operations of the Company and its subsidiaries. The accompanying financial statements
include the active entity of Magnolia Lane Income Fund and its wholly owned subsidiaries, Walker Partners, LLC, Grove Realty Partners,
LLC, Butler LLC from October 15, 2015, Founders Circle, LLC from, August 11, 2016, Huntwicke Advisors, LLC from November 1, 2016
and Huntwicke Securities LLC from November 1, 2016.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Restricted
Cash
Restricted
cash consists of cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual
agreements. The Company’s restricted cash is reserved for real estate taxes on four of its properties.
Concentrations
Concentration
in a geographic area
The
Company operates in the real estate industry and the operations are concentrated in the State of Massachusetts.
Rental
Property, Net
Rental
property assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated
useful lives of the asset.
We
capitalize replacements and improvements, such as HVAC equipment, structural replacements, windows, appliances, flooring, carpeting
and renovations. Ordinary repairs and maintenance, such as unit cleaning, painting and appliance repairs, are expensed when incurred.
Asset
|
|
Useful
Life
(in years)
|
Building
|
|
30
years
|
Land
|
|
Indefinite
|
Building
Improvements
|
|
30
years
|
Net
loss per common share
Net
loss per common share is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board Accounting Standards
Codification. Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average
number of shares of common stock and potentially dilutive outstanding shares of common stock during the period.
There
were no potentially dilutive shares outstanding for any periods presented.
Income
Taxes
The
Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax
assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
The
Company follows the provisions of Income Taxes Topic of the FASB Accounting Standards Codification, which provides clarification
on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance prescribes
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties,
disclosure and transition. At January 31, 2017 and April 30, 2016, no significant income tax uncertainties have been included
in the Company’s Balance Sheets. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits
in income tax expense in the Statements of Operations. No interest and penalties are present for periods open.
The
Company is subject to the United States federal and state income tax examinations by the tax authorities for the 2016, 2015, and
2014 tax years.
Investments
The
Company’s investments in trading securities are reported at fair value, with unrealized gains and losses included in earnings.
The Company will invest its cash proceeds to enhance shareholder value over the long term. The Company will use both short and
long term investing strategies. Investments are classified as available for sale.
Securities
Transactions
The
Company acts as an agent in executing orders to buy or sell OTC and listed securities. It also acts as an agent to purchase private
placements. The company charges a commission based on the services the company provides to customers. The services the company
provides are in compliance with their approvals granted by FINRA. Customers' securities transactions are recorded on a settlement
date basis. The related commission income and expenses are also recorded on the settlement date basis.
Private
Placement Transactions
Customers' private placement
transactions are recorded on the date escrow is closed. The related commission income and expenses are also recorded on the escrow
date. The Company may also recognize a mark-up or a mark-down on transactions in which it acts as a principal. Mark-up and mark-down
commissions are generally priced competitively based upon the services the Company provides to its customers and are in compliance
with guidance established by FINRA.
Introduction
Fee Transactions
Introduction fees are
earned from introducing institutions to each other to commence a lease transaction. These transactions are conducted between the
two introduced parties and the broker-dealer has no further role after introduction. These transactions are recognized when the
transaction closes and the price is fixed and determinable as the broker-dealer never knows if or when a transaction might close.
Commission expense is accrued on the date the income is recognized. The amounts are billed quarterly in advance based on the net
asset value of assets under management and amortized over the period earned.
The Company earns fees for managing client
portfolios through its SEC registered Advisory firm, Huntwicke Advisors.
Property
Revenue Recognition
Our
commercial property leases are for varied terms ranging from month-to-month to 3 years. Rental income is recognized on a straight-line
basis over the term of the lease.
Rent
concessions, including free rent incurred in connection with commercial property leases, are amortized on a straight-line basis
over the terms of the related leases and are charged as a reduction of rental revenue.
Impairment
of Real Estate Investments
The
Company assesses on a regular basis whether there are any indicators that the carrying value of rental property assets may be
impaired. Potential indicators may include an increase in vacancy at a property, tenant reduction in utilization of a property,
tenant financial instability and the potential sale of the property in the near future. An asset is determined to be impaired
if the asset’s carrying value is in excess of its estimated fair value.
Due
from related party
Represents
amounts advanced to an affiliate entity. The money was advanced in anticipation of a merger agreement,which agreement never occurred.
The money was repaid on June 2, 2017.
Commission’s
payable
Represents
amounts owed to registered investments advisors for commissions.
Deferred
Revenue
From
time to time, rental payments may be paid by tenants, but not earned yet by the Company. Such revenue is initially recorded as
a deferred liability and is recognized as revenue once earned. Included in balance are January 31, 2017 are amounts prepaid from
clients for investment advisory services. As of January 31, 2017 and April 30, 2016, the Company had $96,844 and $7,459 in deferred
revenue, respectively.
Segments
The
Company operates in two segment rental real estate and financial services.
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
January 31, 2017
|
|
|
January 31, 2017
|
|
|
|
Real
|
|
|
Financial
|
|
|
|
|
|
Real
|
|
|
Financial
|
|
|
|
|
|
|
Estate
|
|
|
Services
|
|
|
Total
|
|
|
Estate
|
|
|
Services
|
|
|
Total
|
|
Revenues
|
|
$
|
105,200
|
|
|
$
|
714,491
|
|
|
$
|
819,691
|
|
|
$
|
279,985
|
|
|
$
|
714,491
|
|
|
$
|
994,476
|
|
Depreciation
|
|
$
|
37,983
|
|
|
$
|
-
|
|
|
$
|
37,983
|
|
|
$
|
125,750
|
|
|
$
|
-
|
|
|
$
|
125,750
|
|
Gain / (Loss) from Operations
|
|
$
|
232,020
|
|
|
$
|
8,797
|
|
|
$
|
(223,223
|
)
|
|
$
|
(266,731
|
)
|
|
$
|
(28,403
|
)
|
|
$
|
(295,134
|
)
|
Segment Assets
|
|
$
|
5,115,643
|
|
|
$
|
815,741
|
|
|
$
|
5,931,384
|
|
|
$
|
5,115,643
|
|
|
$
|
815,741
|
|
|
$
|
5,931,384
|
|
For the three and nine months ended January 31, 2016 the Company
had one business segment, real estate.
NOTE
3 – RECENT ACCOUNTING PRONOUNCEMENTS
In
February 2016, the FASB issued ASU 2016-02,
Leases
, which will amend current lease accounting to require lessees to recognize
(i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted
basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of,
a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors;
however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard
will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We
are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash
flows or financial condition.
In
March 2016, the FASB issued ASU 2016-09,
Compensation – Stock Compensation: Improvements to Employee Share-Based Payment
Accounting
, which relates to the accounting for employee share-based payments. This standard addresses several aspects of
the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards
as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal
years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions
of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In
April 2016, the FASB issued ASU 2016–10 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations
and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments
in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation
guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts
with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise
to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied
at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments
in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement
necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact
on our results of operations, cash flows or financial condition.
In
April 2016, the FASB issued ASU No. 2016-15,
“Classification of Certain Cash Receipts and Cash Payments”
ASU
2016- provides guidance regarding the classification of certain items within the statement of cash flows. ASU 2016-15 is
effective for annual periods beginning after December 15, 2017 with early adoption permitted. We do not believe this ASU
will have an impact on our results of operation, cash flows, other than presentation, or financial condition.
On
November 17, 2016, the FASB issued ASU No. 2016-18, “
Statement of Cash Flows (Topic 230): Restricted Cash”
,
a consensus of the FASB’s Emerging Issues Task Force (the “Task Force”). The new standard requires that the
statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described
as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance
sheet and disclose the nature of the restrictions. ASU No. 2016-18 is effective for public business entities for fiscal years
beginning after December 15, 2017. We do not believe this ASU will have an impact on our results of operation, cash flows, other
than presentation, or financial condition.
NOTE
4 – GOING CONCERN
The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As
reflected in the accompanying consolidated financial statements. The Company has recognized losses and an accumulated deficit
of $962,483. These conditions raise substantial doubt about its ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business
plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further
implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.
The
consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue
in existence.
NOTE
5 – RENTAL PROPERTY, NET
Rental
Property, Net consisted of the following at January 31, 2017 and April 30, 2016:
|
|
January 31,
2017
|
|
|
April 30,
2016
|
|
Land
|
|
|
583,411
|
|
|
|
358,958
|
|
Buildings
|
|
|
4,580,203
|
|
|
|
3,647,917
|
|
Leasehold Improvements
|
|
|
149,860
|
|
|
|
149,860
|
|
Accumulated Depreciation
|
|
|
(926,003
|
)
|
|
|
(758,050
|
)
|
Net, Real Estate Investments
|
|
|
4,387,471
|
|
|
|
3,398,685
|
|
As
of January 31, 2017 and April 30, 2016, real estate investments consisted of four and three properties, respectively:
58
Main St. Topsfield, Ma 01983
|
●
|
Description:
4,000 Square foot, Commercial Building
|
|
|
|
|
●
|
Status:
Rented 100% occupancy. Lease term: 3-Year
|
|
|
|
|
●
|
Owner:
Walker Partners, LLC
|
|
|
|
|
●
|
Purchase
Price: $503,000
|
|
|
|
|
●
|
Mortgage
Debt as of January 31, 2017 and April 30, 2016: $511,800 and $525,322, respectively
|
7
Grove St., Topsfield, Ma 01983
|
●
|
Description:
12,000 Square foot, Business Office, Retail and Professional Space
|
|
|
|
|
●
|
Status:
Rented at 100% occupancy. Lease term: 3-Year
|
|
|
|
|
●
|
Owner:
Grove Realty Partners, LLC
|
|
|
|
|
●
|
Purchase
Price: $2.025 million
|
|
|
|
|
●
|
Mortgage
Debt: On November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove
Realty into 203,711 shares of common stock ($7.58 per share)
|
6
Park St., Topsfield, Ma 01983
|
●
|
Description:
4,500 Square foot, Business Office, Retail and Professional Space
|
|
|
|
|
●
|
Status:
Rented at 70% occupancy. Lease term: Monthly
|
|
|
|
|
●
|
Owner:
Butler Cabin, LLC
|
|
|
|
|
●
|
Purchase
Price: $1.19 million
|
36-42
Main Street, Topsfield, MA 01983
|
●
|
Description:
8000 Square foot, Business Office, Retail and Professional Space
|
|
|
|
|
●
|
Status:
Rented at 100% occupancy. Lease term: Monthly
|
|
|
|
|
●
|
Owner:
Founders Circle Partners, LLC
|
|
|
|
|
●
|
The
Company issued a total of 170,831 shares of common stock valued at the historical cost
of the assets acquired of $1,190,815
|
Depreciation expense
for the three and nine months ended January 31, 2017 and 2016 totaled $37,983, $125,750 $25,594 and $72,818, respectively.
NOTE
6 – COMMISSION RECEIVABLE FROM BROKER-DEALERS AND CLEARING ORGANIZATIONS
Amounts
receivable from broker-dealers and clearing organizations at January 31, 2017 consist of the following:
Fees and commissions receivable
|
|
$
|
14,441
|
|
NOTE
7 – MORTGAGE AND RELATED PARTY NOTES PAYABLE
58
Main Street
On
January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on the property located
at 58 Main Street, Topsfield, Massachusetts. The note bears interest at 4.875% per annum and is due August 26,
2019. Monthly principle and interest payments totaling $4,435 started on September 26, 2009 and will continue through
the maturity date. The mortgage note is secured by the underlying property. At maturity, the balloon payment of $481,454
will be due in full. The remaining principal balance as of January 31, 2017 and April 30, 2016 is $511,800 and $525,322, respectively.
Future
principle requirements on long-term debt for fiscal years ending after January 31, 2017 are as follows:
Mortgage Payable
|
For fiscal year ending
|
|
Future
Payout
|
|
2016
|
|
$
|
13,305
|
|
2017
|
|
|
53,220
|
|
2018
|
|
|
53,220
|
|
2019 and thereafter
|
|
|
392,055
|
|
Total
|
|
$
|
511,800
|
|
NOTE
8 – SECURED LINE OF CREDIT
On
October 14, 2015, by, between and among Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered
into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations
of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of
Brian Woodland.
The
revolving line of credit note (hereinafter referred to as the “Note”), made by the Borrower and payable to the order
of the bank, at the initial per annum rate of 265 basis points above LIBOR (3.086% as of April 30, 2016), floating for two (2)
years. The Note shall provide for monthly payments of interest only for the first two (2) years of the term. Thereafter, the Note
shall for the next five (5) years of the Loan term provide for monthly payments of principal and interest based upon the 5/15
Federal Home Loan Bank Rate plus 200 basis points. Monthly payments of principal and interest shall be made based upon a 25-year
amortization schedule, with a final payment of the unpaid principal balance, interest, fees and late charges, if any, due on October
14, 2022.
As of January 31, 2017
and April 30, 2016, the Company has drawn down a total of $956,113 and $956,113 and recorded accrued interest of $1,861 and $2,465,
respectively.
NOTE
9 – FUTURE RENTS AND TENANT CONCENTRATION
The
Company’s revenue is derived from property leases with varied lease terms. The following table represents future minimum
rents to be received under non-cancelable leases with terms of twelve months or more as of January 31, 2017:
Future Rents
|
For fiscal year ending
|
2017
|
|
$
|
63,776
|
|
2018
|
|
|
214,397
|
|
2019
|
|
|
111,978
|
|
|
|
$
|
390,151
|
|
For the nine months
ended January 31, 2017 we had one client that represented 6% of revenues (related party). For the nine months ended January 31,
2016, two tenants represented approximately 25% and 15% of the Company’s revenue.
NOTE
10 – RELATED PARTY TRANSACTIONS
Related
parties to the Company include, but are not limited to, officers, directors, and shareholders. From time to time, the Company
receives loans and advances from Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage
LP formerly held equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently shareholders and controlled
by the Company’s president.
An aggregate of $555,930
and $504,218 has been received from related parties for working capital purposes and debt and expenses paid on the Company’s
behalf at January 31, 2017 and April 30, 2016, respectively. These advances are interest-free and payable upon demand. During the
three and nine month ended January 31, 2017 and 2016 the Company imputed interest expense of $5,569, $20,696, $7,603 and $22,798,
respectively.
During
the three and nine months ended January 31, 2017 and 2016 revenue included $18,000, $54,000, $18,615 and $36,615, respectively,
in rental income from Phalanx Partners who is owned by our Principal and Shareholder, who occupies an office in one of the Company’s
properties.
On
October 14, 2015, by, between and among Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered
into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations
of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of
Brian Woodland (See Note 7).
On
November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into
203,711 shares of common stock ($7.58 per share).
On August 11, 2016,
the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”),
in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield,
MA 01983 from a related party. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock
of the Company valued at $431,050 ($7.02 per share) from a related party. The Company now owns a 100% interest in 6 Park Street,
Topsfield, MA 01983. The transaction was recorded at the net asset value of the non-controlling interest on the date of acquisition.
On August 11, 2016,
the Company entered into a “Magnolia Lane Share Issuance Agreement” with Founders Circle Partners, LLC (“Founders”)
(Related Party) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield,
MA 01983. The purchase was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock valued
at $1,190,815 ($7.07 per share) of the Company from a related party.
On
October 31, 2016, the Company converted a $500,000 advance from an entity controlled by Company’s President into 71,429
shares of common stock ($7.00 per share).
On
October 31, 2016, the Company President returned to the treasury and cancelled 1,115,426 shares of common stock (at par value
of $.0001).
On
November 1, 2016, the Company entered into a Share Agreement with WS Advantage LP whereby the Company issued 125,000 shares of
the Company’s common stock to WS Advantage LP (Related Party) in exchange for all of WS Advantage LP’s interest in
Riversky Realty LLC, which owns the property located at 17/19 Main Street, Topfield, MA. WS Advantage LP is owned and managed
by the Company’s President. The Company will close the transaction pending receipt of 2 years of GAAP based audited financial
statements.
On November 1, 2016,
the Company entered into a Share Agreement with Phalanx Partners, LLC. (Related Party) whereby the Company issued 1,384,487 shares
of the Company’s common stock to Phalanx Partners, LLC. (Related Party) in exchange for all the interest in Huntwicke Securities
LLC and Huntwicke Advisors, LLC. The acquisition of Huntwicke Securities LLC. (Related Party) is subject to approval by the Financial
Industry Regulatory Authority. Phalanx Partners, LLC. (Related Party) is owned and managed by the Company’s President. As
such, the Company recorded the Asset at its historical cost of $199,576. The effective closing date for this transaction was November
1, 2016.
NOTE
11 – STOCKHOLDERS’ EQUITY
Common
stock
Common
Stock includes 200,000,000 shares authorized at a par value of $0.0001.
On August 11, 2016,
the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”),
in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield,
MA 01983. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company valued
at $431,050. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983. The transaction was recorded at the net
asset value of non-controlling on the date of acquisition.
On
August 11, 2016, the Company entered into an agreement with Founders Circle Partners, LLC (“Founders”) whereby the
Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase
was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock of the Company. Below are the
pro-forma financial statements as if the Founders Circle Partners, LLC had been acquired on April 1, 2016.
The
acquisition date estimated fair value of the consideration transferred consisted of following:
Total assets acquired
|
|
$
|
1,208,122
|
|
Liabilities assumed
|
|
|
(17,307
|
)
|
Total purchase price
|
|
$
|
1,190,815
|
|
On
November 1, 2016, the Company entered into a Share Agreement with Phalanx Partners, LLC. (Related Party) whereby the Company issued
1,384,487 shares of the Company’s common stock to Phalanx Partners, LLC. (Related Party) in exchange for all the interest
in Huntwicke Securities LLC and Huntwicke Advisors, LLC. The acquisition of Huntwicke Securities LLC. (Related Party) is subject
to approval by the Financial Industry Regulatory Authority. Phalanx Partners, LLC. (Related Party) is owned and managed by the
Company’s President. As such, the Company recorded the Asset at its historical cost. The effective closing date for this
transaction was November 1, 2016.
The
acquisition date estimated fair value of the consideration transferred consisted of following:
Total assets acquired
|
|
$
|
315,637
|
|
Liabilities assumed
|
|
|
(116,061
|
)
|
Total purchase price
|
|
$
|
199,576
|
|
HUNTWICKE CAPITAL GROUP, INC.
PROFORMA CONSOLIDATING STATEMENTS
OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY
31, 2017
|
|
Huntwicke Captial
Group
for the
nine months
ended
January 31,
2017
|
|
|
Founders Circle Partners, LLC from May 1,
2016
to
August 11,
2016
date of
acquisition
|
|
|
Huntwicke
Securities
LLC from
May 1,
2016
to
November 1,
2016
date of
acquisition
|
|
|
Huntwicke
Advisors,
LLC from
May 1,
2016 to
November 1,
2016
date of
acquisition
|
|
|
Pro-Forma
adjustments
|
|
|
Unaudited condensed nine months ended January
31, 2017
pro-forma
amount
|
|
Revenues
|
|
$
|
994,476
|
|
|
$
|
54,250
|
|
|
$
|
1,577,995
|
|
|
$
|
62,717
|
|
|
$
|
-
|
|
|
$
|
2,689,438
|
|
Operating expenses
|
|
|
1,289,610
|
|
|
|
40,111
|
|
|
|
1,483,663
|
|
|
|
141,302
|
|
|
|
-
|
|
|
|
2,954,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(295,134
|
)
|
|
|
14,139
|
|
|
|
94,332
|
|
|
|
(78,585
|
)
|
|
|
-
|
|
|
|
(265,248
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before provision for income taxes
|
|
|
(295,134
|
)
|
|
|
14,139
|
|
|
|
94,332
|
|
|
|
(78,585
|
)
|
|
|
-
|
|
|
|
(265,248
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
37,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME / (LOSS)
|
|
$
|
(257,934
|
)
|
|
$
|
14,139
|
|
|
$
|
94,332
|
|
|
$
|
(78,585
|
)
|
|
$
|
-
|
|
|
$
|
(228,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares outstanding basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,245,267
|
|
Net Loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.07
|
)
|
On November 1, 2015, the
Company issued 169,256 shares of common stock valued at $1,184,792 ($7.00 per share) to a related party to purchase the remaining
minority interest in Butler Cabin LLC. Subsequent to November 1, 2015, the parties elected to rescind the share issuance. As of
April 30, 2016, the shares were returned to the treasury.
On August 11, 2016, the Company entered into an agreement with Founders Circle Partners, LLC whereby the
Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. As consideration
for the purchase, the Company agreed to issue Founders 170,831 shares of common stock of the Company valued at $1,193,739 the historical
depreciated basis of the asset acquired. Founders Circle Partners, LLC. is an entity controlled by Brian Woodland, President and
Chief Financial Officer of the Company. As such, the Company recorded the Asset at its historical cost of $431,050. The effective
closing date for this transaction was August 11, 2016.
On
October 31, 2016, the Company converted a $500,000 advance from an entity controlled by Company’s President into 71,429
shares of common stock ($7.00 per share). See Note 10.
On
October 31, 2016, the Company President returned to the treasury 1,115,426 shares of common stock (at par value of $.0001). See
Note 10.
On November 1, 2016, the
Company entered into a Share Agreement with Phalanx Partners, LLC, whereby the Company issued 1,384,487 shares of the Company’s
common stock to Phalanx Partners, LLC. in exchange for all the interest in Huntwicke Securities LLC and Huntwicke Advisors, LLC.
The acquisition of Huntwicke Securities LLC is subject to approval by the Financial Industry Regulatory Authority. Phalanx Partners,
LLC. is owned and managed by the Company’s President. As such, the Company recorded the Asset at its historical cost of
$199,576. The effective closing date for this transaction was November 1, 2016.
Preferred
stock
Preferred
stock includes 100,000,000 shares authorized at a par value of $0.0001, of which none are issued or outstanding.
On
November 12, 2015, the board of directors of the Company authorized a Certificate of Designations of Preferences, Rights and Limitations
of Series A Preferred Stock (the “Certificate of Designation”), designating
five
(5) shares of Series A Preferred stock. E
ach share of Series A Preferred Stock shall be entitled to vote on all matters
submitted or required to be submitted to a vote of the stockholders of the Corporation and shall be entitled to two votes for
each whole share of Common Stock (two (2) is referred as the “
Vote Multiplier
” hereunder), at the record date
for the determination of stockholders entitled to vote on such matters or, if no such record date is established, at the date
such vote is taken or any written consent of stockholders is solicited. In each case, except as otherwise required by law or expressly
provided herein, the holders of shares of Series A Preferred Stock and Common Stock shall vote together and not as separate classes.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, for each share of Series
A Preferred Stock, the Holders shall not be entitled to receive any amount out of the assets, whether capital or surplus, of the
Corporation. The Series A Preferred Stock may be redeemed by the Corporation at no consideration to, and with no further
action required on the part of, the Holders.
Effective on March 23, 2016, with the
filing of the amendment to the Company's Articles of Incorporation with the Nevada Secretary of State, specifically a Certificate
of Designation, the Company amended its Articles of Incorporation to designate five (5) shares of its authorized preferred stock
as Series A Preferred Stock with specific rights and preferences. On that same date, the Company issued one share to its President
valued at $0.
Additional
paid in Capital
During the three and nine
months ended January 31, 2017 and 2016 the Company recorded imputed interest on stockholders’ loans of $5,569, $20,696,
$7,603 and $22,798, respectively.
NOTE
12 – SUBSEQUENT EVENTS
On March 30, 2017, retroactive
to November 1, 2016, the Company rescinded an agreement to purchase from WS Advantage LP whereby the Company issued 125,000 shares
of the Company’s common stock to WS Advantage LP in exchange for all of WS Advantage LP’s interest in Riversky Realty
LLC, which owns the property located at 17/19 Main Street, Topfield, MA. WS Advantage LP is owned and managed by the Company’s
President. The Company will close the transaction pending receipt of 2 years of GAAP based audited financial statements.
On June 2, 2017, a
related entity repaid $13,000 owed to the Company.
The
money was advanced in anticipation of a closing and then repaid when the closing failed. The money was repaid on June 2
nd
,
2017.