UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

Amendment No. 1

 

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2016

 

Or

 

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to ______.

 

Commission File Number: 000-54379

 

HUNTWICKE CAPITAL GROUP INC.

(Exact name of registrant as specified in its charter)

 

Nevada    
(State or other jurisdiction of
incorporation or organization) 		  (I.R.S. Employee
Identification No.)

 

7 Grove Street

Topsfield, MA 01983

(Address of principal executive offices and Zip code)

 

(978) 887-5981

(Registrant’s telephone number, including area code)

 

MAGNOLIA LANE INCOME FUND

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) 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.

 

Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

 

Yes ☐  No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company) 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.

 

Yes ☐  No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of January 5, 2016, there were 2,698,307 shares of common stock, par value $0.0001 per share, issued and outstanding.

 

 

 

   

EXPLANATORY NOTE

 

This Amendment No. 1 to the Form 10-Q (this “Amendment”) amends the Quarterly Report on Form 10-Q of Huntwicke Capital Group, Inc. for the period ended October 31, 2016 filed on January 6, 2017 (the “Form 10-Q”) to correct errors related to the accounting treatment of (i) certain advances relating to the acquisition of Huntwicke Advisors, LLC, that were accounted for as capital when they were actually expenses of the Company and should have been expensed, (ii) the Company’s failure to disclose the issuance of one share of Series A Preferred Stock on March 23, 2016, and, (iii) the Company’s disclosure relating to the purchase of Huntwicke Advisors, LLC and Huntwicke Securities LLC by the Company from WS Advantage LP that contained incorrect share issuance. The Company agreed to issue to WS Advantage a total of 1,384,923 shares of common stock versus 96,199 shares of common stock as previously reported (collectively the “Restated Transactions”).

 

No other changes have been made to the Form 10-Q other than those related to the Restated Transactions. This Amendment does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way the disclosures made in the original Form 10-Q.

 

 

HUNTWICKE CAPITAL GROUP, INC. 

 

FORM 10-Q

October 31, 2016

 

INDEX

 

    Page
PART I - FINANCIAL INFORMATION  
     
Item 1. Financial Statements 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
Item 4. Control and Procedures 20
     
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Mine Safety Disclosures 22
Item 5. Other Information 22
Item 6. Exhibits 22
     
SIGNATURE 23

 

 

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this quarterly report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the quarterly report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this quarterly report on Form 10-Q.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

CERTAIN TERMS USED IN THIS REPORT

 

Unless the context otherwise indicates, references in this report to the terms “Palmerston,” “Magnolia Lane,” “Huntwicke Capital,” “we,” “us,” “our,” and the “Company” refer to Huntwicke Capital Group Inc.

 

 

 

PART I - FINANCIAL INFORMATION

 

HUNTWICKE CAPITAL GROUP, INC
 (Formerly Known As MAGNOLIA LANE INCOME FUND)
 Condensed  Consolidated Balance Sheets
 

    October 31, 2016     April 30, 2016  
    (unaudited)        
ASSETS   (Restated)     (Restated)  
             
Rental property, net   $ 4,425,453     $ 3,398,685  
Cash     241,994       209,079  
Restricted cash     11,337       -  
Marketable securities     486,155       -  
Prepaid expenses     11,502       -  
Advances     19,995       -  
Accounts receivable     1,619       2,050  
                 
Total Assets   $ 5,198,055     $ 3,609,814  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
                 
Mortgage payable   $ 516,342     $ 525,322  
Secured line of credit     956,113       956,113  
Accounts payable and accrued expenses     15,806       11,852  
Deferred income     4,013       7,459  
Security deposits     10,050       2,900  
Due to shareholders     511,452       504,218  
                 
Total Liabilities     2,013,776       2,007,864  
                 
Commitments and Contingencies                
                 
STOCKHOLDERS' EQUITY (DEFICIT):                
Preferred stock: par value $0.0001; 100,000,000 shares authorized; None issued or outstanding Preferred Stock Series A Preferred stock: $.0001 par value 5 shares authorized; 1 issued and outstanding     -       -  
Common stock: par value $0.0001; 200,000,000 shares authorized; 1,188,820 and 2,000,590 shares issued and outstanding, respectively     118       200  
Additional paid-in capital     4,008,617       1,877,794  
Accumulated deficit     (824,456 )     (707,094 )
                 
Total Magnolia Lane Income Fund Stockholders' Equity(Deficit)     3,184,279       1,170,900  
                 
Non-controlling interest     -       431,050  
                 
Total Stockholders' Equity (Deficit)     3,184,279       1,601,950  
                 
Total Liabilities and Stockholders' Equity (Deficit)   $ 5,198,055     $ 3,609,814  

 

See accompanying notes to condensed consolidated financial statements.

 

  1  

 

HUNTWICKE CAPITAL GROUP, INC
(Formerly Known As MAGNOLIA LANE INCOME FUND)
Condensed Consolidated Statements of Operations

 

    For the three     For the three     For the six     For the six  
    months ended     months ended     months ended     months ended  
    October 31, 2016     October 31, 2015     October 31, 2016     October 31, 2015  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
    (Restated)           (Restated)        
REVENUE                        
Rental revenue   $ 96,417     $ 64,017     $ 174,785     $ 126,835  
                                 
OPERATING EXPENSES                                
Operating costs     71,022       40,840       84,971       52,794  
Professional fees     32,698       49,707       64,509       87,829  
Repairs and maintenance     10,628       3,673       16,669       9,837  
Depreciation     40,938       23,611       87,767       47,224  
Interest expense     15,235       37,289       36,930       71,245  
                                 
Total operating expenses     170,521       155,120       290,846       268,929  
                                 
LOSS FROM OPERATIONS     (74,104 )     (91,103 )     (116,061 )     (142,094 )
                                 
Other Income / (Expenses)                                
Realized Loss on sale of securities     (3,846 )     -       (3,846 )     -  
Insurance proceeds     -       -       -       8,508  
Other income / (expenses)     (3,846 )     -       (3,846 )     8,508  
NET LOSS     (77,950 )     (91,103 )     (119,907 )     (133,586 )
                                 
NET INCOME / (LOSS)  - ATTRIBUTABLE TO NON CONTROLLING INTEREST     161       (1,408 )     (2,545 )     (1,408 )
                                 
NET LOSS AVAILABLE TO STOCKHOLDERS’   $ (78,111 )   $ (89,695 )   $ (117,362 )   $ (132,178 )
                                 
NET LOSS PER COMMON SHARE                                
- BASIC AND DILUTED:   $ (0.04 )   $ (0.05 )   $ (0.06 )   $ (0.07 )
                                 
WEIGHTED AVERAGE COMMON SHARES                                
- BASIC AND DILUTED     2,207,298       1,796,875       2,103,379       1,796,875  

 

See accompanying notes to condensed consolidated financial statements.

 

  2  

 

HUNTWICKE CAPITAL GROUP, INC
(Formerly Known As MAGNOLIA LANE INCOME FUND)
Condensed Consolidated Statements of Cash Flows

 

    For the six months     For the six months  
    ended     ended  
    October 31, 2016     October 31, 2015  
      (unaudited)       (unaudited)  
CASH FLOWS FROM OPERATING ACTIVITIES:     (Restated)          
Net loss   $ (117,362 )   $ (132,178 )
                 
Adjustments to reconcile net loss to net cash provided by (used in) from operating activities:                
Depreciation and amortization     87,768       47,224  
Imputed interest     15,127       15,206  
Losses on investment account     3,846       -  
Changes in operating assets and liabilities:                
Accounts receivable     (2,694 )     (3,464 )
Accounts payable and accrued expenses     1,030       (22,169 )
Deferred income     (3,446 )     -  
Security deposits     (11,503 )     -  
                 
Net cash used in operating activities     (27,234 )     (51,043 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Cash acquired from acquisition     83,311       -  
Purchase of building     -       (1,191,126 )
Cash acquired from non interest control party     -       429,363  
Investment in securities     (490,000 )     -  
Advances for acquisitions     (19,995 )     -  
Restricted cash     (4,187 )     (3,167 )
                 
Net cash used in investing activities     (430,871 )     (764,930 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Advances from shareholders     -       52,419  
Proceeds from line of credit     -       760,355  
Proceeds from loans from shareholder     500,000       -  
Repayments of mortgages payable     (8,980 )     (8,474 )
Cash over draft     -       1,536  
                 
Net cash provided by financing activities     491,020       805,836  
                 
NET CHANGE IN CASH     32,915       (10,137 )
                 
Cash at beginning of period     209,079       17,286  
                 
Cash at end of year   $ 241,994     $ 7,149  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:                
Cash paid for interest   $ 12,927     $ 8,473  
                 
OTHER NON CASH ITEMS                
Conversion of minority interest  to common stock   $ 431,050     $ -  
Conversion of notes payable to common stock   $ 500,000     $ -  
                 
Purchase of building for common stock   $ 1,208,500     $ -  

 

See accompanying notes to condensed consolidated financial statements.

 

  3  

 

HUNTWICKE CAPITAL GROUP, INC.

(F/K/A MAGNOLIA LANE INCOME FUND)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF OCTOBER 31, 2016

(UNAUDITED)

 

NOTE 1 – ORGANIZATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information necessary for a comprehensive presentation of financial position and results of operations. The interim results for the period ended October 31, 2016 are not necessarily indicative of results for the full fiscal year and should be read in junction with the annual financial statements filed on July 29, 2016. It is management's opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation.

 

Huntwicke Capital Group Inc. formerly known as Magnolia Lane Income Fund (the “Company,” ”We,” “Ours,” “Us”), was incorporated on May 12, 2009 under the laws of the State of Delaware. On November 12, 2015, the Company changed domicile from the State of Delaware to the State of Nevada by filing Articles of Domestication and Articles of Incorporation with the Secretary of State of Nevada.  The Company was originally formed to commence business as a stock agent in the wool trade.

 

On May 13, 2013, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Ian Raleigh and Michael Raleigh (the “Sellers”) and Magnolia Lane Financial, Inc. (the “Purchaser”), whereby the Purchaser purchased from the Sellers, 10,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Shares”), representing approximately 69.57% of the issued and outstanding shares of the Company. As a result, the Purchaser became the majority shareholder of the Company.

 

In connection with the Stock Purchase Agreement, we have ceased pursuing our prior business plan and have begun focusing on our new business which is to manage and invest in real property. Our current Chief Executive Officer, Chief Financial Officer and sole director, Brian Woodland, has numerous years in the real estate acquisition, syndication and asset management business. We intend to acquire real estate in small markets with high degrees of safety to provide income streams to our shareholders. In addition, we will develop property, syndicate, manage and acquire property for capital appreciation. 

 

In connection with this change of control and change of business, we have conducted a name change and reverse stock split. On August 1, 2013, we filed a Certificate of Amendment to our Articles of Incorporation (the “Amendment”) to change its name from “Palmerston Stock Agency, Inc.” to “Magnolia Lane Income Fund” (the “Name Change”) and to memorialize a 1:8 reverse stock split (the “Stock Split”). The Amendment was effective as of August 1, 2013.

 

On August 12, 2013, the Company received approval from the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Name Change and Stock Split.  FINRA also confirmed that the new stock symbol is MIFC.

 

On December 23, 2013, a shareholder of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase and Sale Agreements for the acquisition of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC (the “ Acquisition Agreements ”). Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100% of the equity interests in Grove Realty Partners, LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia Lane Financial transferred 134,574 shares of our Common Stock to WS Advantage and Phalanx Wealth Management (the “ Consideration Shares ”). For purposes of the Acquisition Agreements, the parties valued the shares at $16.60 per share for a total purchase price of $2,233,928. Prior to this transaction, Magnolia Lane Financial owned 1,250,000 shares of our common stock and now owns 1,115,426 shares of our common stock. WS Advantage, LP owns 115,347 shares of our common stock and Phalanx Partners, LLC owns 19,227 shares of our common stock.

 

  4  

 

On January 16, 2014, we entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial, Inc. (the “ Agreement ”). Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia Lane Financial, including the assets acquired in the Acquisition Agreements, for a total purchase price of $3,000.

 

On October 15, 2015 the Company paid a total of $761,355 for the purchase of 64% of Butler Cabin LLC. This entity is controlled by our President, a principal of Butler Cabin LLC.

 

On November 12, 2015, the Company changed domicile from the State of Delaware to the State of Nevada by filing Articles of Domestication and Articles of Incorporation with the Secretary of State of Nevada. 

 

On August 11, 2016, Huntwicke the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983 from a related party. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company with a historical cost of $431,050. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983. The transaction was recorded at the net asset value of the non-controlling interest on the date of acquisition. 

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement" with Founders Circle Partners, LLC (“Founders”) (Related Party) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase was recorded at the historical cost of the net assets of $1,208,500 acquired for 170,831 shares of common stock of the Company from a related party.

 

NOTE 2 – SUMMARY OF ACCOUNTING POLICIES

 

Principles of consolidation

 

The accompanying consolidated financial statements represent the consolidated financial position and results of operations of the Company and include the accounts and results of operations of the Company and its subsidiaries. The accompanying financial statements include the active entity of Magnolia Lane Income Fund and its wholly owned subsidiaries, Walker Partners, LLC, Grove Realty Partners, LLC, Butler LLC from October 15, 2015 and Founders Circle, LLC from, August 11, 2016.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

 

Restricted Cash

 

Restricted cash consists of cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements. The Company’s restricted cash is reserved for real estate taxes on both of its properties.

 

  5  

 

Concentrations

 

Concentration in a geographic area

 

The Company operates in the real estate industry and the operations are concentrated in the State of Massachusetts.

 

As of October 31, 2016 two customers comprised 52% and 48%, respectively of accounts receivable. At April 30, 2016, 100% of accounts receivable was due from one tenant, respectively.

 

For the six months ended October 31, 2016 we had two clients that represented 20% and 12%, respectively of revenues (related party). For the six months ended October 31, 2015, two tenants represented approximately 17% and 14% of the Company’s revenue.

 

Rental Property, Net

 

Rental property assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the asset.

 

We capitalize replacements and improvements, such as HVAC equipment, structural replacements, windows, appliances, flooring, carpeting and renovations. Ordinary repairs and maintenance, such as unit cleaning, painting and appliance repairs, are expensed when incurred.

 

Asset   Useful Life
(in years)
Building   30 years
Land   Indefinite
Building Improvements   30 years

 

Net loss per common share

 

Net loss per common share is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board Accounting Standards Codification. Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period.

 

There were no potentially dilutive shares outstanding for any periods presented.

 

Income Taxes

 

The Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

The Company follows the provisions of Income Taxes Topic of the FASB Accounting Standards Codification, which provides clarification on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, disclosure and transition. At October 31, 2016 and April 30, 2016, no significant income tax uncertainties have been included in the Company’s Balance Sheets. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Statements of Operations. No interest and penalties are present for periods open.  

 

  6  

 

The Company is subject to the United States federal and state income tax examinations by the tax authorities for the 2015, 2014, and 2013 tax years.

   

Investments

 

The Company’s investments in trading securities are reported at fair value, with unrealized gains and losses included in earnings. The Company will invest its cash proceeds to enhance shareholder value over the long term. The Company will use both short and long term investing strategies. Investments are classified as available to trade.

 

Property Revenue Recognition

 

Our commercial property leases are for varied terms ranging from month-to-month to 3 years. Rental income is recognized on a straight-line basis over the term of the lease.

 

Rent concessions, including free rent incurred in connection with commercial property leases, are amortized on a straight-line basis over the terms of the related leases and are charged as a reduction of rental revenue.

 

Impairment of Real Estate Investments

 

The Company assesses on a regular basis whether there are any indicators that the carrying value of rental property assets may be impaired. Potential indicators may include an increase in vacancy at a property, tenant reduction in utilization of a property, tenant financial instability and the potential sale of the property in the near future. An asset is determined to be impaired if the asset’s carrying value is in excess of its estimated fair value.

 

Deferred Revenue

 

From time to time, rental payments may be paid by tenants, but not earned yet by the Company. Such revenue is initially recorded as a deferred liability and is recognized as revenue once earned. As of October 31, 2016 and April 30, 2016, the Company had $4,013 and $7,459 in deferred revenue, respectively.

 

Segments

 

The Company operates in one segment and therefore segment information is not presented.

 

NOTE 3 – RESTATEMENT

 

Restatement

 

On April 11, 2017, the management and the Board of Directors of the Company, concluded that the Company’s previously issued financial statements as of and for the quarter ended October 31, 2016 should no longer be relied upon because of errors related to an accounting treatment of (i) certain advances relating to the acquisition of Huntwicke Advisors, LLC, (ii) the issuance of preferred stock, and (iii) disclosure relating the purchase of Huntwicke Advisors, LLC and Huntwicke Securities LLC from WS Advantage LP.

 

The effects of the restatement on the Company’s Consolidated financial statements as of, and for the three and six months ended following:

 

Balance Sheet as of October 31, 2016

 

    As Previously     Effect of     As  
    Reported     Restatement     Restated  
Advances   $ 64,145     $ (44,150 )   $ 19,995  
Preferred stock Series A Preferred stock: $.0001 par value; 5 shares authorized; 1 issued and outstanding     -       -       -  
Accumulated (Deficit)   $ (780,306 )   $ (44,150 )   $ (824,456 )

 

  7  

 

Statement of Operations for the three months ended October 31, 2016

 

    As Previously     Effect of     As  
    Reported     Restatement     Restated  
Operating Costs   $ 26,872     $ 44,150     $ 71,022  
Net loss available to common stockholders’   $ (33,800 )   $ (44,150 )   $ (77,950 )
Net loss to stockholders’   $ (33,639 )   $ (44,150 )   $ (77,789 )
Net loss per share – basic and diluted   $ (0.02 )   $ (0.02 )   $ (0.04 )

 

Statement of Operations for the six months ended October 31, 2016

 

    As Previously     Effect of     As  
    Reported     Restatement     Restated  
Operating Costs   $ 40,821     $ 44,150     $ 84,971  
Net loss available to common stockholders’   $ (75,757 )   $ (44,150 )   $ (119,907 )
Net loss to stockholders’   $ (73,212 )   $ (44,150 )   $ (117,362 )
Net loss per share – basic and diluted   $ (0.03 )   $ (0.03 )   $ (0.06 )

 

Statement of Cash Flows for the six months ended October 31, 2016

  

    As Previously     Effect of     As  
    Reported     Restatement     Restated  
Net loss   $ (73,212 )   $ (44,150 )   $ (117,362 )
Net cash provided by (used in) operating activities   $ 16,916     $ (44,150 )   $ (27,234 )
Advances for acquisition   $ (64,145 )   $ 44,150     $ (19,995 )
Net cash used in investing activities   $ (475,021 )   $ 44,150     $ (430,871 )

 

NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS

 

In February 2016, the FASB issued ASU 2016-02, Leases , which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting , which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

  8  

 

In April 2016, the FASB issued ASU 2016–10 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

NOTE 5 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.  As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $824,456. These conditions raise substantial doubt about its ability to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

 

NOTE 6 – RENTAL PROPERTY, NET

 

Rental Property, Net consisted of the following at October 31, 2016 and April 30, 2016:

 

    October 31,
2016 		   

April 30,

2016  

 
Land     583,411       358,958  
Buildings     4,580,203       3,647,917  
Leasehold Improvements     149,860       149,860  
Accumulated Depreciation     (888,021 )     (758,050 )
Net, Real Estate Investments     4,425,453       3,398,685  

 

As of October 31, 2016 and April 30, 2016, real estate investments consisted of four and three properties, respectively:

 

58 Main St. Topsfield, Ma 01983

 

  ● Description: 4,000 Square foot, Commercial Building
     
  ● Status: Rented 100% occupancy. Lease term: 3-Year
     
  ● Owner: Walker Partners, LLC
     
  ● Purchase Price: $503,000
     
  ● Mortgage Debt as of October 31, 2016 and April 30, 2016: $516,342 and $525,322, respectively

 

  9  

 

7 Grove St., Topsfield, Ma 01983

 

  ● Description: 12,000 Square foot, Business Office, Retail and Professional Space
     
  ● Status: Rented at 100% occupancy. Lease term: 3-Year
     
  ● Owner: Grove Realty Partners, LLC
     
  ● Purchase Price: $2.025 million
     
  ● Mortgage Debt: On November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into 203,711 shares of common stock ($7.58 per share)

 

6 Park St., Topsfield, Ma 01983

 

  ● Description: 4,500 Square foot, Business Office, Retail and Professional Space
     
  ● Status: Rented at 70% occupancy. Lease term: Monthly
     
  ● Owner: Butler Cabin, LLC
     
  ● Purchase Price: $1.19 million

 

36-42 Main Street, Topsfield, MA 01983 

 

  ● Description: 8000 Square foot, Business Office, Retail and Professional Space
     
  ● Status: Rented at 100% occupancy. Lease term: Monthly
     
  ● Owner: Founders Circle Partners, LLC
     
  ● The Company issued a total of 170,831 shares of common stock valued at the historical cost of the assets acquired of $1,193,739

 

Depreciation expense for the three and six months ended October 31, 2016 and 2015 totaled $40,939, $87,767, $23,611 and $47,224, respectively.

 

NOTE 7 – MORTGAGE AND RELATED PARTY NOTES PAYABLE

 

58 Main Street

 

On January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on the property located at 58 Main Street, Topsfield, Massachusetts.   The note bears interest at 4.875% per annum and is due August 26, 2019.  Monthly principle and interest payments totaling $4,435 started on September 26, 2009 and will continue through the maturity date.  The mortgage note is secured by the underlying property. At maturity, the balloon payment of $481,454 will be due in full. The remaining principal balance as of October 31, 2016 and April 30, 2016 is $516,342 and $525,322, respectively.

 

  10  

 

Future principle requirements on long-term debt for fiscal years ending after October 31, 2016 are as follows:

 

Mortgage Payable  
For fiscal year ending     Future
Payout 		 
2016     $ 26,610  
2017       53,220  
2018       53,220  
2019 and thereafter       383,292  
Total     $ 516,342  

 

NOTE 8 – SECURED LINE OF CREDIT

 

On October 14, 2015, by, between and among Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of Brian Woodland.

 

The revolving line of credit note (hereinafter referred to as the “Note”), made by the Borrower and payable to the order of the bank, at the initial per annum rate of 265 basis points above LIBOR (3.086% as of April 30, 2016), floating for two (2) years. The Note shall provide for monthly payments of interest only for the first two (2) years of the term. Thereafter, the Note shall for the next five (5) years of the Loan term provide for monthly payments of principal and interest based upon the 5/15 Federal Home Loan Bank Rate plus 200 basis points. Monthly payments of principal and interest shall be made based upon a 25-year amortization schedule, with a final payment of the unpaid principal balance, interest, fees and late charges, if any, due on October 14, 2022.

 

As of October 31, 2016 and April 30, 2016 the Company has drawn down a total of $956,113 and $956,113 and recorded accrued interest of $1,861 and $2,465, respectively.

 

NOTE 9 – FUTURE RENTS AND TENANT CONCENTRATION

 

The Company’s revenue is derived from property leases with varied lease terms. The following table represents future minimum rents to be received under non-cancelable leases with terms of twelve months or more as of October 31, 2016: 

 

Future Rents  
For fiscal year ending  
2016   $ 95,160  
2017     126,145  
2018     51,040  
2019     7,600  
    $ 279,945  

 

For the six months ended October 31, 2016 we had two clients that represented 20% and 12%, respectively of revenues (related party). For the six months ended October 31, 2015, two tenants represented approximately 17% and 14% of the Company’s revenue.

 

NOTE 10 – RELATED PARTY TRANSACTIONS

 

Related parties to the Company include, but are not limited to, officers, directors, and shareholders. From time to time, the Company receives loans and advances from Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage LP formerly held equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently shareholders and controlled by the Company’s president.

 

An aggregate of $511,452 has been received from related parties for working capital purposes and debt and expenses paid on the Company’s behalf. These advances are interest-free and payable upon demand. During the three and six month ended October 31, 2016 and 2015 the Company imputed interest expense of $7,524, $15,127, $7,603 and $15,206, respectively. During the six months ended October 31, 2016 and 2015, the related party received repayments from the Company $0 and $0 respectively, to fund operations.

 

During the three and six months ended October 31, 2016 and 2015 revenue included $18,000. $36,000, $9,000 and $18,000, respectively, in rental income from Phalanx Partners who is owned by our Principal and Shareholder, who occupies an office in one of the Company’s properties.

 

During the three and six months ended October 31, 2016 a 36% and 83% owner in Founders Circle paid us rental income of $3,750 and $7,500, respectively.

 

  11  

 

On October 14, 2015, by, between and among Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of Brian Woodland (See Note 7).

 

On November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into 203,711 shares of common stock ($7.58 per share).

 

On August 11, 2016, Huntwicke Capital Group Inc. (F/K/A Magnolia Lane Income Fund) (the “Company”) entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983 from a related party. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company valued at $431,505 ($7.02 per share) from a related party. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983. The transaction was recorded at the net asset value of the non-controlling interest on the date of acquisition.  

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with Founders Circle Partners, LLC (“Founders”) (Related Party) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock valued at $1,208,500 ($7.07 per share) of the Company from a related party.

 

On October 31, 2016, the Company converted a $500,000 advance from an entity controlled by Company’s President into 71,429 shares of common stock ($7.00 per share).

 

On October 31, 2016, the Company President returned to the treasury and cancelled 1,115,426 shares of common stock (at par value of $.0001).

 

NOTE 11 – STOCKHOLDERS’ EQUITY

 

Preferred stock

 

On November 12, 2015, the board of directors of the Company authorized a Certificate of Designations of Preferences, Rights and Limitations of Series A Preferred Stock, designating five (5) shares of Series A Preferred stock. E ach share of Series A Preferred Stock shall be entitled to vote on all matters submitted or required to be submitted to a vote of the stockholders of the Corporation and shall be entitled to two votes for each whole share of Common Stock (two (2) is referred as the “ Vote Multiplier ” hereunder), at the record date for the determination of stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. In each case, except as otherwise required by law or expressly provided herein, the holders of shares of Series A Preferred Stock and Common Stock shall vote together and not as separate classes. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, for each share of Series A Preferred Stock, the Holders shall not be entitled to receive any amount out of the assets, whether capital or surplus, of the Corporation.  The Series A Preferred Stock may be redeemed by the Corporation at no consideration to, and with no further action required on the part of, the Holders.  Effective on March 23, 2016, with the filing of the amendment to the Company's Articles of Incorporation with the Nevada Secretary of State, specifically a Certificate of Designation, the Company amended its Articles of Incorporation to designate five (5) shares of its authorized preferred stock as Series A Preferred Stock with specific rights and preferences.

 

Common stock

 

Common Stock includes 200,000,000 shares authorized at a par value of $0.0001.

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company valued at $428,344. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983. The transaction was recorded at the net asset value of non-controlling on the date of acquisition.

 

On August 11, 2016, the Company entered into an agreement with Founders Circle Partners, LLC (“Founders”) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock of the Company. Below are the pro-forma financial statements as if the Founders Circle Partners, LLC had been acquired on April 1, 2016.

 

The acquisition date estimated fair value of the consideration transferred consisted of following:

 

Total assets acquired   $ 1,208,123  
Liabilities assumed     14,384  
Total purchase price   $ 1,193,739  

 

On August 11, 2016, the Company entered into a agreement with Founders Circle Partners, LLC whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. As consideration for the purchase, the Company agreed to issue Founders 170,831 shares of common stock of the Company valued at $1,193,739 the historical depreciated basis of the asset acquired. Founders Circle Partners, LLC. is an entity controlled by Brian Woodland and President and Chief Financial Officer of the Company. As such, the Company recorded the Asset at its historical cost. The effective closing date for this transaction was August 11, 2016.

 

  12  

    

     Huntwicke Capital Group for the six months ended October 31,
2016     		    Founders Circle Partners, LLC from May 1,
2016 to August 11,
2016
date of acquisition 		    Pro-Forma Adjustments     Pro-Forma Amount  
      (Restated)                        
Revenue   $ 174,785     $ 54,250     $            -     $ 229,035  
Operating expenses     290,846       40,111       -       330,957  
                                 
LOSS FROM OPERATIONS       (116,061 )       14,139       -       (101,922 )
                                 
Other expenses     (3,846 )     -       -       (3,846 )
                                 
(Loss) income before provision for income taxes     (119,907 )     14,139       -       (105,768 )
                                 
INCOME ATTRIBUTABLE TO - NON CONTROLLING INTEREST     (2,545 )     -       -       (2,545 )
                                 
NET LOSS   $ (117,362 )   $ 14,139     $ -     $ (103,223 )
                                 
Weighted shares outstanding basic and diluted                             2,103,379  
Net Loss per share                           $ (0.06 )

  

On October 31, 2016, the Company converted a $500,000 advance from an entity controlled by Company’s President into 71,429 shares of common stock ($7.00 per share).

 

On October 31, 2016, the Company President returned to the treasury 1,115,426 shares of common stock (at par value of $.0001).

 

Preferred stock

 

Preferred stock includes 100,000,000 shares authorized at a par value of $0.0001, of which none are issued or outstanding.

 

On November 12, 2015, the board of directors of the Company authorized a Certificate of Designations of Preferences, Rights and Limitations of Series A Preferred Stock (the “Certificate of Designation”), designating five (5) shares of Series A Preferred stock. E ach share of Series A Preferred Stock shall be entitled to vote on all matters submitted or required to be submitted to a vote of the stockholders of the Corporation and shall be entitled to two votes for each whole share of Common Stock (two (2) is referred as the “ Vote Multiplier ” hereunder), at the record date for the determination of stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. In each case, except as otherwise required by law or expressly provided herein, the holders of shares of Series A Preferred Stock and Common Stock shall vote together and not as separate classes. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, for each share of Series A Preferred Stock, the Holders shall not be entitled to receive any amount out of the assets, whether capital or surplus, of the Corporation.  The Series A Preferred Stock may be redeemed by the Corporation at no consideration to, and with no further action required on the part of, the Holders.  Effective on March 23, 2016, with the filing of the amendment to the Company's Articles of Incorporation with the Nevada Secretary of State, specifically a Certificate of Designation, the Company amended its Articles of Incorporation to designate five (5) shares of its authorized preferred stock as Series A Preferred Stock with specific rights and preferences. On that same date, the Company issued one share to its President valued at $0.

 

Additional paid in Capital

 

During the six months ended October 31, 2016 and 2015 the Company recorded imputed interest on stockholders’ loans of $15,127 and $15,206, respectively.

 

NOTE 12 – SUBSEQUENT EVENTS (RESTATED)

 

On November 1, 2016, the Company entered into a Share Agreement with Phalanx Partners, LLC, whereby the Company issued 1,384,487 shares of the Company’s common stock to Phalanx Partners, LLC. in exchange for all the interest in Huntwicke Securities LLC and Huntwicke Advisors, LLC. The acquisition of Huntwicke Securities LLC is subject to approval by the Financial Industry Regulatory Authority. Phalanx Partners, LLC. is owned and managed by the Company’s President.

 

On November 1, 2016, the Company entered into a Share Agreement with WS Advantage LP whereby the Company issued 125,000 shares of the Company’s common stock to WS Advantage LP in exchange for all of WS Advantage LP’s interest in Riversky Realty LLC, which owns the property located at 17/19 Main Street, Topfield, MA. WS Advantage LP is owned and managed by the Company’s President. The Company will close the transaction pending receipt of 2 years of GAAP based audited financial statements.

 

  13  

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

Overview

 

Huntwicke Capital Group, Inc. formerly known as Magnolia Lane Income Fund (the “Company”) was incorporated in the state of Delaware on May 12, 2009. We were formed to commence business as a stock agent in the wool trade.

 

On May 13, 2013, we entered into a stock purchase agreement (the “ Stock Purchase Agreement ”) with Ian Raleigh and Michael Raleigh (the “ Sellers ”) and Magnolia Lane Financial, Inc. (the “ Purchaser ”), whereby the Purchaser purchased from the Sellers, 10,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Shares”), representing approximately 69.57% of the issued and outstanding shares of the Company. As a result, the Purchaser became the majority shareholder of the Company. 

 

In connection with the Stock Purchase Agreement, we have ceased pursuing our prior business plan and have begun focusing on our new business which is to manage and invest in real property. Our current Chief Executive Officer and sole director, Brian Woodland, has numerous years in the real estate acquisition, syndication and asset management business. We intend to acquire real estate in small markets with high degrees of safety to provide income streams to our shareholders. In addition, we will develop, syndicate, manage and acquire property for capital appreciation.

 

In connection with this change of control and change of business, we conducted a name change and reverse stock split. On August 1, 2013, we filed a Certificate of Amendment to our Articles of Incorporation (the “ Amendment ”) to change its name from “Palmerston Stock Agency, Inc.” to “Magnolia Lane Income Fund” (the “ Name Change ”) and to memorialize a 1:8 reverse stock split (the “ Stock Split ”). The Amendment was effective as of August 1, 2013.

 

On August 12, 2013, the Company received approval from the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Name Change and Stock Split.  FINRA also confirmed that the new stock symbol is MIFC.

 

On December 23, 2013, a shareholder of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase and Sale Agreements for the acquisition of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC (the “ Acquisition Agreements ”). Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100% of the equity interests in Grove Realty Partners, LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia Lane Financial transferred 134,574 shares of our Common Stock to WS Advantage and Phalanx Wealth Management (the “ Consideration Shares ”). For purposes of the Acquisition Agreements, the parties valued the shares at $16.60 per share for a total purchase price of $2,233,928. Prior to this transaction, Magnolia Lane Financial owned 1,250,000 shares of our common stock and now owns 1,115,426 shares of our common stock. WS Advantage, LP owns 115,347 shares of our common stock and Phalanx Partners, LLC owns 19,227 shares of our common stock.

 

On January 16, 2014, the Company entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial, Inc. (the “ Agreement ”). Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia Lane Financial, including the assets acquired in the Acquisition Agreements, for a total purchase price of $3,000.

 

  14  

 

On October 15, 2015 the Company paid a total of $761,355 for the purchase of 64% of Butler Cabin LLC. This entity is controlled by our President, a principal of Butler Cabin LLC.

 

On November 12, 2015, the Company changed domicile from the State of Delaware to the State of Nevada by filing Articles of Domestication and Articles of Incorporation with the Secretary of State of Nevada. 

 

On March 23, 2016, the Company filed an amendment to the Company's Articles of Incorporation with the Nevada Secretary of State, specifically a Certificate of Designation, to designate five (5) shares of its authorized preferred stock as Series A Preferred Stock with specific rights and preferences. On March 23, 2016 the Company issued one share of the Series A Preferred stock to is President.

  

On August 11, 2016, the Company entered into share issuance agreement with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983. The transaction was recorded at the net asset value of the on the date of acquisition.

 

On August 11, 2016, the Company entered into a share issuance agreement with Founders Circle Partners, LLC (“Founders”) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock of the Company.

 

On September 19, 2016, the Company filed a Certificate of Amendment to its Articles of Incorporation to change the name of the Company from “Magnolia Lane Income Fund” to “Huntwicke Capital Group Inc.” (the “ Name Change ”).

 

On September 19, 2016, the Company filed the Name Change and a request for a ticker symbol change with the Financial Industry Regulatory Authority (“ FINRA ”). On September 23, 2016, FINRA announced the Name Change and the ticker symbol of the Company changed from “MIFC” to “HCGI”.

 

On November 1, 2016, the Company entered into a Share Agreement with Phalanx Partners, LLC, whereby the Company issued 1,384,487 shares of the Company’s common stock to Phalanx Partners, LLC. in exchange for all the interest in Huntwicke Securities LLC and Huntwicke Advisors, LLC. The acquisition of Huntwicke Securities LLC is subject to approval by the Financial Industry Regulatory Authority. Phalanx Partners, LLC. is owned and managed by the Company’s President.

 

On November 1, 2016, the Company entered into a Share Agreement with WS Advantage LP whereby the Company issued 125,000 shares of the Company’s common stock to WS Advantage LP in exchange for all of WS Advantage LP’s interest in Riversky Realty LLC, which owns the property located at 17/19 Main Street, Topfield, MA. WS Advantage LP is owned and managed by the Company’s President.

 

Our Operating Strategy

 

Our business plan is focused on managing real property. Specifically, we intend to acquire real estate in small markets with high degrees of safety to provide income streams to our shareholders. In addition, we will develop, syndicate, manage and acquire property for capital appreciation.

 

On December 23, 2013, a shareholder of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase and Sale Agreements for the acquisition of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC (the “ Acquisition Agreements ”). Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100% of the equity interests in Grove Realty Partners, LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia Lane Financial transferred 134,574 shares of our Common Stock to WS Advantage and Phalanx Wealth Management (the “ Consideration Shares ”). For purposes of the Acquisition Agreements, the parties valued the shares at $16.60 per share for a total purchase price of $2,233,928. Prior to this transaction, Magnolia Lane Financial owned 1,250,000 shares of our common stock and now owns 1,115,426 shares of our common stock. WS Advantage, LP owns 115,347 shares of our common stock and Phalanx Partners, LLC owns 19,227 shares of our common stock.

 

On January 16, 2014, the Company entered into an “LLC Membership Interest Purchase and Sale Agreement” with Magnolia Lane Financial, Inc. (the “ Agreement ”). Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia Lane Financial, including the assets acquired in the Acquisition Agreements, for a total purchase price of $3,000.

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983 from a related party. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company valued at $431,050. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983.

 

  15  

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with Founders Circle Partners, LLC (“Founders”) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock.

 

As of October 31, 2016, real estate that we, through our subsidiaries, owned consisted of four properties:

 

7 Grove Street, Topsfield, Ma 01983

 

  ● Description: 12,000 Square foot, Business Office, Retail and Professional Space
     
  ● Status: Rented at 100% occupancy. Lease term: 3-Year
     
  ● Owner: Grove Realty Partners, LLC
     
  ● Purchase Price:  $2.025 million
     
  ● Mortgage Debt: On November 1, 2015, WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into 203,711 shares of common stock ($7.58 per share)

 

58 Main Street, Topsfield, Ma 01983

 

  ● Description: 4,000 Square foot, Commercial Building

 

  ● Status: Rented 100% occupancy. Lease term: 3-Year

 

  ● Owner: Walker Partners, LLC
     
  ● Purchase Price: $503,000

 

  ● Mortgage Debt as of October 31, 2016 and April 30, 2016: $516,342 and $525,322, respectively

 

6 Park St., Topsfield, Ma 01983

 

  ● Description: 4,500 Square foot, Business Office, Retail and Professional Space
     
  ● Status: Rented at 70% occupancy. Lease term:  Monthly
     
  ● Owner: Butler Cabin, LLC
     
  ● Purchase Price: $1.19 million

 

36-42 Main Street, Topsfield, MA 01983 

 

  ● Description: 8000 Square foot, Business Office, Retail and Professional Space
     
  ● Status: Rented at 100% occupancy. Lease term: Monthly
     
  ● Owner: Founders Circle Partners, LLC
     
  ● The Company issued a total of 170,831 shares of common stock valued at the historical cost of the assets acquired of $1,193,739

 

Limited Operating History

 

We have only begun generating modest revenue, have a limited financial history and have limited capital. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods.

 

Going Concern

 

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. 

 

  16  

 

Results of Operations

 

For the three months ended October 31, 2016 and 2015

 

Revenue

 

Our rental revenue for the three months ended October 31, 2016 was $96,417 as compared to $64,017 in revenue for the three months ended October 31, 2015. The increase of $32,400 was primarily due to the Company’s purchase of Butler Cabin LLC and Founders Circle Partners, LLC which resulted in increased rental revenue.

 

Operating Expense

 

Operating expenses for the three months ended October 31, 2016 totaled $170,521, an increase of $15,401 as compared with operating expenses of $155,120 for the three-month period ended October 31, 2015. This increase was due mainly to reduced professional fees and interest expense which was offset by higher general and administrative expense. Our operating expenses for the three months ended October 31, 2016 consisted of $71,022 in operating costs, $32,698 in professional fees, $10,628 in repairs and maintenance, $40,938 in depreciation and $15,235 in interest expense.

 

Net Loss

 

During the three months ended October 31, 2016 and 2015, we incurred a net loss of $78,111 and $89,695 respectively, a decrease of $11,584. This decrease was due mainly to increased rental revenue which was partially offset by higher general and administrative costs.

 

For the six months ended October 31, 2016 and 2015

 

Revenue

 

Revenues were $174,785 for the six months ended October 31, 2016 as compared to $126,835 in revenue for the six months ended October 31, 2015, an increase in revenue of $47,950. This increase was primarily due to the Company’s purchase of Butler Cabin LLC and Founders Circle Partners, LLC which resulted in increased rental revenue. 

 

Operating Expense

 

Operating expenses for the six months ended October 31, 2016 totaled $290,846, an increase of $21,917 as compared with operating expenses of $268,929 for the six month period ended October 31, 2015. This decrease was due mainly to reduced professional fees and interest expense which was partially offset by higher general and administrative costs. Our operating expenses for the six months ended October 31, 2016, consisted of $84,971 in operating costs, $64,509 in professional fees, $16,669 in repairs and maintenance, $87,767 in depreciation and $36,930 in interest expense.

 

Net Loss

 

During the six months ended October 31, 2016 and 2015, we incurred a net loss of $117,362 and $132,178, respectively, a decrease of $14,816. Increased rental revenue due to the Company’s purchase of Butler Cabin LLC and Founders Circle Partners, LLC as well as reduced professional fees and interest expense.

 

Capital Resources and Liquidity

 

As of October 31, 2016, we had $241,994 cash on hand and net cash used in operating activities of $27,234. Management believes our increasing cash provided by our secured line of credit and the availability of loans from related parties will be adequate to sustain our operations at the current level for the next twelve months. Should we not be able to meet our current financial needs, the Company will seek alternative methods of financing, such as issuing convertible debt or introducing additional shares of its common stock into the market.

 

Net cash used in operating activities was $27,234 for the six months ended October 31, 2016 as compared to net cash used in operating activities of $51,043 for the six October 31, 2015, reflecting a decrease in our net loss which was partially offset by increases accounts receivable and security deposits.

 

Net cash used in investing activities was $430,871 for the six months ended October 31, 2016 and reflects amounts used for investments in securities of $490,000 and advances for acquisitions of $19,995 which was partial offset by cash acquired from non controlling interest of $83,311. Net cash used in investing activities was $764,930 for the six months ended October 31, 2015 and reflects monies paid for the membership interest in Butler Cabin, LLC of $1,191,126 in which was partially offset by cash acquired from the non controlling interest of $429,363.

 

Net cash provided by financing activities amounted to $491,020 for the six months ended October 31, 2016, and reflects proceeds from a shareholder loan of $500,000, which was partially offset by cash overdraft fees of $8,980. Net cash used in financing activities amounted to $805,836 for the six months ended October 31, 2015, and reflects proceeds from a line of credit of $760,355, advances from shareholders of $52,419 which was partially offset by mortgage repayments of $8,474.

 

Our principal sources of liquidity include cash from rental revenue bank loans, credit facilities, sales of common stock. and loans from shareholders to cover mortgage obligations.

 

  17  

 

Mortgage Obligations

 

58 Main Street

 

On January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on a property located at 58 Main Street, Topsfield, Massachusetts.   The note bears interest at 7.875% per annum and is due August 26, 2019. Monthly principal and interest payments totaling $4,435 started on September 26, 2009 and will continue through the maturity date. The mortgage note is secured by the underlying property. At maturity, the balloon payment of $481,454 will be due in full. The remaining principal balance as of October 31, 2016 and April 30, 2016 is $516,342 and $525,322, respectively.

 

7 Grove Street

 

On January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on a property located at 7 Grove Street, Topsfield, Massachusetts. The note bore interest at 7.9 % per annum and was scheduled to mature on September 5, 2032. Monthly payments of $17,775 started on October 5, 2008. The mortgage note was secured by the property. At maturity, the balloon payment was to be due in full.  

 

On April 12, 2014, the mortgage note payable on the property at 7 Grove Street was paid in full by its majority shareholder. On that same date, a new mortgage payable was established between the Company and its majority shareholder for an amount equal to the balance that was remaining on the original mortgage. The new related party mortgage payable began on April 12, 2014 and is a 5-year fixed loan at 5.5% interest, with a balloon payment on May 15, 2019 for the outstanding balance. Interest only payments until maturity began on May 15, 2014 in the amount of $6,536.

 

On November 1, 2015, WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into 203,711 shares of common stock ($7.58 per share).

 

SECURED LINE OF CREDIT

 

On October 14, 2015, Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of Brian Woodland.

 

The revolving line of credit note (hereinafter referred to as the “Note”), made by the Borrower and payable to the order of the bank, at the initial per annum rate of 265 basis points above LIBOR (3.086% as of April 30, 2016), floating for two (2) years. The Note shall provide for monthly payments of interest only for the first two (2) years of the term. Thereafter, the Note shall for the next five (5) years of the Loan term provide for monthly payments of principal and interest based upon the 5/15 Federal Home Loan Bank Rate plus 200 basis points. Monthly payments of principal and interest shall be made based upon a 25-year amortization schedule, with a final payment of the unpaid principal balance, interest, fees and late charges, if any, due on October 14, 2022.

 

As of October 31, 2016 and April 30, 2016, the Company has drawn down a total of $956,113 and $956,113 and recorded accrued interest of $2,627 and $2,465, respectively.

 

Related Party Transactions

 

From time to time, the Company receives loans and advances from Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage LP formerly held equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently controlled by the Company’s president and are shareholders.

 

An aggregate of $511,452 has been received from related parties for working capital purposes and debt and expenses paid on the Company’s behalf. These advances are interest-free and payable upon demand. During the three and six month ended October 31, 2016 and 2015 the Company imputed interest expense of $7,524, $15,127, $7,603 and $15,206, respectively.

 

  18  

  

During the three and six months ended October 31, 2016 and 2015 revenue included $18,000. $36,000, $9,000 and $18,000, respectively, in rental income from Phalanx Partners who is owned by our Principal and Shareholder, who occupies an office in one of the Company’s properties.

 

During the three and six months ended October 31, 2016 a 36% and 83% owner in Founders Circle paid us rental income of $3,750 and $7,500, respectively.

 

On October 14, 2015, Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of Brian Woodland (See Note 7).

 

On November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into 203,711 shares of common stock ($7.58 per share).

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983 from a related party. As consideration for the purchase, the Company agreed to issue Butler 61,396 shares of common stock of the Company valued at $431,505 ($7.02 per share) from a related party. The Company now owns a 100% interest in 6 Park Street, Topsfield, MA 01983. Butler is owned and controlled by the Company’s President.

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with Founders Circle Partners, LLC (“Founders”) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. The purchase was recorded at the historical cost of the net assets acquired for 170,831 shares of common stock valued at $1,208,500. Founders is owned and controlled by the Company’s President.

 

Effective on March 23, 2016, with the filing of the amendment to the Company's Articles of Incorporation with the Nevada Secretary of State, specifically a Certificate of Designation, the Company amended its Articles of Incorporation to designate five (5) shares of its authorized preferred stock as Series A Preferred Stock with specific rights and preferences. On that same date, the Company issued one share of Series A Preferred Stock to its President valued at $0 .

 

On October 31, 2016, the Company converted a $500,000 advance from an entity controlled by Company’s President into 71,429 shares of common stock.

 

On October 31, 2016, the Company President returned to the treasury and canceled 1,115,426 shares of common stock.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, Leases , which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting , which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. 

 

In April 2016, the FASB issued ASU 2016–10 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

  19  

Critical Accounting Policies and Estimates  

 

Rental Property, Net

 

Rental property assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the asset.

 

We capitalize replacements and improvements, such as HVAC equipment, structural replacements, windows, appliances, flooring, carpeting and renovations. Ordinary repairs and maintenance, such as unit cleaning, painting and appliance repairs, are expensed when incurred.

 

Asset  

Useful Life

(in years)

Building   30 years
Land   Indefinite
Building Improvements   30 years

 

Impairment of Real Estate Investments

 

The Company assesses on a regular basis whether there are any indicators that the carrying value of rental property assets may be impaired. Potential indicators may include an increase in vacancy at a property, tenant reduction in utilization of a property, tenant financial instability and the potential sale of the property in the near future. An asset is determined to be impaired if the asset’s carrying value is in excess of its estimated fair value.

 

Going Concern

 

At October 31, 2016, we had an accumulated deficit of $824,456 and incurred a net loss of $117,362 for the six-month period ended October 31, 2016.  We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.

 

We have generated minimal revenues and have incurred losses since inception. Accordingly, we will be dependent on future additional financing in order to finance operations and growth.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We do not hold any derivative instruments and do not engage in any hedging activities. 

 

Item 4. Controls and Procedures

 

Disclosure of controls and procedures.

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

As required by the SEC Rule 13a-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

 

In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

  20  

 

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following material weaknesses which have caused management to conclude that as of October 31, 2016 our disclosure controls and procedures were not effective at the reasonable assurance level:

 

  (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
     
  (ii) inadequate segregation of duties consistent with control objectives; and

 

  (iii) ineffective controls over period end financial disclosure and reporting processes.
     
  (iv) lack of accounting personal with adequate Securities and Exchange Commission experience.
     

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Changes in internal controls over financial reporting.

 

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

  21  

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors

 

We are exempt from this reporting because we are a smaller reporting company.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement” with a subsidiary, Butler Cabin, LLC. (“Butler”), in which the Company purchased from Butler the remaining ownership interest (36%) of real property located at 6 Park Street, Topsfield, MA 01983. As consideration for the purchase, the Company issued Butler 61,396 shares of common stock of the Company valued at $428,344.

 

On August 11, 2016, the Company entered into a “Magnolia Lane Share Issuance Agreement" with Founders Circle Partners, LLC (“Founders”) whereby the Company purchased from Founders a 100% interest in real property located at 36-42 Main Street, Topsfield, MA 01983. As consideration for the purchase, the Company issued 170,831 shares of common stock.

 

On October 31, 2016, the Company converted a $500,000 advance from an entity controlled by Company’s President into 71,429 shares of common stock.

 

Item 3. Defaults Upon Senior Securities

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

Item 6. Exhibits

 

(a) Exhibits

 

31.1 Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1+ Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101 Interactive Data File (Form 10-Q for the quarterly period ended October 31, 2016 furnished in XBRL).

 

+ In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 

  22  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

  Huntwicke Capital Group Inc.
   
Date:  April 27, 2017 By: /s/ Brian Woodland
    Brian Woodland
    President and Chief Financial Officer
    (Duly Authorized Officer,
Principal Executive Officer and
Principal Financial and Accounting Officer)

 

 

23

 

 

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