TMCnet News
MCIG, INC. - 10-Q/A - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) Forward Looking Statements This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements. Business Overview mCig, Inc. (mCig) (fka Lifetech Industries) was incorporated in the State of Nevada on December 30, 2010 to develop a new day spa business in the affluent area of Montrose, California, surrounded by La Crescenta, La Canada, and Glendale. On April 30, 2012, the company entered into a Joint Venture Agreement, a Distribution Agreement, and a Technology License Agreement (the "Agreements") with Leadwill Corporation, a Japanese corporation (the "Manufacturer" and the "Licensor"). Pursuant to the Joint Venture Agreement, we acquired the global exclusive right (excluding Japan) to make, use, sell and otherwise distribute all of the Manufacturer's AWG products and technologies. In addition, we have the exclusive right to assign, sublicense, or otherwise subcontract our distribution and marketing rights to third parties. We were also granted an exclusive license to any and all of the Manufacturer's patents, trademarks, and all other intellectual property related to AWG products and have the exclusive right to assign, sublicense, or otherwise transfer these rights to third parties. We will receive the Manufacturer's AWG products at the price of twelve percent (12%) above wholesale costs for such products. Pursuant to the Distribution Agreement, we were appointed as the Manufacturer's sole and exclusive Distributor. As such, we were given the exclusive right to: (1) market, promote, sell, and distribute all of the Manufacturer's current and future AWG products and technology; and (2) assign, sublicense, or otherwise subcontract these distribution and marketing rights to third parties worldwide (excluding Japan). The Manufacturer will receive ten percent (10%) of the net profits generated from our distribution of the AWG technology, less related costs and expenses. Pursuant to the Technology License Agreement, we were granted an exclusive, perpetual license to make, manufacture, use, sell or otherwise distribute all of the Licensor's AWG related technology. We were also granted the right to sublicense these rights to third parties at our sole discretion. We will pay the Licensor a royalty equal to ten percent (10%) of the Net Sales Revenue received from our sales of the licensed technology on a quarterly basis. Upon execution of the Agreements, Leadwill Corporation has agreed to (A) file all necessary "doing business as" ("d/b/a") documents in Japan so that Leadwill shall d/b/a "Lifetech Japan," (B) change its corporate name from "Leadwill Corporation" to "Lifetech Japan," or (C) transfer or "spinoff" all and not less than all of its AWG business into a new, separate corporate entity in Japan, to be called "Lifetech Japan". All of our rights set forth in the Agreements shall apply equally to the new, separate corporate entity. On September 1, 2012, the company entered into a Joint Venture Agreement, a Distribution Agreement, and a Technology License Agreement (the "New Agreements") with Lifetech Japan Corporation (the "New Manufacturer"), a Japanese corporation. The New Agreements were executed pursuant to the transfer of the AWG business from Leadwill to Lifetech Japan. The Lifetech AirWell System is a highly advanced air to water generator that produces high quality water by promoting and filtering the condensation of moisture from air. The Air Well System uses an advance triple step gathering system and 12-step purification process to produce water that is free of chemicals, pollutants, contaminants and hormones. As of October 31, 2013 we did not purchase or make any sales of air to water generators. We were not able to raise enough investment to fund production or further product development. Effective December 1, 2012 LifeTech Industries Inc. has signed an exclusive ten-country distribution agreement with SunPlex Limited. The three phases, previously disclosed, are not part of the distribution agreement. In accordance with the agreement SunPlex has 30 days from receipt of evaluation units to perform all of its product testing as well as its due diligence assessment, subject to acceptance by SunPlex. 14 -------------------------------------------------------------------------------- Under the terms of the agreement, the project has the potential to bring sales of up to $75 Million. This is based upon five year forecasts that are non-binding on SunPlex. As of October 31, 2013 no revenue has been realized from the said distribution agreement. As of October 31, 2013 no revenue has been realized from the said distribution agreement. This agreement will be cancelled on April 30, 2014. On May 23, 2013, the Company received a resignation notice from Benjamin Chung from all of his positions with the Company, including President, CEO, Principal Executive Officer, CFO, Principal Accounting Officer, Secretary, Treasurer and as Director. On May 23, 2013, the Company appointed Paul Rosenberg as its new President, CEO, Principal Executive Officer, CFO, Principal Accounting Officer, Secretary, Treasurer and as Director. Effective August 2, 2013, we have changed our name from "Lifetech Industries, Inc." to "mCig, Inc.". As of October 31, 2013, we have adjusted the company's business plan and its technology by launching a new consumer product. Accordingly, mCig, Inc. has positioned itself as a technology company focused on two long-term secular trends sweeping the globe: (1) The decriminalization and legalization of marijuana for medicinal or recreational purposes (2) The adoption of electronic vaporizing cigarettes (commonly known as "eCigs") by the world's 1.2 Billion smokers. We manufacture and retail the mCig - the world's most affordable loose-leaf eCig priced at only $10. Designed in the USA - the mCig provides a superior smoking experience by heating plant material, waxes, and oils delivering a smoother inhalation experience. All agreements related to the Lifetech business will be terminated and closed as of April 30, 2014. It will not have any impact on the current and future operations because all of these agreements are related to the previous business directions of the Company. Liquidity and Capital Resources Cash Flows Since Six months inception ended (December 30, Six months ended October 2010) to October 31, 31, October 31, 2013 2012 2013 Net Cash From Used in Operating Activities $ (35,084) $ (31,765) $ (238,640) Net Cash Used by Investing Activities $ (7,757) $ (9,400) $ (23,280) Net Cash From Financing Activities $ 53,050 $ 36,950 $ 275,728 Net Increase (Decrease) in Cash During the Period $ 10,209 $ (4,215) $ 13,809 Through October 31, 2013, the Company had not carried on any significant operations and had not generated any significant revenues. The Company has incurred losses since inception aggregating $287,347. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has accumulated deficit since inception (December 30, 2010) to the quarter ended October 31, 2013 and is dependent on its ability to raise capital from shareholders or other sources to sustain operations. However, these conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Results of Operations for the Six Months Ended October 31, 2013 and 2012 Revenues Revenues for the six months ended October 31, 2013 and October 31, 2012 were $25,680 and $25,000 respectively as the result of the 2 year distribution contract signed with Epik Investments Limited in May 2012. Cost of Goods Sold Cost of goods sold for the six months ended October 31, 2013 and October 31, 2012 were $0 and $7,105 respectively. Net Loss 15 -------------------------------------------------------------------------------- For the six months ended October 31, 2013 and October 31, 2012 we incurred net loss of $27,260 and $101,192, respectively. Expenses Our total operation expenses for the six months ended October 31, 2013 were $52,940, which consisted of $15,427 of professional fees, $2,587 of amortization, $19,026 of general and administrative expenses and $15,900 of share-based compensation. Our general and administrative expenses consist of bank charges, advertising and promotion, rent, computer and internet expenses, and other miscellaneous expenses. For the six months ended October 31, 2012 we incurred total expenses of $119,087, which consisted of $9,969 of professional fees, $88,064 of travel expenses and $21,054 of general and administrative expenses. Since inception (December 30, 2010) to October 31, 2013, we incurred total expenses of $363,027, which consisted of $108,793 of professional fees, $114,299 of travel expenses, $4,743 of amortization, $119,292 of general and administrative expenses and $15,900 of share-based compensation. Thus far all our expenses have been financed via advances from our controlling shareholder Mr. Paul Rosenberg who has committed to fund the product development and marketing of the mCig into the launch date and the foreseeable future. Inflation The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments. Off-Balance Sheet Arrangements As of October 31, 2013, we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. |