Kindcard, Inc 10-Q for FY2023 Q2
Kindcard, Inc. (KCRD)
About this 10-Q
Kindcard, Inc filed this 10-Q on September 19, 2022, covering the quarter ended July 31, 2022 (FY2023 Q2).
Headline figures
Quarter ended July 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $139.2K
- compared with $0 a year earlier
- Net loss
- $116.49K
- compared with a net loss of $13.99K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
Commission File Number
|
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
None |
| N/A |
| N/A |
As of September 13, 2022, there were
TABLE OF CONTENTS
|
|
| ||
|
|
|
| |
| 3 |
| ||
|
|
|
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
| 4 |
| |
|
|
|
|
|
| 6 |
| ||
|
|
|
|
|
| 6 |
| ||
|
|
|
|
|
|
|
| ||
|
|
|
| |
| 7 |
| ||
|
|
|
|
|
| 7 |
| ||
|
|
|
|
|
| 7 |
| ||
|
|
|
|
|
| 7 |
| ||
|
|
|
|
|
| 7 |
| ||
|
|
|
|
|
| 7 |
| ||
8 | ||||
| 2 |
| Table of Contents |
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
Kindcard, Inc. and Subsidiaries
Consolidated Financial Statements
July 31, 2022
(Unaudited)
Table of Contents
| 3 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Consolidated Balance Sheets
|
| July 31, 2022 |
|
| January 31, 2022 |
| ||
Assets |
| (unaudited) |
|
|
| |||
Current Assets: |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Accounts receivable, net |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
| $ |
| ||
Property, plant and equipment, net |
|
|
|
|
|
| ||
Intellectual property, net |
|
|
|
|
|
| ||
Total Other Assets |
|
|
|
|
|
| ||
Total Assets |
| $ |
|
| $ |
| ||
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ |
|
| $ |
| ||
Accrued payroll expenses |
|
|
|
|
|
| ||
Due to related party |
|
|
|
|
|
| ||
Notes payable |
|
|
|
|
|
| ||
Current portion SBA loan |
|
|
|
|
|
| ||
Total Current Liabilities |
|
|
|
|
|
| ||
Long-term Liabilities |
|
|
|
|
|
|
|
|
SBA loan and accrued interest |
|
|
|
|
|
| ||
Total Long-term Liabilities |
|
|
|
|
|
| ||
Total Liabilities |
|
|
|
|
|
| ||
Commitments and Contingencies - See Note 9 |
|
|
|
|
|
| ||
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
| ||
Authorized |
|
|
|
|
|
|
|
|
Additional Paid In Capital |
|
|
|
|
| ( | ) | |
Accumulated Deficit |
|
| ( | ) |
|
| ( | ) |
Total Stockholders’ Deficit |
|
| ( | ) |
|
| ( | ) |
Total Liabilities and Stockholders’ Deficit |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-1 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
|
| For the three months ended July 31, |
|
| For the six months ended July 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional Fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Loss from Operations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Other Income – Wholesale Payments-See Note 11 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Loss |
| $ | ( | ) |
|
| ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Net Income Per Common Share – Basic and Diluted |
| $ | - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
Weighted Average Number of Common Shares Outstanding - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-2 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
For the three and six months ended July 31, 2022
(Unaudited)
|
| Common Stock |
|
| Additional |
|
|
|
|
| ||||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Accumulated Deficit |
|
| Total |
| |||||
Balance, January 31, 2022 |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Net income for period ended April 30, 2022 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Shares issued in exchange for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance, April 30, 2022 |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Net loss for period ended July 31, 2022 |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Shares issued for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Shares issued with debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance, July 31, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
For the three and six months ended July 31, 2021
(Unaudited)
|
| Common Stock |
|
| Additional |
|
|
|
|
| ||||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Accumulated Deficit |
|
| Total |
| |||||
Balance, January 31, 2021 |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Net loss for period ended April 30, 2021 |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance, April 30, 2021 |
|
|
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||
Net loss for period ended July 31, 2021 |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance, July 31, 2021 |
|
|
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-3 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
|
| For the six months ended |
| |||||
|
| July 31, |
|
| July 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Cash Flows from Operating Activities: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net income to net cash used in operations |
|
|
|
|
|
|
|
|
Stock issued for services |
|
|
|
|
|
| ||
Depreciation and amortization |
|
|
|
|
|
| ||
Decrease (increase) in operating assets/liabilities |
|
|
|
|
|
| ||
Accounts receivable |
|
| ( | ) |
|
|
| |
Accounts payables |
|
| ( | ) |
|
| ( | ) |
Accrued expenses |
|
| ( | ) |
|
|
| |
Total Adjustments to reconcile Net loss to Net Cash (used in) operations |
|
| ( | ) |
|
| ( | ) |
Net cash (used in) by operating activities |
| $ | ( | ) |
| $ | ( | ) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of software and equipment |
|
| ( | ) |
|
|
| |
Net cash used in investing activities |
|
| ( | ) |
|
|
| |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from related party loan |
|
|
|
|
|
| ||
Proceeds from sale of shares for cash |
|
|
|
|
|
| ||
Proceeds from notes payable, net |
|
|
|
|
|
| ||
Net cash provided by financing activities |
| $ |
|
| $ |
| ||
Net cash increase (decrease) for the year |
|
| ( | ) |
|
|
| |
Cash at beginning of year |
| $ |
|
| $ |
| ||
Cash at end of year |
| $ |
|
| $ |
| ||
Supplemental disclosures: |
|
|
|
|
|
|
|
|
Non-cash investing & financing activities: |
|
|
|
|
|
|
|
|
Common Stock issued in exchange for services |
| $ |
|
| $ | - |
| |
Software purchases included in accounts payable |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| F-4 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
KindCard, Inc. (f/k/a MWF Global Inc.) (the “Company”) was incorporated in the State of Nevada on November 18, 2016, and established a fiscal year end of January 31. The Company was originally organized to sell unique country specific handcrafted natural products with a focus on sourcing these products from South-East Asia and offering these products for sale through the Company’s website and to establish other distribution channels. On June 1, 2021, RMR Management LLC (“RMR” and the “Majority Stockholder”) purchased
The Company’s principal business activity through its wholly owned operating subsidiaries, Deb Inc. and Tendercard Inc., is an innovative FinTech and PayTech company which provides alternative Closed-Loop payment solutions to consumers and businesses across a wide variety of verticals.
Going concern
These financial statements have been prepared assuming the Company will be able to continue as a going concern. To date, the Company has generated revenues from its business operations and has incurred accumulated operating losses of $
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the fiscal year ended January 31, 2022 included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended July 31, 2022 are not necessarily indicative of the results that may be expected for the year ending January 31, 2023.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. These estimates include Allowance of doubtful accounts, and Impairment of long-lived assets.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
| F-5 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
Revenue Recognition
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Revenue is recognized when all of the following criteria are met:
(i) Identification of the contract, or contracts, with a customer (ii) Identification of the performance obligations in the contract (iii) Determination of the transaction price (iv) Allocation of the transaction price to the performance obligations in the contract (v) Recognition of revenue when, or as, we satisfy performance obligation
We currently offer the following products and services:
Vault Program provides cash pick up services for retail & wholesale merchants the within North American retail market. Commission revenues are recorded over the life of these multiyear contracts.
Tendercard provides a stored value point of sale gift card processing solution to small and mid-sized businesses within North American retail market. The Company’s proprietary host-based program provides real time data and accurate records of all activity related to the gift card processing account and the related monthly reporting. Fixed monthly service fee revenues are recorded monthly over the life of these multiyear contracts. The fees are collected in arrears resulting in accounts receivable at the end of each month.
Fair Value of Financial Instruments
The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB Accounting Standards Codification No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.
Loss per Common Share
The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per share is the same as basic loss per share due to the lack of dilutive instruments in the Company. There are no common stock equivalents at July 31, 2022.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances and tax loss carry-forwards. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
| F-6 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
NOTE 2 – BUSINESS ACQUISITION
On June 7, 2021, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Kindcard, Inc., a Massachusetts corporation (“KindCard MA”) and Croesus Holdings Corp., a Massachusetts corporation (“Croesus” and together with Kindcard MA, the “Seller”)pursuant to which the Company acquired 100% of the outstanding shares of common stock of Kindcard MA (the “Kindcard MA Shares”)and all of intellectual property and operational assets (collectively, the “Tendercard Assets”) of the Tendercard Division of Croesus in consideration of an aggregate of
As a result, the goodwill from the acquisition of the Kindcard MA Shares was considered impaired and the Company recorded and impairment expense of $
On August 26, 2021, Tendercard, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada.
The Company’s principal business activity through its wholly owned operating subsidiaries, Deb Inc. and Tendercard Inc., is an innovative FinTech and PayTech company which provides alternative Closed-Loop payment solutions to consumers and businesses across a wide variety of verticals.
The Company recorded the acquisition in accordance with ASC-805, pertaining to business combinations. The following table summarizes the consideration paid for the acquisition and the amounts of the assets acquired at fair market value assumed recognized at the acquisition date.
Purchase Price Considerations |
| Fair Value |
| |
Stock Consideration |
| $ |
| |
SBA Loan |
|
|
| |
Total Purchase Consideration & Assumed Liabilities |
| $ |
| |
Tangible Assets |
|
|
|
|
Cash |
|
|
| |
Accounts Receivable |
|
|
| |
Intangible Assets |
|
|
|
|
Customer Lists |
|
|
| |
Website |
|
|
| |
Trade Name |
|
|
| |
Technology |
|
|
| |
Goodwill |
|
|
| |
Total Assets |
| $ |
| |
NOTE 3 – ACCOUNTS RECEIVABLE, Net
We estimate credit loss reserves for accounts receivable on an individual receivable basis. A specific allowance is established based on expected future cash flows and the financial condition of the debtor. We charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due. We consider any balance unpaid after the contract payment period to be past due. There are $
| F-7 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful life of the asset generally ranging from three to seven years.
Property and equipment consist of the following at:
|
| July 31, |
|
| January 31, |
| ||
|
| 2022 |
|
| 2022 |
| ||
Merchandise and equipment: Vault |
| $ |
|
| $ |
| ||
Merchandise and equipment: Office Equipment |
|
|
|
|
|
| ||
Merchandise and equipment: IT Equipment |
|
|
|
|
|
| ||
Less: accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
| $ |
| ||
Depreciation expense amounted to approximately $
NOTE 5 – GOODWILL AND INTANGIBLE ASSETS
The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired and liabilities assumed, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors such as macro-economic conditions, industry and market conditions, cost factors as well as other relevant events, to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. The Company did not note any impairment as of July 31, 2022.
Goodwill
Goodwill recorded was $110,291 and related specifically to the acquisition of Kindcard with no other assets assumed on June 7, 2021 (see note 2). KindCard failed to deliver its registered trademark and failed to deliver the software that conforms to industry standards. As a result, the goodwill from the acquisition of Kindcard was considered impaired in full and the Company recorded and impairment expense of $110,291 during the year ended January 31, 2022.
Intangible assets
Intangible assets are comprised of customer relationships and brands acquired in a business combination specifically related to the Tendercard division (see note 2) and its DEB Platform. The Company amortizes intangible assets with a definitive life over their respective useful lives. Assets with indefinite lives are tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company did not note any impairment as of July 31, 2022.
| F-8 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
NOTE 5 – GOODWILL AND INTANGIBLE ASSETS (continued)
Intangible assets (continued)
On December 21, 2021 the Company entered into a contract to develop its DEB Platform, a proprietary payment processing platform for a total cost of $
|
| July 31, 2022 |
|
| January 31, 2022 |
| ||
Definite-lived intangible assets |
|
|
|
|
|
| ||
Technology: DEB Platform |
| $ |
|
| $ |
| ||
Technology: Tendercard Program |
|
|
|
|
|
| ||
Customer Lists |
|
|
|
|
|
| ||
Website |
| $ |
|
| $ |
| ||
Trade Name |
|
|
|
|
|
| ||
Less: accumulated amortization |
|
| ( | ) |
|
| ( | ) |
Definite-lived intangible assets, net |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Total Intangibles |
| $ |
|
| $ |
| ||
The following is the future estimated amortization expense related to intangible assets as of July 31, 2022:
Year ending January 31, |
|
|
| |
2023 - |
|
|
| |
2024 - |
|
|
| |
2025 - |
|
|
| |
2026 - |
|
|
| |
2027 - |
|
|
| |
Total - |
| $ |
| |
NOTE 6 – CURRENT LIABILITIES
Accounts Payable
Accounts Payable is comprised of Trade payables of $
Accrued Payroll Expenses
Balance consists of Accrued Salaries & Wages $
Notes Payable
Notes payable consists of $
NOTE 7 – DUE TO RELATED PARTY
Due to Related Party
The total amount owed to the CEO as of July 31, 2022 was $
| F-9 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
NOTE 8 – SBA Loan
The balance consists of Small Business Administration Economic Disaster Injury Loan assumed in the acquisition of Kindcard on June 7, 2021, with a principal balance of $
Year ending January 31,
2023: |
| $ |
| |
2024: |
|
|
| |
2025: |
|
|
| |
2026: |
|
|
| |
2027: |
|
|
| |
Thereafter |
|
|
| |
Total future minimum loan payments |
| $ |
| |
Less: current portion |
|
| ( | ) |
Long-term portion |
|
|
|
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The recent outbreak of the coronavirus COVID-19 has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company’s business activities. The extent to which COVID-19 may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time. No adjustments have been made to the amounts reported in these consolidated financial statements as a result of this matter.
On May 25, 2022 the Company entered into an Advisory Agreement related to the development, design and build of their compliance and state licensing program. The initial term of the agreement is six months at a rate of $
On May 25, 2022 the Company entered into an Advisory Agreement for the oversight of all regulatory BSA/AML compliance matters and the drafting of the Company’s comprehensive BSA/AML compliance program policies and procedures. The initial term of the agreement is six months at a rate of $
NOTE 10 – COMMON STOCK
The Company is authorized to issue
The Company issued
The Company issued
The Company issued
The Company issued
The Company issued
| F-10 |
| Table of Contents |
Kindcard, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2022
NOTE 11 – TERMINATION OF MATERIAL DEFINITIVE AGREEMENT
An Asset Purchase Agreement, dated as of the 1st day of January, 2022, was entered into between Wholesale Payments LLC, a Wyoming limited liability company (“Seller”) and the Company, Kindcard, Inc., a Nevada corporation (“Buyer”) to purchase
NOTE 12 – SUBSEQUENT EVENTS
On August 5, 2022, the Company received a short-term loan from Vision Payments, Inc. in the amount of $
On August 17, 2022, the Company received a short-term loan from an accredited investor in the amount of $
On August 31, 2022, the Company received a short-term loan from an accredited investor in the amount of $
| F-11 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended January 31, 2022, included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed on May 17, 2022 (the “Annual Report”) with the U.S. Securities and Exchange Commission (the “SEC”). This Quarterly Report on Form 10-Q contains forward looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.
In some cases, you can identify forward-looking statements by terminology such as ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘expects,’ ‘plans,’ ‘intends,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘predicts,’ ‘potential,’ or ‘continue’ or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this report.
Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Kindcard Inc. and its subsidiaries.
Company Overview
KindCard, Inc. (f/k/a MWF Global Inc.) (the “Company”) was incorporated in the State of Nevada on November 18, 2016, and established a fiscal year end of January 31. The Company was originally organized to sell unique country specific handcrafted natural products with a focus on sourcing these products from South-East Asia and offering these products for sale through the Company’s website and to establish other distribution channels. On June 1, 2021, RMR Management LLC (“RMR” and the “Majority Stockholder”) purchased 54,000,000 shares of common stock of the Company, representing the majority of the Company’s issued and outstanding shares, from William D Mejia in consideration of a purchase price of $150,000. RMR is owned and controlled by Michael Rosen, the Company’s sole officer and director. On June 7, 2021, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Kindcard, Inc., a Massachusetts corporation (“KindCard MA”) and Croesus Holdings Corp, a Massachusetts corporation (“Croesus” and together with Kindcard MA, the “Seller”), pursuant to which the Company acquired (i) all of the intellectual property and operational assets (collectively, the “Assets”) of the Tendercard Division of Croesus and (ii) 100% of the issued and outstanding shares of common stock of Kindcard MA in consideration of an aggregate of 8,000,000 shares of common stock of the Company. On June 16, 2021, Michael Rosen was appointed as a Director of the Company. On June 30, 2021, William D. Mejia resigned as a director and the sole officer of the Company and Michael Rosen was appointed as the sole officer of the Company. On July 9, 2021, the Company filed a Certificate of Amendment to Articles of Incorporation (the “Certificate”) with the State of Nevada effectuate a name change (the “Name Change”). As a result of the Name Change, the Company’s name changed from “MWF Global Inc.” to “Kindcard, Inc.”. The Certificate was approved by the Majority Stockholder and by the Board of Directors of the Company. The Purchase Agreement and the transactions contemplated therein closed on August 16, 2021 (the “Closing”). Subsequent to the Closing, the Company became aware that the Sellers failed to deliver certain of the Assets to the Company in material breach of the Purchase Agreement. A settlement arrangement is currently being negotiated between the Company and Sellers in connection with such matter. On August 26, 2021, Tendercard, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada. In connection with the Name Change, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Name Change was implemented by FINRA on September 21, 2021. Our symbol on OTC Markets was KCRDD for 20 business days from September 21, 2021 (the “Notification Period”). Our new CUSIP number is 49452K105. As a result of the name change, our symbol was changed to “KCRD” following the Notification Period.
The Company, through its wholly owned operating subsidiaries, Deb Inc. and Tendercard Inc., is an innovative FinTech and PayTech company which provides alternative Closed-Loop payment solutions to consumers and businesses across a wide variety of verticals. The Company believes that mobile wallet technology will ultimately grow to become the preferred method for merchants and consumers to transact at the point of sale, and it is our goal to capture significant market share from the mobile wallet segment through our proprietary consumer app and merchant services platform, “Pay with Deb”.
Deb Inc. targets the high-risk merchant market where businesses operating within innovative verticals and e-commerce are incurring higher transaction costs, utilizing a robust compliance policy for onboarding users and businesses in accordance with federal and state regulations. Pay with Deb operates on a closed loop system, whereby consumers can purchase “Deb Tokens” to store in their wallet and use them to make purchases with the Pay with Deb merchant network. Deb Tokens are not a crypto currency, stable coins, or tied to any exchange. Funds used to purchase Deb Tokens are kept in a custodial deposit account ensuring that Deb Tokens are valued 1:1 with the US dollar. By using Deb Tokens to transact with customers, suppliers, vendors, and employees, businesses can send and receive money without using traditional banking infrastructure or credit card rails. For businesses, Pay with Deb eliminates the transaction fees associated with traditional payment processors at the point of sale. For the consumer, Pay with Deb transactions at the point of sale only appear on the mobile wallet’s statement, not bank or credit card statements, offering additional privacy to the customer.
| 4 |
| Table of Contents |
Tendercard Inc. provides independent merchants with a gift card and loyalty platform, allowing businesses to purchase their own proprietary gift card program to promote and sell to their own customers, where their customers can also earn points. Tendercard’s gift card and loyalty platform replaces paper gift certificates and all manual recordkeeping with an electronic accounting and reporting system hosted by Tendercard. Unlike other gift card providers, Tendercard settles gift card purchases directly to the merchant’s account, never taking control of the money. Tendercard processing is available through the Bridgepay payment gateway and can be used with a dedicated terminal, or with Pax, and Dejavoo terminals.
Kindcard is dedicated to providing universal access to digital payment tools for all entities, persons, and governments, who accept or pay with money. Each of our business units has a focused value proposition, delivering cutting-edge fintech and paytech solutions within their target markets. Combined with excellent customer service, Kindcard aims to grow its user base and merchant network exponentially over the next two years.
Results of Operations
For the three-month period ended July 31, 2022, we had revenues of $139,204 as compared to $NIL in revenues for the three-month period ended July 31, 2021. Total Cost of Sales for the three-month period ended July 31, 2022 was $19,532 resulting in a Gross Profit of $119,672 as compared to Total Cost of Sales for the three-month period ended July 31, 2021 of $NIL. Operating Expenses for the three-month period ended July 31, 2022 were $236,160 resulting in Net Loss from Operations of $116,488. The net loss for the three-month period ended July 31, 2022 is comprised of General and Administrative Expenses of $220,751, Depreciation and Amortization of $15,409 and Professional Fees of $NIL, as compared to the Net Loss for the three-month period ended July 31, 2021 of $13,992 which were comprised of General and Administrative Expenses of $9,992, Professional fees of $4,000, and Depreciation and Amortization of $NIL.
For the six-month period ended July 31, 2022, we had revenues of $324,154 as compared to $NIL in revenues for the six-month period ended July 31, 2021. Total Cost of Sales for the six-month period ended July 31, 2022 was $36,008, resulting in a Gross Profit of $ 288,146, as compared to Total Cost of Sales for the six-month period ended July 31, 2021 of $NIL resulting in a Net Loss for the six-month period ended July 31, 2021 of $23,055. Operating Expenses for the six-month period ended July 31, 2022 were $433,348 Other Income was $48,968 resulting in Net Loss from Operations of $96,234. The net loss for the six-month period ended July 31, 2022 is comprised of General and Administrative Expenses of $415,749, Depreciation and Amortization of $17,599 and Professional Fees of $NIL, as compared to the Net Loss for the six-month period ended July 31, 2021 of $23,055 which were comprised of General and Administrative Expenses of $10,555, Professional fees of $12,500, and Depreciation and Amortization of $NIL.
Liquidity and Capital Resources
We anticipate until we generate a more rapid growth in revenues, although we have raised limited funds in the form of debt financing we will require additional financings in order to fully implement our plan of operations.
As of July 31, 2022 we had $16,118 in cash, $68,017 in Accounts Receivable and $296,501 due to related parties. Total liabilities as of July 31, 2022, were $703,580 compared to $629,108 in total liabilities at January 31, 2022. The funds available to the Company will not be sufficient to fund the planned operations of the Company and maintain a reporting status.
The total amount owed to the CEO as of July 31, 2022 was $296,501. The amounts due to related party are unsecured and non-interest bearing with no set terms of repayment
The balance consists of Small Business Administration Economic Disaster Injury Loan assumed in the acquisition of Kindcard on June 7, 2021, with a principal balance of $150,000 and $3,160 accrued interest for a total balance of $153,160. An additional $6,842 of interest was accrued for the fourteen months ended July 31, 2022 for a total balance of $160,002. The term of the note is 30 years with an interest rate of 3.75% per annum, Installment payments of $713 currently scheduled to begin April 14, 2023, Accounts Payable of $94,565, Accrued Payroll Expenses of $44,641 and Notes Payable of $116,963.
Off-balance sheet arrangements
Other than the situation described in the section titled Capital Recourses and Liquidity, the company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets
| 5 |
| Table of Contents |
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
In connection with this quarterly report, as required by Rule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company’s management, including our company’s principal executive officer and principal financial officer. Based upon that evaluation, our company’s principal executive officer and principal financial officer concluded that subject to the inherent limitations noted in this Part II, Item 9A(T) as of July 31, 2022, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal controls over financial reporting.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended July 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
| 6 |
| Table of Contents |
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Currently we are not involved in any pending litigation or legal proceeding.
Item 1A. Risk Factors.
We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
| 7 |
| Table of Contents |
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
| Advisor Agreement by and between Kindcard, Inc. and VSR LLC dated May 25, 2022. | |
|
|
|
| Advisor Agreement by and between Kindcard, Inc. and Geoff Ostrove dated May 25, 2022. | |
|
|
|
| ||
|
|
|
31.2 |
| Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15(d)-14(a) of the Securities Act of 1934 + |
|
|
|
| ||
|
|
|
32.2 |
| Certification of Chief Financial Officer under Section 1350 as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ++ |
|
|
|
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document |
|
|
|
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith |
|
|
# | Indicates management contract or compensatory plan. |
|
|
+ | Included in Exhibit 31.1 |
|
|
++ | Included in Exhibit 32.1 |
| 8 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Kindcard, Inc. |
| |
| (Registrant) |
| |
|
|
|
|
Date: September 19, 2022 | By: | /s/ Michael Rosen |
|
| Michael Rosen |
| |
| CEO, CFO, President, and Director |
| |
| (Principal Executive Officer, |
| |
| Principal Financial and Accounting Officer) |
| |
9 |
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 31.1
CERTIFICATIONS
I, Michael Rosen, certify that:
| 1. | I have reviewed this quarterly report of Kindcard, Inc. (f/k/a MWF Global Inc.); |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have: |
|
| a) | Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b) | Designed such internal controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions): |
|
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and, |
|
|
|
|
|
| b) | Any fraud, whether material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Michael Rosen |
|
| Michael Rosen CEO, CFO, President, and Director (Principal Executive Officer, Principal Financial Officer and Director) |
|
|
|
|
| Date: September 19, 2022 |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended July 31, 2022 of Kindcard, Inc. (f/k/a MWF Global Inc.), a Nevada corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Transition Report"), I, Michael Rosen, CEO, President and Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Quarterly Report fully complies with the requirements of Section 13(a) or15(d) of the Securities and Exchange Act of 1934, as amended; and |
|
|
|
| 2. | The information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
| /s/ Michael Rosen |
|
| Michael Rosen CEO, CFO, President, and Director (Principal Executive Officer, Principal Financial Officer) |
|
|
|
|
| Date: September 19, 2022 |
|