NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
NOTE 1 - NATURE OF OPERATIONS
Grasshopper Staffing Inc (the Company), formally Tomichi Creek Outfitters, was formed in the state of Nevada on June 25, 2013 and its year-end is July 31. Our plan of operation is to provide our clients with a once in a lifetime experience to harvest a big game animal or to enjoy a guided scenic tour on the western slopes of the Rocky Mountains. Our operations are located in Sargents, Colorado, which is approximately four hours southwest from Denver. We are nestled just west of the continental divide surrounded by 12,000 to 14,000 foot mountain peaks. This territory is remote yet accessible and rich with diverse wildlife which is adjacent to the 1.86 million acre Rio Grande National Forest. Tomichi Creek Outfitters has access to over 500,000 acres of private land which is located adjacent to approximately 42 square miles of public land.
On March 2, 2015, the Company entered into a Business Acquisition Agreement and share exchange under which we acquired the business and assets of Grasshopper Staffing Inc (Grasshopper Colorado), formed in the state of Colorado on January 13, 2015. The exchange for $10,651 was represented by 250,000 shares of the Companys common stock in exchange for all of the outstanding shares of Grasshopper Colorado. The assets purchased include the logo and website, office supplies and office furniture. Grasshopper Colorado is operating as a wholly-owned subsidiary of the Company.
Grasshopper Colorado was founded as a solution to the staffing needs presented in the blossoming cannabis industry in Colorado. Grasshopper Colorado is an agency that serves the Colorado's cannabis employment needs by providing employee recruiting, training, securing proper credentials and ensuring compliance with the ever-changing local and state laws. Grasshopper Colorado specializes in providing budtenders, trimmers, janitorial, security, payroll, armored transport, edible production, infusion specialists, grow consultants, irrigation, retail sales, IT solutions, web design, and event services.
NOTE 2 - GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern. The Company has a history of losses, an accumulated deficit, has minimal working capital and has not generated cash from its operations to support meaningful ongoing operations. In view of these matters, the Companys ability to continue as a going concern is dependent upon advancement of operations and to achieve a level of profitability. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements of the Company have been prepared using the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (U.S. GAAP).
The consolidated financial statements include the Companys accounts and those of the Companys wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated.
Reclassifications
Certain prior period amounts have been reclassified to conform to current period presentation.
F-6
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the estimates of useful lives for depreciation.
Cash and Cash Equivalents
The Company considers highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less to be cash equivalents.
Accounts Receivable
Accounts receivable represent amounts due from customers in the ordinary course of business from sales activities The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. At July 31, 2015 and 2014, the Company considered its accounts receivable to be fully collectible.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for major additions and improvements are capitalized while minor replacements and maintenance and repairs, which do not improve or extend the life of such assets, are charged to operations as incurred. Disposals are removed at cost less accumulated depreciation, and any resulting gain or loss is reflected in the statement of operations. Depreciation is calculated using the straight-line method which depreciates the assets over the estimated useful lives of the depreciable assets ranging from five to seven years.
Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment at least annually or whenever facts and circumstances indicate that the carrying value may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. The Company did not recognize any impairment losses for any periods presented.
Intangible Assets
Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 3 years for website development. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible assets remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. At July 31, 2015, no revision to the remaining amortization period of the intangible assets was made.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
F-7
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and borrowings. The fair value of current financial assets and current financial liabilities approximates their carrying value because of the short-term maturity of these financial instruments.
Revenue Recognition
Revenue is derived from the placement of temporary workers. The Company recognizes revenue when it is realized or realizable and estimable in accordance with ASC 605, Revenue Recognition. The Company will recognize revenue only when all of the following criteria have been met:
·
Persuasive evidence for an agreement exists;
·
Service has been provided;
·
The fee is fixed or determinable; and,
·
Collection is reasonably assured.
Advertising
Advertising costs are expensed as incurred. As of July 31, 2015 and July 31, 2014, no advertising costs have been incurred.
Basic Net Loss Per Common Share
Basic net loss per common share is computed by dividing the loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.
Stock Based Compensation
The Company accounts for the grant of restricted stock awards in accordance with ASC 718, Compensation-Stock Compensation. ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of equity based compensation. The expense is recognized over the period during which the employee is required to provide service in exchange for the compensation. Any remaining unrecognized balance will be recognized ratably over the life of the vesting period and is a reduction of stockholders' equity.
F-8
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
Income Taxes
Under ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of July 31, 2015 there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.
Recent Accounting Pronouncements
We have reviewed the FASB issued Accounting Standards Update (ASU) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporations reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," ("ASU 2014-09"). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. We are evaluating the impact that adoption of this guidance will have on the determination or reporting of its financial results.
In June 2014, the FASB issued ASU 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period," ("ASU 2014-12"). ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. ASU 2014-12 is effective for reporting periods beginning after December 15, 2015. Early adoption is permitted. Adoption of this guidance is not expected to have a significant impact on the determination or reporting of our financial results.
In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-15, Presentation of Financial Statements- Going Concern. The Update provides U.S. GAAP guidance on managements responsibility in evaluating whether there is substantial doubt about a companys ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a companys ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this Update are effective for the annual period ended after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the effects of ASU 2014-15 on the consolidated financial statements.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of the revenue standard issued in 2014, ASU 2014-09, Revenue from Contracts with Customers. In response to stakeholders' requests to defer the effective date of the guidance in ASU 2014-09 and in consideration of feedback received through extensive outreach with preparers, practitioners, and users of financial statements, the FASB proposed deferring the effective date of ASU 2014-09. Respondents to the proposal overwhelmingly supported a deferral. Respondents noted that providing sufficient time for implementation of the guidance in ASU 2014-09 is critical to its success. The Company is currently evaluating the impact of this pronouncement.
F-9
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that an entity classify deferred tax assets and liabilities as noncurrent on the balance sheet. Prior to the issuance of the standard, deferred tax assets and liabilities were required to be separated into current and noncurrent amounts on the basis of the classification of the related asset or liability. This ASU is effective for the Company on April 1, 2017, with early adoption permitted. The adoption of ASU No. 2015-17 is not expected to have a material impact on the Company's condensed consolidated financial statements or related disclosures.
Subsequent Events
The Companys management reviewed all material events through the issuance date of this report for disclosure purposes.
On May 8, 2015, the FASB issued ASU 2015-08,
Business Combinations (Topic 805) Pushdown Accounting
which conforms the FASBs guidance on pushdown accounting with the SECs guidance. ASU 2015-08 is effective for annual periods beginning after December 15, 2015. As of July 31, 2015, this ASU has not had a material impact on the consolidated financial statements.
The Company does not expect that any other recently issued accounting pronouncements will have a significant impact on the results of operations, financial position, or cash flows of the Company.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at July 31, 2015 and 2014:
|
|
|
|
|
| |
|
|
July 31,
2015
|
|
July 31,
2014
|
Computer equipment
|
|
$
|
2,643
|
|
$
|
--
|
Furniture and fixtures
|
|
|
3,007
|
|
|
--
|
Subtotal
|
|
|
5,650
|
|
|
--
|
Less: accumulated depreciation
|
|
|
(472)
|
|
|
--
|
Total property and equipment, net
|
|
$
|
5,178
|
|
$
|
--
|
Depreciation expense for the years ended July 31, 2015 and 2014 was $473 and $0 respectively.
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consisted of the following at July 31, 2015 and 2014:
|
|
|
|
|
| |
|
|
July 31,
2015
|
|
July 31,
2014
|
Website development
|
|
|
5,000
|
|
|
--
|
Less: accumulated amortization
|
|
|
(822)
|
|
|
--
|
Total intangible assets, net
|
|
$
|
4,178
|
|
$
|
--
|
Amortization expense for the years ended July 31, 2015 and 2014 was $822 and $0 respectively.
F-10
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
NOTE 6 - CONCENTRATIONS
The following table sets forth information as to each customer that accounted for 10% or more of the Companys revenues for the years ended July 31, 2015 and 2014. At July 31, 2015, three customers accounted for 84% of the Companys total revenue.
|
|
|
|
|
| |
Customer
|
|
Year Ended
July 31, 2015
|
|
Year Ended
July 31, 2014
|
A
|
|
|
46%
|
|
|
0 %
|
B
|
|
|
23%
|
|
|
0 %
|
C
|
|
|
15%
|
|
|
0 %
|
NOTE 7 - INCOME TAXES
The Company files corporate income tax returns in the United States (federal) and in Colorado. The Company is subject to federal, state and local income tax examinations by tax authorities through inception.
At July 31, 2015, the Company has net operating loss carry-forward (NOL carry-forwards) for Federal tax purposes of approximately $60,500 that may offset against future taxable income through 2035. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company's net deferred tax assets calculated at the effective rates note below, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
The Company's tax expense differs from the "expected" tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.01% to income before taxes), as follows:
|
|
|
|
|
| |
|
|
For the Years Ended July 31,
|
|
|
2015
|
|
2014
|
Deferred Tax Expense (benefit) at the Statutory Rate
|
|
$
|
(121,500)
|
|
$
|
(10,400)
|
Deferred State Income Taxes, Net of Federal Income Tax Benefit
|
|
|
--
|
|
|
--
|
Change in Valuation allowance
|
|
$
|
121,500
|
|
$
|
10,400
|
Total
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
| |
|
|
For the Years Ended July 31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
$
|
134,700
|
|
$
|
13,500
|
Valuation allowance
|
|
|
(134,700)
|
|
|
(13,500)
|
Net deferred tax asset
|
|
$
|
--
|
|
$
|
--
|
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
F-11
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
As of July 31, 2015, and July 31, 2014, the Company has net operating losses from operations. The carry forwards expire through the year 2035. A valuation allowance has been applied due to the uncertainty of realization. The tax returns for 2013, 2014 and 2015 remain open for inspection by federal and state taxing authorities.
NOTE 8 - RELATED PARTY TRANSACTIONS
In support of the Companys efforts and cash requirements, it has relied on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note. As of July 31, 2015 and July 31, 2014, members of management have loaned the Company $16,671 and $2,600, respectively. The loans are payable on demand and carry no interest.
The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.
NOTE 9 - CAPITAL STOCK
The Company is authorized to issue an aggregate of 200,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued. At July 31, 2015 and July 31, 2014, the Company had 16,425,000 and 13,000,000 common shares issued and outstanding, respectively.
The Company filed a Prospectus as part of its Registration Statement on Form S-1 which registered a total of 3,000,000 shares of its common stock at $0.01 per share, all of which were offered by the Company. The Company sought to raise $30,000 under the Offering. That Prospectus was declared effective on February 4, 2014. The Company closed its Offering on July 3, 2014 and will not sell any additional shares under that Prospectus. The Company sold 3,000,000 shares under the Prospectus, raising a total of $30,000.
On March 2, 2015, the Company entered into a Business Acquisition Agreement and share exchange under which the Company acquired the business and assets of Grasshopper Colorado in exchange for $10,651, which was represented by 250,000 shares of common stock in exchange for 100% of the Grasshopper Colorados common shares. The acquisition resulted in a change in management control, therefore, the investment in the subsidiary value has been eliminated.
On June 12, 2015, the Company's Board of Directors approved the issuance of 3,175,000 shares of common stock to various employees and consultants. The fair market value of the shares was $1,301,750 at the date of grant, of which $322,533 will be recognized as an expense in the year ended July 31, 2015. The remaining balance of $979,217 will be recorded as a contra-equity account and amortized over the life of the employment agreements (15 - 18 months).
As of July 31, 2015, there are no warrants or options outstanding to acquire any additional shares of common stock of the Company.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Legal Matters
In the normal course of business, the Company may become a party to litigation matters involving claims against the Company. The Company's management is unaware of any pending or threatened assertions and there are no current matters that would have a material effect on the Companys financial position or results of operations.
The Companys operations are subject to significant risks and uncertainties including financial, operational and regulatory risks, including the potential risk of business failure.
F-12
GRASSHOPPER STAFFING, INC.
formerly Tomichi Creek Outfitters
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2015 and JULY 31, 2014
Operating Leases
The companys executive offices are located at 200 S Victoria Ave, Pueblo, Co 81003. The property is leased on a month to month basis with a monthly rental payment of $800.
NOTE 11 - SUBSEQUENT EVENTS
The Company follows the guidance in Sections 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the consolidated financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its consolidated financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
On August 3, 2015, the Company entered into a one-year consulting agreement with Acorn Management Partners, LLC. Under the terms of the agreement, the Company will pay compensation of $12,500 a month and issue 375,000 shares of the Companys common stock due on the first day of the contract. On September 28, 2015, these shares were issued and considered to be fully earned as of the date of issuance. In addition, as per the agreement, the Company was to issue $75,000 in common stock to be priced at the closing bid price of the last trading day of the previous period during both the third and fourth three-month period. As of the date of filing, these shares have not been issued.
On August 10, 2015, the Company entered into a second consulting agreement with Acorn Management Partners, LLC, with no termination date, for 1,000,000 shares of the Companys common stock that were issued on September 28, 2015. Under the terms of the agreement, the stock is considered to be fully earned on the date of issuance.
On September 28, 2015, the Company issued 50,000 shares of common stock at $0.20 per share for gross proceeds for working capital of $10,000.
On September 28, 2015, the Company issued 37,500 shares of common stock at $0.20 per share for gross proceeds for working capital of $7,500.
On October 28, 2015, the Company entered into a one-year consulting agreement with Caro Capital LLC. Under the terms of the agreement, the Company will pay the consultant $2,500 per month for six months. These payments will be accrued until the Company closes on financing. Upon execution of the agreement the Company is to issue, and the consultant is to purchase, 200,000 shares of the Companys common stock at a value of 0.001 per share for a total purchase price of $200. In addition, the Company is to issue, and the consultant is to purchase, 200,000 additional shares per quarter (up to 800,000 shares total). On February 18, 2016, 400,000 of these shares were issued by the Company.
On January 15, 2016, the Company entered into a three-year consulting and advisory agreement. Compensation consists of a monthly retainer fee of $20,000. In addition, for services rendered through January 15, 2016, the Company issued on March 15, 2016, 8,000,000 shares of the Companys common stock at a purchase price of $0.01 per share. The first months retainer was reduced by the $8,000 for the compensation shares resulting in a net payment of $12,000 for month one.
On March 29, 2016, the Company issued 6,000,000 warrants to purchase shares of the Companys common stock as satisfaction for $6,000 in compensation that was owed to Acorn Management Partners, LLC. The warrants have a term of ten years and an exercise price of $0.01.
F-13