Bots Inc (BTZI)

[lesgetrich]

Just another fantasy claim DEBUNKED. mCig STILL OWNS VAPOLUTION, INC.!!!

The only thing that was liquidated was the cost accounting method used to account for mCig's less than controlling interest in Vapolution...

Cost Method & Equity Method

If your company invests in another firm, whether it's to form a business alliance or just to make a profit, that investment must be accounted for on your balance sheet. Accounting rules dictate the method to use to report the investment. The cost method and the equity method apply when your ownership interest in the other company is less than a controlling stake.

Level of Influence

The method a company must use to account for a less-than-controlling stake in another business depends on how much of that other business it owns. If the stake is less than 20 percent, generally accepted accounting principles define it as a "passive" investment -- meaning it isn't big enough to exert major influence over the company's policies and direction. Passive investments must be accounted for under either the cost method or the fair value method. If the stake is at least 20 percent but less than a controlling stake, then it's considered an investment with "significant influence." Significant-influence investments must be accounted for with the equity method.

Recording the Investment

Under both the cost method and the equity method, you place your investment in the other company on your balance sheet as an asset equal in value to whatever you paid to acquire the investment. Since intercompany investments typically involve owning stock, you'd list the value of the investment as the price you paid for the shares. Once the investment is on the balance sheet, however, the cost and equity methods diverge substantially.

Cost Method

The accounting for passive investments depends on what your company plans to do with the stock it owns in the other business. If you plan to hold on to that stock indefinitely, then your company must use the cost method. Under the cost method, the investment stays on the balance sheet at its original cost. If you receive any dividends from the investment, those dividends get treated as revenue. If, however, your company plans to sell the stock, or at least make it available for sale at the right price, then you would have to use the fair value method of accounting -- also called the market method -- rather than the cost method. In a nutshell, the fair value method requires you to periodically adjust the balance sheet value of the investment to reflect changes in the market value of the stock.

Equity Method Adjustments

With the equity method, the balance-sheet value of the investment changes according to the net income (the profit) of the "owned" company. Say your company owns 30 percent of a firm, and that firm reports net income of $100,000. You would increase the balance-sheet value of your investment by $30,000 -- 30 percent of $100,000 -- and report the gain as revenue on your income statement. If the firm had a net loss, you'd decrease the value of the investment by your share of the loss and report the decline as an expense. Finally, dividends from the stock are considered a return of invested capital, not revenue. You would decrease the value of the investment by the amount of any dividends received.

For the past three years since they acquired the company, they have been using the cost method to account for the transaction. This meant that they recorded the original cost of the investment but couldn't record any revenue. The only change they could record would have been any dividend that was paid, and Vapolution was never in any position to pay a dividend.

With the settlement, mCig gained 100% control of Vapolution. They are no longer required to use the cost method to account for the investment. It is now a wholly owned subsidiary. Consequently, they had to liquidate the accounting for it as a separate investment. What this means is that they can now record all costs and revenues for their investment. Vapolution, Inc is still owned by mCig. Only the way it's accounted for has changed.

From the 10-Q...

mCig 3FQ17 10-Q page 8

Vapolution, Inc.

The Company’s non-marketable equity investment in Vapolution, Inc., was recorded using the cost-basis method of accounting, and was classified within other long-term assets on the accompanying balance sheet as permitted by FASB ASC 325, “Cost Method Investments”.

On January 17, 2016 the Company entered into an agreement with the former owners and current managers of Vapolution, Inc., whereby the Company received 1,700,000 shares of mCig, Inc., stock ending the cost basis investment in Vapolution, Inc., As part of the settlement, the Company took control of the Vapolution bank account and inventory. The Company operates the Vapolution, Inc., business under its e-Cig Segment. (See Cost-Basis Investments)

...and from the Conference Call...

Paul...

We took control last quarter of management of Vapolution, adding inventory and capital stock-ware

Michael James...

With the recent in-house move with the Vapolution products, we’re expanding our operations within this segment to address the many opportunities that exist within the inhalation product and technology industry, not just the eCig elements.

The claim that mCig doesn't own Vapolution is just another silly argument that's again been totally debunked!