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Replies to post #102465 on Bots Inc (BTZI)
12/19/19 8:46 AM
As OBITX is no longer a subsidiary controlled by the Company we have reclassified the investment as an equity basis investment. Effective May 1, 2019 OBITX is no longer consolidated with MCIG’s financial statements. The Company records its equity investment (loss) as other income(expense) on the profit and loss statement.
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...
...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.
The Company subsidiary, Grow Contractors, Inc., along with the Company and its officers was sued by APEX Management, LLC and Apex Operations, LLC (the “Solaris” project) for the return of approximately $600,000 in cash paid for services they allege were never provided. We have countersued for the payment of approximately $425,000 in services provided that have not yet been paid for. In addition, we have sued both Michael Sassano and Ronald Sassano individually for their roles in the alleged actions. The cases were settled in August 2019, which results have been reflected in this annual filing. The case files were sealed by the state and federal courts for the protection of all parties.
The Company subsidiary, Grow Contractors, Inc., was sued for alleged faulty services provided in the state of Oregon. Grow Contractors alleges it has outstanding, unpaid invoices and services were stopped for lack of payment. The case has been sent to arbitration which is expected to be conducted within the next calendar year.
Due to the discontinued operations of Grow Contractors and the settlement agreement, the Company has eliminated the construction reserve for the period ending July 31, 2018. The Company recognized $111,835 and $586,525 as an uncollectable reserve for the three months ending July 31, 2019 and July 31, 2018, respectively.
