We lease approximately 2,000 square feet of office and warehouse space located at 761 NW 23rd Street
This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.
On February 7, 2017 the Company entered into an agreement with the members of Grand Havana Master LLC, a Florida limited liability company, whereby the Company acquired Grand Havana Master in exchange for shares of the Company, Grand Havana Master became a wholly-owned subsidiary of the Company, we sold the business of First Choice Apparel and the website junkiedog.com to Roberto Luciano and adopted the business plan of Grand Havana Master.
We had revenue of $204,303 for the year ended December 31, 2017. Comparatively, we had revenue of $210,508 for the year ended December 31, 2016. The difference is due to the Company’s change to the food servicing business following the acquisition of Cafesa,Co.
We had operating expenses of $4,228,850 for the year ended December 31, 2017 compared to operating expenses of $276,796 during the year ended December 31, 2016. The increase is mainly due to the change in business from selling retail products to selling to wholesale accounts, the impairment of goodwill of $553,980, and the issuance of 100 shares of Series A preferred stock to employees valued at $2,811,782.
Net cash used in investing activities was $5,594 for the fiscal year ended December 31, 2017, due primarily to purchase of property and equipment of $8,465, cash acquired in Cafesa acquisition of $2,393 and cash acquired in reverse merger of $478.
(ii) the services have been rendered and all required milestones achieved,
The Company’s revenue is primarily derived from the sale of coffee, tea and accessories. The Company records revenue when the amount is fixed or determinable, delivery has occurred or services have been performed and both title and risk of loss have transferred to the customer, and collection is reasonably assured.
The Company’s current cash on hand is not sufficient to meet our working capital requirements for the next twelve month period. We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) increased production; (ii) advertisement expenses; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and potentially debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or debt securities could potentially result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.
Management’s plans with regard to these matters encompass the following actions: 1) obtain funding from new investors to alleviate the Company’s working deficiency, and 2) expand sales of Grand Havana products. The Company’s continued existence is dependent upon its ability to resolve it liquidity problems and increase profitability in its current business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. The accompanying financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.
The Report of Independent Registered Public Accounting Firm issued by MaloneBailey, LLP for the audited financial statements for year ended December 31, 2017 are included herein immediately preceding the audited financial statements.