UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

(Amendment No. 1)

 

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

 

For the quarterly period ended April 30, 2016

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from ______ to _______

 

Commission File Number 000-54840

 

Golden Matrix Group, Inc.

(Name of small business issuer in its charter)

 

Nevada

46-1814729

(State of incorporation)

(I.R.S. Employer Identification No.)

 

3651 Lindell Road, Ste D131

Las Vegas, NV, 89103

(Address of principal executive offices)

 

(917) 7759689

(Registrant's telephone number)

 

Indicate by check mark whether the registrant (1) has 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, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ 

Smaller reporting company

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of June 10, 2016, there were 13,925,616 shares of the registrant's $0.00001 par value common stock issued and outstanding.

 

 

 

 

EXPLANATORY NOTE

 

As disclosed in the Current Report on Form 8-K filed by Golden Matrix Group, Inc. (the “Company”, “we” and “us”) with the Securities and Exchange Commission (the “Commission”) on February 29, 2016, On February 18, 2016, the Board of Directors of the Company appointed (i) Mr. Anthony Brian Goodman as the Chief Executive Officer, President, Secretary, Treasurer, and Chairman of the Board of Directors of the Company, and (ii) Ms. Weiting Feng as Chief Financial Officer and Director of the Company (the “Appointments”). Since the date of the appointments, Mr. Goodman and Ms. Feng have held those same positions with the Company.

 

Notwithstanding Ms. Feng’s appointment as Chief Financial Officer of the Company on February 18, 2016, Mr. Feng’s role with the Company since the date of her appointment has not risen to the level of the Principal Financial Officer or Principal Accounting Officer of the Company, and instead Mr. Goodman, as Chief Executive Officer, President, and Principal Executive Officer, has held such roles with the Company. Specifically, Mr. Goodman, along with other responsibilities consistent with the positions of Principal Financial/Accounting Officer, has been primarily in charge of assuring that the Company’s financial books and records are properly kept and maintained and financial statements prepared.

 

Although Mr. Goodman has held the position of Principal Financial/Accounting Officer of the Company since the date of the Appointments, certain of the Company’s prior periodic filings either (a) incorrectly referenced Ms. Feng as the Principal Financial and/or Principal Accounting Officer of the Company in the exhibits required by Rule 13a-14(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Periodic Report Certifications”) filed in connection therewith (i.e., the Exhibits 31.2 and 32.2 to the filings); (b) incorrectly included a Periodic Report Certification of Ms. Feng; and/or (c) failed to clarify that Mr. Goodman served as the Principal Financial/Accounting Officer of the Company and was executing the applicable periodic report and Periodic Report Certifications, in such positions.

 

This Amendment No 1. to the Quarterly Report on Form 10-Q of the Company for the quarter ended April 30, 2016 (this “Amendment”) is being filed to amend the original Quarterly Report on Form 10-Q for the quarter ended April 30, 2016, filed by the Company with the Commission on June 20, 2016 (the “Original Report”), to correct the signature page of such Original Report and the Periodic Report Certifications (i.e., to include a new Exhibit 31.1 and 32.1 to the Amendment and remove the prior Exhibits 31.2 and 32.2), to clarify that Mr. Goodman was serving as, and signed off on such Original Report and Periodic Certifications as, the Principal Financial/Accounting Officer of the Company, as well as the Principal Executive Officer of the Company.

 

Except for the foregoing (and updates to the exhibit table where necessary in connection therewith), this Amendment does not update or modify any of the information contained in the Original Report. Other than as specifically set forth herein, this Amendment continues to speak as of the date of the Original Report and we have not updated or amended the disclosures contained therein to reflect events that have occurred since the date of the Original Filing. Information not affected by this Amendment remains unchanged and reflects the disclosures made at the time of the Original Report. Accordingly, this Amendment should be read in conjunction with our filings made with the Commission after the date of the Original Report.

 

 
2

 

 

GOLDEN MATRIX GROUP.*

 

TABLE OF CONTENTS

 

Page

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

5

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

48

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

53

ITEM 4.

CONTROLS AND PROCEDURES

53

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

54

ITEM 1A.

RISK FACTORS

54

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

54

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

56

ITEM 4.

MINE SAFETY DISCLOSURES

56

ITEM 5.

OTHER INFORMATION

56

ITEM 6.

EXHIBITS

57

 

 
3

 

 

Special Note Regarding Forward-Looking Statements

  

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Golden Matrix Group. (the "Company"), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we,""GMGI" "our," "us," the "Company," refers to Golden Matrix Group, Inc.

 

 
4

Table of Contents

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

GOLDEN MATRIX GROUP.

(An Exploration Stage Company)

 

Condensed Consolidated Financial Statements

 

(Expressed in US dollars)

 

April 30, 2016 (unaudited)
 

Financial Statement Index

 

Consolidated Balance Sheets (unaudited)

 

 

6

 

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss (unaudited)

 

 

7

 

 

 

 

 

 

Consolidated Statement of Cash Flows (unaudited)

 

 

8

 

 

 

 

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

 

9

 

 

 
5

Table of Contents

 

GOLDEN MATRIX GROUP.

 

Condensed Consolidated Balance Sheets

 

 

 

As of

 

 

As of

 

 

 

April 30, 2016

 

 

July 31, 2015

 

ASSETS

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$ -

 

 

$ -

 

Loan receivable

 

 

49,539

 

 

 

63,115

 

Prepaid expenses

 

 

-

 

 

 

-

 

Total current assets

 

 

49,539

 

 

 

63,115

 

Non-current assets:

 

 

 

 

 

 

 

 

Computer equipment

 

 

-

 

 

 

-

 

Intangible assets

 

 

2,766,468

 

 

 

-

 

Mineral property

 

 

85,000

 

 

 

85,000

 

Total non-current assets

 

 

2,851,468

 

 

 

85,000

 

TOTAL ASSETS

 

$ 2,901,007

 

 

$ 148,115

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

 

 

 

 

 

 

 

 

Bank overdraft

 

$ -

 

 

$ -

 

Accounts payable and accrued liabilities

 

 

37,994

 

 

 

35,441

 

Notes payable, net of discount

 

 

3,844,111

 

 

 

2,361,905

 

Notes payable interest

 

 

558,956

 

 

 

209,187

 

Notes payable, derivative liability

 

 

25,296,862

 

 

 

322,029

 

Loan payable

 

 

5,065

 

 

 

-

 

Due to related party

 

 

54,820

 

 

 

42,820

 

Total Current liabilities

 

 

29,797,809

 

 

 

2,971,382

 

Shareholder's equity:

 

 

 

 

 

 

 

 

Preferred stock, Series A: $0.00001 par value; 19,999,000 shares authorized, none outstanding

 

 

-

 

 

 

-

 

Preferred stock, Series B: $0.00001 par value; 1,000 shares authorized; 1,000 (July 31, 2015 - 0) issued and outstanding

 

 

-

 

 

 

-

 

Common stock: $0.00001 par value; 7,980,000,000 shares authorized; 2,405,512 (July 31, 2015 - 1,736,217) shares issued and outstanding (1)

 

 

24

 

 

 

17

 

Additional paid in capital

 

 

17,544,067

 

 

 

15,861,504

 

Accumulated other comprehensive loss

 

 

(683 )

 

 

(683 )

Retained earnings (accumulated deficit)

 

 

(44,440,209 )

 

 

(18,684,105 )

Total shareholders' equity

 

 

(26,896,801 )

 

 

(2,823,267 )

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

 

$ 2,901,007

 

 

$ 148,115

 

 

All common share amounts and per share amounts in these financial statements, reflect the one thousand five hundred-for-one

reverse stock splits of the issued and outstanding shares of the common stock of the Company, effective

April 7, 2016, respectively, including retroactive adjustment of common share amounts. See Note 11.

 

The accompanying notes are an integral part of these financial statements

 

 
6

Table of Contents

 

GOLDEN MATRIX GROUP.

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

April 30,

 

 

April 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

Cost of goods sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Gross profit (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounting and audit fees

 

 

4,534

 

 

 

1,268

 

 

 

9,961

 

 

 

20,410

 

Amortization expense

 

 

248,595

 

 

 

-

 

 

 

258,244

 

 

 

-

 

G&A expenses

 

 

375,445

 

 

 

215,403

 

 

 

1,147,510

 

 

 

989,733

 

Management fees

 

 

20,000

 

 

 

30,000

 

 

 

110,000

 

 

 

120,000

 

Professional fees

 

 

9,710

 

 

 

300

 

 

 

16,874

 

 

 

8,763

 

Loss from operations

 

 

(658,284 )

 

 

(246,971 )

 

 

(1,542,589 )

 

 

(1,138,906 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

-

 

 

 

21,151

 

 

 

-

 

Fair value change of derivative liability

 

 

(20,900,753 )

 

 

(891 )

 

 

(20,725,354 )

 

 

176,565

 

Interest on convertible notes

 

 

(916,207 )

 

 

(141,666 )

 

 

(3,509,312 )

 

 

(493,046 )

Total other income (expense)

 

 

(21,816,960 )

 

 

(142,557 )

 

 

(25,756,104 )

 

 

(316,481 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$ (22,475,244 )

 

$ (389,528 )

 

$ (25,756,104 )

 

$ (1,455,387 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic, weighted number of common shares outstanding (1)

 

 

1,486,329

 

 

 

2,215,622

 

 

 

782,976

 

 

 

2,063,401

 

Net profit/(loss) per common share

 

 

(15.1213 )

 

 

(0.176 )

 

 

(32.8951 )

 

 

(0.705 )

 

All common share amounts and per share amounts in these financial statements, reflect the one thousand five hundred-for-one

reverse stock splits of the issued and outstanding shares of the common stock of the Company, effective

April 7, 2016, respectively, including retroactive adjustment of common share amounts. See Note 11.

The accompanying notes are an integral part of these financial statements

 

 
7

Table of Contents

 

GOLDEN MATRIX GROUP.

 

Condensed Consolidated Statements of Cash Flows

 

 

 

Nine months ended

 

 

 

April 30,

 

 

 

2016

 

 

2015

 

Operating activities:

 

 

 

 

 

 

Net loss

 

 

(25,756,104 )

 

 

(1,455,387 )

Adjustment to reconcile net loss to net cash in operating activities

 

 

 

 

 

 

 

 

Amortization expense

 

 

258,244

 

 

 

-

 

Convertible debt interest expense

 

 

3,509,312

 

 

 

407,996

 

Loss from change in fair value of derivative liability

 

 

20,725,354

 

 

 

(176,565 )

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in loans receivable

 

 

13,576

 

 

 

12,945

 

(Increase) decrease in prepaid expenses

 

 

-

 

 

 

-

 

(Decrease) increase in accounts payable and accrued liabilities

 

 

36,542

 

 

 

16,325

 

(Decrease) increase in notes payable, interest

 

 

351,011

 

 

 

85,051

 

Net cash used in operating activities

 

 

(862,065 )

 

 

(1,109,636 )

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchase of computer equipment

 

 

-

 

 

 

-

 

Purchase of intangible assets

 

 

(650,000 )

 

 

-

 

Net cash flows used in investing activities

 

 

(650,000 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Bank overdraft

 

 

-

 

 

 

-

 

Proceeds from notes payable

 

 

845,000

 

 

 

1,083,000

 

Due to related party

 

 

12,000

 

 

 

26,000

 

Proceeds from loan payable

 

 

5,065

 

 

 

-

 

Common stock issued for asset purchase

 

 

650,000

 

 

 

-

 

Net cash provided by financing activities

 

 

1,512,065

 

 

 

1,109,000

 

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

 

-

 

 

 

(636 )

Cash and cash equivalents at the beginning of the period

 

 

-

 

 

 

636

 

Cash and cash equivalents at the end of the period

 

$ -

 

 

$ (0 )

 

 

 

 

 

 

 

 

 

Supplementary disclosure for non-cash investing and financing activities

 

 

 

 

 

 

 

 

Note issued to acquire intangible assets

 

$ 2,374,412

 

 

$ -

 

 

The accompanying notes are an integral part of these financial statements

 

 
8

Table of Contents

 

Golden Matrix Group.

Notes to the Condensed Consolidated Financial Statements

April 30, 2016

(Unaudited)


 

Note 1 - Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for financial information and with the instructions to Form 10-Q of Regulation S-K. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended July 31, 2015 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the nine months ended April 30, 2016 are not necessarily indicative of the results that may be expected for the year ending July 31, 2016.

 

The condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States and are presented in United States dollars.

 

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies IRC Exploration Ltd., ('IRC") a company incorporated in Alberta, Canada on August 1, 2008; Northern Bonanza Inc, ('NBI") a company incorporated in Ontario, Canada on June 30, 2010; Source Bonanza LLC, ("SB") a Limited Liability Company incorporated in Nevada, USA on June 18, 2010; and Vulture Gold LLC ("Vulture"), a Nevada Limited Liability Company which was acquired on August 7, 2010.

 

All significant inter-company transactions and balances have been eliminated.

 

Note 2 - Nature of Operations and Going Concern

 

The Company was incorporated in the state of Nevada, United States of America on June 4, 2008. The Company is an exploration stage company and was formed for the purpose of acquiring exploration and development stage mineral properties. The Company's year-end is July 31. On August 31, 2009, the Company changed its name to Source Gold Corp. in order to reflect the focus of the Corporation.

 

During the year ended July 31, 2009, the Company acquired via its subsidiary company IRC Exploration Ltd. ("IRC"), a mineral claim located in British Columbia, Canada. During the year ended July 31, 2010, the mineral property option agreement for the claim in British Columbia was abandoned.

 

During the year ended July 31, 2010, the Company acquired two additional mineral properties located in Ontario, Canada. The Company also incorporated two new subsidiary companies, Northern Bonanza Inc. ("NBI") to hold its mineral properties located in Ontario, Canada, and Source Bonanza LLC ("SB") to hold its mineral properties located in the USA. The Company also transferred its Ontario mineral properties to NBI during the year ended July 31, 2010.

 

 
9

Table of Contents

 

On August 7, 2010, the Company acquired a 100% interest in Vulture Gold LLC, ("Vulture") a Nevada Limited Liability Company. (Note 8c)

 

On March 28, 2012, the Company entered into a property option agreement to acquire a 100% undivided right in three tenures comprising 2,785 acres in northern British Columbia, Canada. (Note 8d)

 

On July 25, 2014, the Company increased the number of authorized shares of the Company from 3,000,000,000 to 8,000,000,000 shares and par value was changed to $0.00001.

 

On October 15, 2015, the Company effectuated a 1 for 2,000 reverse stock split, thereby reducing the issued and outstanding shares of common stock from 3,472,433,130 prior to the reverse split to 1,736,217 following the reverse split.

 

On February 18, 2016, Edward Aruda, the Chief Executive Officer, Secretary, Treasurer and Director tendered his resignation as CEO, Secretary and Treasurer. Mr. Aruda will remain a Director of the Company. Mr. Aruda's resignation was not due to any disagreement on any matter relating to the operations, policies, or practices of the Company.

 

On February 18, 2016, the Board of Directors appointed Mr. Anthony Brian Goodman Chief Executive Officer, President, Secretary, Treasurer, and Chairman of the Board of Directors.

 

On February 18, 2016, the Board of Directors appointed Ms. Weiting Feng as Chief Financial Officer and Director of the Company.

 

On February 22, 2016, the Company entered into an Asset Purchase Agreement with Luxor Capital, LLC, a Nevada limited liability corporation. The Company purchased a certain Gaming IP, along with the "know how" of that Gaming IP from Luxor. In consideration for the purchase, the Company has agreed to issue 1,666,667 shares of the Company's Common Stock and a Convertible Promissory Note in the amount of $2,374,712. Additionally, the Company is buying back certain debt, in the form of Convertible Promissory Notes, in the amount of $2,141,897.00, from Note Holders and in exchange for the mining claims held by the Company. Pursuant to the Asset Purchase Agreement, 1,666,667 Shares of Common Stock have been issued to Luxor Capital, LLC and its designated party.

 

On March 9, 2016, the Company's Board of Directors approved 1 for 1,500 reverse split for the Company's issued and outstanding shares of common stock. The reverse stock split was effective on April 7, 2016 upon approval of shareholders holding a majority of the voting stock.

 

On March 9, 2016, the Company's Board of Directors approved to change for the name of the Company to Golden Matrix Group, Inc, and effected on April 7, 2016.

 

On April 8, 2016 Edward Aruda announced his resignation as a Director of the Company. There are no known disagreements with Mr. Aruda regarding such resignation or any claims the Company may have against him.

 

The Company intends on exploring its mineral properties and has not yet determined the existence of economically recoverable reserves. The recoverability of amounts incurred on its mineral properties is dependent upon the existence of economically recoverable reserves in the property, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain the necessary financing to complete their development, and the attainment and maintenance of future profitable production or disposition thereof.

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

 

 
10

Table of Contents

 

The Company has yet to achieve profitable operations, has accumulated losses of $44,440,209 since inception, has a working capital deficiency of $29,748,270 and stockholders' deficit of 26,896,801, has no source of recurring revenues, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

Note 3 - Summary of Significant Accounting Policies

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates.

 

Principles of Consolidation

 

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies IRC Exploration Ltd., ('IRC") a company incorporated in Alberta, Canada on August 1, 2008; Northern Bonanza Inc., ('NBI") a company incorporated in Ontario, Canada on June 30, 2010; Source Bonanza LLC, ("SB") a Limited Liability Company incorporated in Nevada, USA on June 18, 2010 and Vulture Gold LLC, ("Vulture") a Nevada Limited Liability Company which was acquired on August 7, 2010.

 

All significant inter-company transactions and balances have been eliminated.

 

Cash and Cash Equivalents

 

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of six months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

 

Exploration Stage Company

 

The Company has not commenced any significant operations and, in accordance with ASC Topic 915, the Company is considered an exploration stage company. All losses accumulated since inception have been considered as part of the Company's exploration stage activities.

 

 
11

Table of Contents

 

Intangible Assets

 

Intangible assets consist of expenditures for domain names and certain intellectual properties acquired for a social online gaming product the Company is developing. The intangible assets are recorded cost and amortized over estimated useful life of 3 years.

 

Mineral Properties

 

The Company is primarily engaged in the acquisition, exploration, and development of mineral properties.

 

Mineral property acquisition costs are capitalized in accordance with FASB ASC 930-805, "Extractive Activities-Mining," when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements.

 

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized.

 

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis.

 

Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

 

To date the Company has not established any proven or probable reserves on its mineral properties.

 

Computer equipment

 

Computer equipment is stated at the lower of cost or fair value. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

 

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of its office equipment or whether the remaining balance of office equipment should be evaluated for possible impairment.

 

 
12

Table of Contents

 

Foreign Currency Translation

 

The Company's functional currency is the US dollar as a substantial part of the Company's operations is based in Arizona. IRC's and NBI's functional currency is the Canadian dollar. The functional currency of SB and Vulture is the US dollar as its activities are in the USA. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission ("SEC").

 

Assets and liabilities denominated in a foreign currency are translated into US dollar reporting currency at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses are included in other comprehensive loss.

 

Diluted and Basic Loss per Share

 

Basic loss per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed similar to basic income per share except that the denominator is increased to include the number of common stock equivalents. Common stock equivalents represent the dilutive effect of the assumed exercise of any outstanding stock equivalents, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company's net income (loss) position at the calculation date.

 

There are no common stock equivalents outstanding and, thus, diluted and basic loss per share is the same.

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is "more likely-than-not" that a deferred tax asset will not be realized.

 

Comprehensive Loss

 

The Company is required to report comprehensive loss, which includes net loss as well as changes in equity from non-owner sources.

 

Fair Value of Financial Instruments

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of April 30, 2016 and July 31, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

 
13

Table of Contents

 

Stock-Based Compensation

 

The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expense related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

 

Stock based compensation for non-employees is accounted for using the Stock Based Compensation Topic of the FASB ASC 505. We use the fair value method for equity instruments granted to non-employees and will use the Black-Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

 

Use of estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles 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 and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

 

Newly Issued Accounting Pronouncements

 

On June 10, 2014, The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, consolidation removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company has adopted this amendment effective the current reporting period.

 

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

 

Note 4 - Computer equipment

 

 

 

April 30,

 

 

July 31,

 

 

 

2016

 

 

2015

 

Cost

 

 

 

 

 

 

Computer equipment

 

$ 1,973

 

 

$ 1,973

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

(1,973 )

 

 

(1,973 )

 

 

 

 

 

 

 

 

 

Net book value

 

$ -

 

 

$ -

 

 

 
14

Table of Contents

 

Note 5 - Intangible Asset

 

On November 6, 2015 and December 7, 2015, the Company purchased 100% interest in the intellectual property "We Buy Gold. "The Company expects the intellectual property to bring value to the Company for the first three years of its service and as such the property is classified as a definitive asset and is amortized over a 3-year period. As of April 30, 2016, the accumulated amortization is $21,966 and the carrying value is $128,034.

 

On February 22, 2016 the Company entered into a Know-How and Asset Purchase Agreement with Luxor Capital, LLC, whereby the Company acquired Gaming IP and know-how. The purchase price for these assets consisted of a convertible note in the amount of $2,374,712 payable to Luxor Capital, LLC, and 1,666,667 shares of the Company's common stock. The note bears 6% interest and the Company recorded an initial discount to the note of $2,198,807. As of April 30, 2016, the accumulated amortization is $236,278 and the carrying value is $2,638,434.

 

Note 6 - Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

 

The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

The fair value hierarchy for valuation inputs prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels; the level is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 - inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 
Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

The carrying value of the Company's financial assets and liabilities which consist of cash, and accounts payable and accrued liabilities, in management's opinion approximate their fair value due to the short maturity of such instruments. These financial assets and liabilities are valued using level 3 inputs, except for cash which is at level 1. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.

 

 
15

Table of Contents

 

Note 7 - Related Party Transactions

 

All related party transactions have been recorded at the exchange value which was the amount of consideration established and agreed to by the related parties.

 

On June 30, 2010, the Company purchased from the Company president 13 mineral property claims in the Thunder Bay mining division of Ontario, Canada. As consideration for the purchase the Company issued an unsecured, non-interest bearing promissory note for $20,000 due on November 30, 2010. During the year ended July 31, 2011 this promissory note was settled by payment of $20,000 cash to the president.

 

During the year ended July 31, 2010, the former president of the Company granted an option to the current president of the Company to acquire up to 7 common shares of the Company.

 

On November 1, 2009, the Company entered into a Corporate Management Services Agreement with the President of the Company for management services. Pursuant to the agreement the President would receive a signing bonus of $7,500 (paid November 1, 2009) and $5,000 per month beginning December 1, 2009 for services rendered plus reimbursement of the Company's expenses. The agreement may be terminated by either party upon 30 days written notice.

 

On June 21, 2011, the Company amended the agreement by issuing a resolution to reflect a payment of $6,000 per month for services rendered.

 

On October 31, 2012, the Former President of the Company acquired 3 common shares of the Company in a private transaction. As of October 31, 2012 the President holds 16.4% interest in the common stock of the Company.

 

On May 15, 2013 the Company entered into an employment agreement with DhugaldPinchin providing a signing bonus equivalent to $50,000 USD or stock and $7,500 per month salary.

 

On March 25, 2014, DhugaldPinchin terminated his employment with the Company.

 

On April 1, 2014, the Company entered into a consulting contract with Edward Aruda. The Company will pay Mr. Aruda $2,000 per month, payable in duly authorized, validly issued, fully paid non assessable common shares of the Company.

 

On February 22, 2016, the Company entered into an Asset Purchase Agreement with Luxor Capital, LLC, which is wholly-owned by Anthony Goodman.

 

On April 1, 2016, the Company entered into a Services Agreement with Articulate Pty Ltd, which is wholly owned by the director of the Company, for consulting services. Pursuant to the agreement Articulated would receive $4,500 per month ending for services rendered plus reimbursement of the Company's expenses. The agreement may be terminated by either party upon 30 days written notice.

 

On April 8, 2016 Edward Aruda announced his resignation as a Director of the Company.

 

 
16

Table of Contents

 

Note 8 - Convertible Notes Payable

 

 

 

April 30,

 

 

July 31,

 

 

 

2016

 

 

2015

 

 

Promissory Note #2

 

 

30,000

 

 

 

30,000

 

Promissory Note #5

 

 

12,000

 

 

 

12,000

 

Promissory Note #6

 

 

11,774

 

 

 

11,774

 

Promissory Note #11

 

 

-

 

 

 

57,500

 

Promissory Note #12

 

 

7,500

 

 

 

7,500

 

Promissory Note #13

 

 

7,500

 

 

 

7,500

 

Promissory Note #14

 

 

11,000

 

 

 

11,000

 

Promissory Note #15

 

 

7,500

 

 

 

7,500

 

Promissory Note #16

 

 

11,000

 

 

 

11,000

 

Promissory Note #17

 

 

7,500

 

 

 

7,500

 

Promissory Note #18

 

 

11,000

 

 

 

11,000

 

Promissory Note #19

 

 

7,500

 

 

 

7,500

 

Promissory Note #20

 

 

1,000

 

 

 

1,000

 

Promissory Note #21

 

 

11,000

 

 

 

11,000

 

Promissory Note #22

 

 

7,500

 

 

 

7,500

 

Promissory Note #23

 

 

16,000

 

 

 

16,000

 

Promissory Note #25

 

 

7,500

 

 

 

7,500

 

Promissory Note #26

 

 

7,000

 

 

 

7,000

 

Promissory Note #27

 

 

7,500

 

 

 

7,500

 

Promissory Note #28

 

 

16,000

 

 

 

16,000

 

Promissory Note #29

 

 

7,500

 

 

 

7,500

 

Promissory Note #30

 

 

16,000

 

 

 

16,000

 

Promissory Note #31

 

 

26,500

 

 

 

26,500

 

Promissory Note #34

 

 

7,500

 

 

 

7,500

 

Promissory Note #35

 

 

16,000

 

 

 

16,000

 

Promissory Note #36

 

 

7,500

 

 

 

7,500

 

Promissory Note #37

 

 

11,500

 

 

 

11,500

 

Promissory Note #39

 

 

22,969

 

 

 

23,995

 

Promissory Note #42

 

 

21,000

 

 

 

24,000

 

Promissory Note #44

 

 

25,000

 

 

 

25,000

 

Promissory Note #45

 

 

29,500

 

 

 

40,000

 

Promissory Note #46

 

 

33,000

 

 

 

33,000

 

Promissory Note #49

 

 

359,000

 

 

 

360,000

 

Promissory Note #50

 

 

359,250

 

 

 

360,000

 

Promissory Note #51

 

 

147,773

 

 

 

174,510

 

Promissory Note #52

 

 

221,493

 

 

 

240,000

 

Promissory Note #53

 

 

150,000

 

 

 

150,000

 

Promissory Note #54

 

 

75,000

 

 

 

75,000

 

Promissory Note #55

 

 

75,000

 

 

 

75,000

 

Promissory Note #56

 

 

75,000

 

 

 

75,000

 

Promissory Note #57

 

 

140,000

 

 

 

140,000

 

Promissory Note #58

 

 

140,000

 

 

 

140,000

 

Promissory Note #59

 

 

240,000

 

 

 

240,000

 

Promissory Note #60

 

 

57,500

 

 

 

-

 

Promissory Note #61

 

 

240,000

 

 

 

-

 

Promissory Note #62

 

 

150,000

 

 

 

-

 

Promissory Note #63

 

 

140,000

 

 

 

-

 

Promissory Note #64

 

 

80,000

 

 

 

-

 

Promissory Note #65

 

 

80,000

 

 

 

-

 

Promissory Note #66

 

 

80,000

 

 

 

-

 

Promissory Note #67

 

 

75,000

 

 

 

-

 

Promissory Note #68

 

 

2,374,712

 

 

 

-

 

Notes payable, principal

 

$ 5,681,471

 

 

$ 2,523,279

 

Debt discount

 

 

(1,837,359 )

 

 

(161,374 )

Notes payable, net of discount

 

 

3,844,111

 

 

 

2,361,905

 

Accrued interest

 

 

558,956

 

 

 

209,187

 

Total notes payable

 

$ 4,403,067

 

 

$ 2,571,092

 

 

 
17

Table of Contents

 

Promissory Note #2

 

On March 19, 2012, the Company received $30,000 cash from the issuance of a convertible promissory note in the amount of $30,000. The promissory note is unsecured, interest free and repayable upon demand.

 

The note may be converted at the option of the holder into Common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly the note may be converted into 3,000,000 common shares of the Company.

 

The Company determined that this Promissory note should be accounted for in accordance with FASB ASC 470-20 which addresses "Accounting for Convertible Securities with Beneficial Conversion Features". The beneficial conversion feature is calculated at its intrinsic value (that is, the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (per share being $0.08), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.

 

Promissory Note #5

 

On October 30, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $12,000. The promissory note is unsecured; bears interest at 8% per annum, and matured on October 30, 2012. Any principal amount not paid by the maturity date bears interest at 22% per annum. During the nine months ended April 30, 2016, the Company accrued $1,982 (April 30, 2015 - $1,975) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $13,844 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months endedApril 30, 2016, the Company recorded a gain of $17,999 (April 30, 2015 – gain of $16,138) due to the change in value of the derivative liability during the period.

 

As of April 30, 2016, principal balance of $12,000 (April 30, 2015 - $12,000) accrued interest of $9,244 (April 30, 2015 - $6,596) and aderivative liability of $18,691 (April 30, 2015 - $23,529) was recorded.

 

Promissory Note #6

 

On December 18, 2012, the Company converted a loan payable of $11,774 to a convertible promissory note. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 18, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. During the nine months ended April 30, 2016, the Company accrued $1,944 (April 30, 2015 - $1,937) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $19,145 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.    

 
During the nine months ended April 30, 2016, the Company recorded a gain of $17,660 (April 30, 2015 – gain of $15,878) due to the change in value of the derivative liability during the period.

 

As of April 30, 2016, principal balance of $11,774 (April 30, 2015 - $11,774) accrued interest of $7,767 (April 30, 2015 - $5,109) and a derivative liability of $18,339 (April 30, 2015 - $23,086) was recorded.

 

 
18

Table of Contents

 

Promissory Note #11

 

On May 31, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $57,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 30, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 10, 2015, the Company reassigned the principal amount of the note of $57,500 to Santa Rosa Resources.

 

During the nine months ended April 30, 2016, the Company accrued $347 (April 30, 2015 - $9,462) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On May 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $57,500 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $0 (April 30, 2015 - $57,500) and accrued interest of $23,725 (April 30, 2015 - $20,190) was recorded.

 

Promissory Note #12

 

On June 30, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 31, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On June 30, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $7,500 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $4,150 (April 30, 2015 - $2,495) was recorded.

 

 
19

Table of Contents

 

Promissory Note #13

 

On July 31, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on January 31, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On July 31, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $5,250 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $4,010 (April 30, 2015 - $2,355) was recorded.

 

Promissory Note #14

 

On August 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,817 (April 30, 2015 - $1,810) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On August 1, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $7,700 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $11,000 (April 30, 2015 - $11,000) and accrued interest of $5,874 (April 30, 2015 - $3,447) was recorded.

 

 
20

Table of Contents

 

Promissory Note #15

 

On August 31, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 3, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On August 31, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $2,250 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,870 (April 30, 2015 - $2,215) was recorded.

 

Promissory Note #16

 

On September 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,817 (April 30, 2015 - $1,810) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On September 1, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $3,300 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $11,000 (April 30, 2015 - $11,000) and accrued interest of $5,681 (April 30, 2015 - $3,254) was recorded.

 

 
21

Table of Contents

 

Promissory Note #17

 

On September 30, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 31, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On September 30, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $3,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,740 (April 30, 2015 - $2,085) was recorded.

 

Promissory Note #18

 

On October 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,817 (April 30, 2015 - $1,810) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On October 1, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $5,500 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $11,000 (April 30, 2015 - $11,000) and accrued interest of $5,478 (April 30, 2015 - $3,051) was recorded.

 

 
22

Table of Contents

 

Promissory Note #19

 

On October 31, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On October 31, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $750 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,602 (April 30, 2015 - $1,947) was recorded.

 

Promissory Note #20

 

On November 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $176,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $165 (April 30, 2015 - $165) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On November 1, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

On May 19, 2014, a replacement note was issued and the principal balance of $50,000 and interest of $5,000 was transferred Gel Properties, LLC.

 

On June 6, 2014, a replacement note was issued and the principal balance of $25,000 was transferred Union Capital, LLC.

 

On July 2, 2014, a replacement note was issued and the principal balance of $25,000 was transferred Union Capital, LLC.

 

On July 9, 2014, a replacement note was issued and the principal balance of $25,000 was transferred LG Capital, LLC.

 

As of April 30, 2016, principal balance of $1,000 (April 30, 2015 - $1000) and accrued interest of $11,679 (April 30, 2015 - $11,458) was recorded.

 

 
23

Table of Contents

 

Promissory Note #21

 

On November 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,817 (April 30, 2015 - $1,810) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On November 1, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $11,000 (April 30, 2015 - $11,000) and accrued interest of $5,274 (April 30, 2015 - $2,847) was recorded.

 

Promissory Note #22

 

On November 30, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On November 30, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,466 (April 30, 2015 - $1,812) was recorded.

 

 
24

Table of Contents

 

Promissory Note #23

 

On December 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $2,642 (April 30, 2015 - $2,633) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On December 1, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $16,000 (April 30, 2015 - $16,000) and accrued interest of $7,379 (April 30, 2015 - $3,850) was recorded.

 

Promissory Note #25

 

On December 31, 2013 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On December 31, 2013, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,326 (April 30, 2015- $1,672) was recorded.

 

 
25

Table of Contents

 

Promissory Note #26

 

On January 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $7,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,156 (April 30, 2015 - $1,152) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On January 1, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $7,000 (April 30, 2015 - $7,000) and accrued interest of $3,100 (April 30, 2015 - $1,556) was recorded.

 

Promissory Note #27

 

On January 31, 2014 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 31, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,234) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On January 31, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,186 (April 30, 2015 - $1,532) was recorded.

 

 
26

Table of Contents

 

Promissory Note #28

 

On February 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on August 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $2,642 (April 30, 2015 - $2,623) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On February 1, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $16,000 (April 30, 2015 - $16,000) and accrued interest of $6,784 (April 30, 2015 - $3,254) was recorded.

 

Promissory Note #29

 

On February 28, 2014 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on August 28, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,154) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On February 28, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $3,060 (April 30, 2015 - $1,405) was recorded.

 

 
27

Table of Contents

 

Promissory Note #30

 

On March 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $2,642 (April 30, 2015 - $2,436) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On March 1, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $16,000 (January 31, 2015 - $16,000) and accrued interest of $6,499 (April 30, 2015 - $2,969) was recorded.

 

Promissory Note #31

 

On March 17, 2014, the Company received funding pursuant to a convertible promissory note in the amount of $26,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 17, 2015. Any principal amount not paid by the maturity date bears interest at 24% per annum. During the nine months ended April 30, 2016, the Company accrued $4,774 (April 30, 2015 - $2,097) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $42,329 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $97,167 (nine months ended April 30, 2015–loss of $10,671) due to the change in value of the derivative liability during the period, and debt discount of $0 (nine ended April 30, 2015–$26,500) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $26,500 (April 30, 2015 - $26,500), accrued interest of $9,265 (April 30, 2015 - $2,887), debt discount of $0 (April 30, 2015 - $0) and derivative liability of $150,167 (April 30, 2015 - $53,000) was recorded.

 

Promissory Note #34

 

On March 31, 2014 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

 
28

Table of Contents

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $1,059) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On March 31, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $2,914 (April 30, 2015 - $1,259) was recorded.

 

Promissory Note #35

 

On April 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $2,642 (April 30, 2015 - $2,252) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On April 1, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $16,000 (April 30, 2015 - $16,000) and accrued interest of $6,206 (April 30, 2015 - $2,677) was recorded.

 

Promissory Note #36

 

On April 30, 2014 the Company entered into a Convertible Promissory Note with DhugaldPinchin in the sum of $7,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,239 (April 30, 2015 - $969) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

 
29

Table of Contents

 

On April 30, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $1,500 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $7,500 (April 30, 2015 - $7,500) and accrued interest of $2,775 (April 30, 2015 - $1,121) was recorded.

 

Promissory Note #37

 

On May 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital, LLC, in the sum of $16,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the Company transferred the note to Direct Capital Group, Inc.

 

During the nine months ended April 30, 2016, the Company accrued $1,899 (April 30, 2015 - $2,011) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On May 1, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $4,950 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the life of the promissory note, the debt discount was accreted to the statement of operations.

 

On March 24, 2015, a replacement note was issued and $5,000 of the principal balance was transferred Direct Capital Group, Inc.

 

As of April 30, 2016, principal balance of $11,500 (January 31, 2015 - $11,500), and accrued interest of $4,877 (April 30, 2015 - $2,340) was recorded.

 

Promissory Note #39

 

On May 19, 2014, the Company received funding pursuant to a convertible promissory note in the amount of $25,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 19, 2015. Any principal amount not paid by the maturity date bears interest at 16% per annum. During the nine months ended April 30, 2016, the Company accrued $2,811 (April 30, 2015 - $1,463) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $32,007 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $73,028 (nine months ended April 30, 2015 - $9,334) due to the change in value of the derivative liability during the period. During the life of the promissory note, the debt discount of $25,000 was accreted to the statement of operations.

 

 
30

Table of Contents

 

During the nine months ended April 30, 2016, the Company issued 1,900 common shares upon the conversion of $1,026 in principal, and $8,382 of the derivative liability was re-classified as additional paid in capital upon conversion.

 

As of April 30, 2016, principal balance of $22,969 (April 30, 2015 - $23,995), accrued interest of $5,542 (April 30, 2015 - $1,863), and derivative liability of $104,637 (April 30, 2015 - $39,992) was recorded.

 

Promissory Note #42

 

On June 6, 2014, the Company received funding pursuant to a convertible promissory note in the amount of $25,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 6, 2015. Any principal amount not paid by the maturity date bears interest at 16% per annum. During the nine months ended April 30, 2016, the Company accrued $2,759 (April 30, 2015 - $1,472) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $33,550 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $71,812 (nine months ended April 30, 2015 - $23,091) due to the change in value of the derivative liability during the period. During the life of the promissory note, the debt discount of $25,000 was accreted to the statement of operations.

 

During the nine months ended January 31, 2016, the Company issued 27,667 common shares upon the conversion of $3,000 in principal, and $9,343 of the derivative liability was re-classified as additional paid in capital upon conversion.

 

As of April 30, 2016, principal balance of $21,000 (April 30, 2015 - $24,000), accrued interest of $5,306 (April 30, 2015 - $1,773), and derivative liability of $100,222 (April 30, 2015 - $40,000) was recorded.

 

Promissory Note #44

 

On July 2, 2014, the Company received funding pursuant to a convertible promissory note in the amount of $25,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 2, 2015. Any principal amount not paid by the maturity date bears interest at 16% per annum. During the nine months ended April 30, 2016, the Company accrued $3,003 (April 30, 2015 - $1,008) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $40,725 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $72,221 (nine months ended April 30, 2015 loss of $942) due to the change in value of the derivative liability during the period. During the life of the promissory note, the debt discount of $25,000 was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $25,000 (April 30, 2015 - $25,000), accrued interest of $5,321 (April 30, 2015 - $1,655), and derivative liability of $113,888 (April 30, 2015 - $41,667) was recorded.

 

 
31

Table of Contents

 

Promissory Note #45

 

On July 9, 2014, the Company arranged a debt swap under which Syndication Capital Note #20 for $75,000 was transferred to LG Capital Funding, LLC. The promissory note is unsecured, bears interest at 8% per annum and matures on July 9, 2015. Any principal amount not paid by the maturity date bears interest at 16% per annum. The note also contains customary events of default. During the nine months ended April 30, 2016, the Company accrued $4,250 (April 30, 2015 - $2,439) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $202,937 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $136,190 (nine months ended April 30, 2015 gain of $55, 700) due to the change in value of the derivative liability during the period. During the life of the promissory note, the debt discount of $75,000 was accreted to the statement of operations.

 

During the nine months ended April 30, 2016, the Company issued 39,148 common shares upon the conversion of $10,500 in principal and 1,241.60 in interest, and $34,857 of the derivative liability was re-classified as additional paid in capital upon conversion.

 

As of April 30, 2016, principal balance of $29,500 (April 30, 2015 - $40,000) accrued interest of $6,597 (April 30, 2015 - $2,589), and a derivative liability of $181,333 (April 30, 2015 - $80,000) was recorded.

 

Promissory Note #46

 

On July 9, 2014, the Company received funding pursuant to a convertible promissory note in the amount of $33,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 9, 2015. Any principal amount not paid by the maturity date bears interest at 16% per annum. During the nine months ended April 30, 2016, the Company accrued $3,964 (April 30, 2015 - $1,975) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $130,556 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $121,000 (nine months ended April 30, 2015 gain of $64,556) due to the change in value of the derivative liability during the period. During the life of the promissory note, the debt discount of $33,000 was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $33,000 (April 30, 2015 - $33,000), accrued interest of $6,922 (April 30, 2015 - $2,134), and derivative liability of $187,000 (April 30, 2015 - $66,000) was recorded.

 

 
32

Table of Contents

 

Promissory Note #49

 

On December31, 2014 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $360,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

 

During the nine months ended April 30, 2016, the Company accrued $19,482 (April 30, 2015 - $9,468) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On December 31, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

On February 9, 2016, the note was reassigned to Tide Pool Ventures Corporation. At any time the note may be converted at the option of the holder into Common stock of the Company.

 

During nine month ended April 30, 2016, the Company issued 6,667 common shares upon the conversion of $1,000 in principal.

 

As of April 30, 2016, principal balance of $359,000 (April 30, 2015 - $360,000) and accrued interest of $80,324 (April 30, 2015 - $9,468) was recorded.

 

Promissory Note #50

 

On December31, 2014 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $360,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On April 27, 2016, the Company transferred the note to N600PG, LLC.

 

During the nine months ended April 30, 2016, the Company accrued $19,528 (April 30, 2015 - $9,468) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

 
33

Table of Contents

 

On December 31, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

During nine months ended April 30, 2016, the Company issued 67 common shares upon the conversion of $750 in principal, and $1 of the derivative liability was re-classified as additional paid in capital upon conversion.

 

As of April 30, 2016, principal balance of $359,250 (April 30, 2015 - $360,000) and accrued interest of $80,323 (April 30, 2015 - $9,468) was recorded.

 

Promissory Note #51

 

On March 24, 2015, the Company arranged a debt swap under which four Syndication Capital notes totaling $176,000 were transferred to Direct Capital Group, Inc. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 24, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $14,479 (April 30, 2015 - $0) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On March 24, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $176,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital. During the nine months ended April 30, 2016, debt discount of $42,030 (nine months ended April 30, 2015 - $35,391) was accreted to the statement of operations.

 

During the nine months ended April 30, 2016, the Company issued 180,134 common shares upon the conversion of 27,737 in principal.

 

As of April 30, 2016, principal balance of $147,773 (April 30, 2015 - $176,000), accrued interest of $27,510 (April 30, 2015 - $1,427), and debt discount of $0 (April 30, 2015 - $140,609) was recorded.

 

Promissory Note #52

 

On April 30, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $240,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 30, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par$0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $12,174 (January 31, 2015 - $0) in interest expense.

 

 
34

Table of Contents

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On April 30, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $240,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital. During the nine months ended April 30, 2016, debt discount of $119,344 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

On January 19, 2016, the note was reassigned to Rockwell Capital Partners. At any time the note may be converted at the option of the holder into Common stock of the Company. The conversion price is 50% of the market price, where market price is defined as "the lowest closing price on any day with a fifteen day look back".On 18th April 2016, Rockwell Capital Partners reassigned $165,000 of the original note back to Direct Capital Group, Inc.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $479,999 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $3,778,338 (April 30, 2015 $0) due to the change in value of the derivative liability during the period, and debt discount of $240,000 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

During the nine months ended April 30, 2016, the Company issued 113,666 common shares upon the conversion of $18,507 in principal, and $41,978 of the derivative liability was re-classified as additional paid in capital upon conversion.

 

As of April 30, 2016, principal balance of $221,493 (April 30, 2015 - $0), accrued interest of $33,426 (April 30, 2015 - $0), and derivative liability of $4,208,359 (April 30, 2015 - $0) was recorded.

 

Promissory Note #53

 

On May 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $150,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2015. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $11,951 (April 30, 2015 - $0) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $353,498 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

 
35

Table of Contents

 

During the nine months ended April 30, 2016, the Company recorded a gain of $2,496,502 (April 30, 2015 – $0) due to the change in value of the derivative liability during the period, and debt discount of $150,000 nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $150,000 (April 30, 2015 - $0), accrued interest of $14,942 (April 30, 2015 -$0), and derivative liability of $2,850,000 (April 30, 2015 - $0) was recorded.

 

Promissory Note #54

 

On May 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2015. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $5,975 (April 30, 2015 - $0) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $176,749 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $1,248,251 (April 30, 2015 – $0) due to the change in value of the derivative liability during the period, and debt discount of $75,000 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $75,000 (April 30, 2015 - $0), accrued interest of $7,471 (April 30, 2015 - $0)and derivative liability of $1,425,000 (April 30, 2015 - $0) was recorded.

 

Promissory Note #55

 

On May 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2015. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $5,975 (April 30, 2015 - $0) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $176,749 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $1,248,251 (April 30, 2015 – $0) due to the change in value of the derivative liability during the period, and debt discount of $7,500 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $75,000 (April 30, 2015 - $0), accrued interest of $7,471 (April 30, 2015 - $0) and derivative liability of $1,425,000 (April 30, 2015 - $0) was recorded.

 

 
36

Table of Contents

 

Promissory Note #56

 

On May 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2015. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $5,975 (April 30, 2015 - $0) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $176,749 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $1,425,000 (April 30, 2015 – $0) due to the change in value of the derivative liability during the period, and debt discount of $7,500 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $75,000 (April 30, 2015 - $0), accrued interest of $5,252 (April 30, 2015 - $0) and derivative liability of $1,425,000 (April 30, 2015 - $0) was recorded.

 

Promissory Note #57

 

On May 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $140,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2015. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $11,154 (April 30, 2015 - $0) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $329,931 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $2,330,069 (April 30, 2015 – $0) due to the change in value of the derivative liability during the period, and debt discount of $140,000(nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $140,000 (April 30, 2015 - $0), accrued interest of $13,946 (April 30, 2015 - $0), and derivative liability of $2,660,000 (April 30, 2015 - $0) was recorded.

 

Promissory Note #58

 

On May 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $140,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2015. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $11,154 (April 30, 2015 - $0) in interest expense.

 

 
37

Table of Contents

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $329,931 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

During the nine months ended April 30, 2016, the Company recorded a gain of $2,330,069 (April 30, 2015 – $0) due to the change in value of the derivative liability during the period, and debt discount of $140,000(nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $140,000 (April 30, 2015 - $0), accrued interest of $13,946 (April 30, 2015 - $0), and derivative liability of $2,660,000 (April 30, 2015 - $0) was recorded.

 

Promissory Note #59

 

On July 31, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $240,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on January 31, 2016. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par$0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $14,413 (April 30, 2015 - $0) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On July 31, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $0 was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

As of April 30, 2016, principal balance of $240,000 (April 30, 2015 - $0) and accrued interest of $14,413 (January 31, 2015 - $0) was recorded.

 

Promissory Note #60

 

On August 10, 2015, the Company reassigned the principal amount of a DhugaldPinchin note to Santa Rosa Resources. The original note was issued on May 31, 2013 in the sum of $57,500 and matured on November 30, 2013. The Conversion Price shall mean par $0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

 

As of April 30, 2016, principal balance of $57,500 (April 30, 2015 - $0) respectively was recorded.

 

 
38

Table of Contents

 

Promissory Note #61

 

On October 31, 2015, the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $240,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2016. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $9,574 (April 30, 2015 - $0) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On October 31, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $240,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital. During the nine months ended April 30, 2016, debt discount of $8,000 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $240,000 (April 30, 2015 - $0), and accrued interest of $9,574 (April 30, 2015 - $0) was recorded.

 

Promissory Note #62

 

On November 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $150,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2016. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the year ended January 31, 2016, the Company accrued $5,951 (April 30, 2015 - $0) in interest expense.

 

After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company. The conversion price is 50% of the market price, where market price is defined as "the average of the last fifteen closing trading prices on the OTCBB immediately prior to conversion date".

 

As of April 30, 2016, principal balance of $150,000 (April 30, 2015 - $0) and accrued interest of $5,951 (April 30, 2015 - $0) was recorded.

 

Promissory Note #63

 

On November 1, 2015 the Company received funding pursuant to a convertible promissory note in the amount of $140,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2016. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $5,554 (April 30, 2015 - $0) in interest expense.

 

After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company. The conversion price is 50% of the market price, where market price is defined as "the average of the last fifteen closing trading prices on the OTCBB immediately prior to conversion date".

 

As of April 30, 2016, principal balance of $140,000 (April 30, 2015 - $0) and accrued interest of $2,792 (April 30, 2015 - $0) was recorded.

 

 
39

Table of Contents

 

Promissory Note #64

 

On November 1, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2016. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $3,174 (April 30, 2015 - $0) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On November 1, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital. During the nine months ended April 30, 2016, debt discount of $80,000 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $80,000 (April 30, 2015 - $0), and accrued interest of $3,174 (April 30, 2015 - $0) was recorded.

 

Promissory Note #65

 

On December 1, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 1, 2016. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $2,648 (April 30, 2015 - $0) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On December 1, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital. During the nine months ended April 30, 2016, debt discount of $80,000 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $80,000 (April 30, 2015 - $0), and accrued interest of $2,648 (April 30, 2015 - $0) was recorded.

 

 
40

Table of Contents

 

Promissory Note #66

 

On January 2, 2016 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 2, 2016. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $0.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the nine months ended April 30, 2016, the Company accrued $2,087 (April 30, 2015 - $0) in interest expense.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

 

On January 2, 2016, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements, with a corresponding increase to additional paid in capital. During the nine months ended April 30, 2016, debt discount of $80,000 (nine months ended April 30, 2015 - $0) was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $80,000 (April 30, 2015 - $0), and accrued interest of $2,087 (April 30, 2015 - $0) was recorded.

 

Promissory Note #67

 

On January 31, 2016 the Company received funding pursuant to a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 31, 2016. Any principal amount not paid by the maturity date bears interest at 12% per annum. During the nine months ended April 30, 2016, the Company accrued $1,479 (April 30, 2015 - $0) in interest expense.

 

After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company. The conversion price is 50% of the market price, where market price is defined as "the average of the last fifteen closing trading prices on the OTCBB immediately prior to conversion date".

 

As of April 30, 2016, principal balance of $75,000 (April 30, 2015 - $0) and accrued interest of $1,479 (January 31, 2015 - $0) was recorded.

 

Promissory Note #68

 

On March 1, 2016 the Company entered into a convertible promissory note with Luxor Capital, LLC in the amount of $2,374,712. The promissory note is unsecured, bears interest at 6% per annum, and matures on March 1, 2017. During the nine months ended April 30, 2016, the Company accrued $23,422 (April 30, 2015 - $0) in interest expense.

 

Upon the holder's option to convert becoming active the Company recorded a debt discount and derivative liability of $2,330,680 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

 

 
41

Table of Contents

 

During the nine months ended April 30, 2016, the Company recorded a loss of $5,438,545 (nine months ended April 30, 2015 $0) due to the change in value of the derivative liability during the period. During the life of the promissory note, the debt discount of $2,198,807 was accreted to the statement of operations.

 

As of April 30, 2016, principal balance of $2,374,712 (April 30, 2015 - $0) and accrued interest of $23,422 (January 31, 2015 - $0) was recorded.

 

Note 9 - Derivative Liabilities

 

The Company issued financial instruments in the form of convertible notes with embedded conversion features. Some of the convertible notes payable have conversion rates, which are indexed to the market value of the Company's stock price.

 

During the nine months ended April 30, 2016 and 2015, the Company recorded derivative liabilities for embedded conversion features related to convertible notes payable of face value $5,681,471 and $279,167 respectively. During the nine months ended April 30, 2016 and 2015, $33,823 and $95,500 respectively of convertible notes payable principal and accrued interest was converted into common stock of the Company. For the nine months ended April 31, 2016 and 2015, the Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes of and the carrying amount of the derivative liability related to the conversion feature of $58,771 and $214,648 respectively, was re-classed to additional paid in capital on the date of conversion in the statement of shareholders' deficit. During the nine months ended April 30, 2016 and 2015, the Company recognized a gain of $20,725,354and$176,565 respectively, based on the change in fair value (mark-to-market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations.

 

These derivative liabilities have been measured in accordance with fair value measurements, as defined by ASC 820. The valuation assumptions are classified within Level 1 and Level 2 inputs. The following table represents the Company's derivative liability activity for the embedded conversion features discussed above.

 

The following table represents the Company's derivative liability activity for the embedded conversion features discussed above:

 

 

 

April 30,

 

 

April 30,

 

 

 

2016

 

 

2015

 

Balance, beginning of period

 

$ 322,029

 

 

$ 479,320

 

Initial recognition of derivative liability

 

 

4,454,880

 

 

 

279,167

 

Conversion of derivative instruments to Common Stock

 

 

(58,771 )

 

 

(214,648 )

Mark-to-Market adjustment to fair value

 

 

20,900,753

 

 

 

(176,565 )

Balance, end of period

 

$ 25,296,862

 

 

$ 367,273

 

 

 
42

Table of Contents

 

Note 10 - Preferred Stock

 

The Company is authorized to issue 20,000,000 shares of it $0.00001 par value preferred stock.

 

On August 10, 2015, the Company's Board of Directors authorized the creation of 1,000 shares of Series B Voting Preferred Stock. The holder of the shares of the Series B Voting Preferred Stock has the right to vote those shares of the Series B Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series B Voting Preferred Stock is equal to and counted as 4 times the votes of all of the shares of the Company's (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.

 

On August 10, 2015, the Company filed a Certificate of Designation with the Nevada Secretary of State creating the 1,000 shares of Series B Voting Preferred Stock

 

On August 14, 2015, the Company issued 1,000 shares of Series B Voting Preferred Stock to Santa Rosa Resources, representing 100% of the total issued and outstanding shares of the Company's Series B Voting Preferred Stock.

 

On April 3, 2016, the Company cancelled 1,000 shares of Series B Voting Preferred Stock to Santa Rosa Resources and a new certificate issued in the name of Luxor Capital LLC in the amount of 1000 Series B shares.

 

As of April 30, 2016, 19,999,000 Series A preferred shares and 1,000 Series B preferred shares of par value $0.00001 were authorized, of which 0 Series A shares were issued and outstanding, (0 shares as of April 30, 2015) and 1,000 Series B shares were issued and outstanding (0 shares as of April 30, 2015).

 

Note 11 - Common Stock

 

The Company is authorized to issue 7,980,000,000 shares of its $0.00001 par value common stock.

 

On October 15, 2015, the Company effectuated a 1 for 2,000 reverse stock split, thereby reducing the issued and outstanding shares of common stock from 3,472,433,130 prior to the reverse split to 1,736,217 following the reverse split. An additional 1,043 shares were issued due to no fractional shares used as a result of the reverse stock split.

 

On November 6, 2015, the Company purchased all data and rights to the "We Buy Gold" website from Santa Rosa Resources. The Company issued 33,334 shares of common stock on November 6, 2015 and 33,334 shares of common stock on December 7, 2015, with a total value equal to $150,000.

 

On March 9, 2016, the Company's Board of Directors approved 1 for 1,500 reverse split for the Company's authorized, issued and outstanding shares of common stock. The reverse stock split was effective on April 7, 2016 upon approval of shareholders holding a majority of the voting stock.

 

During the nine months ended April 30, 2016, the Company issued 2,337,626 common shares upon the conversion of $33,822 in principal and interest of promissory notes into common stock.

 

As of April 30, 2016, 7,980,000,000 common shares of par value $0.00001 were authorized, of which 2,405,512 shares were issued and outstanding.

 

 
43

Table of Contents

 

Warrants and Options

 

As of April 30, 2016 and July 31, 2015, there were no warrants or options outstanding to acquire any additional shares of the Company's common stock.

 

Note 12 - Mineral Properties

 

a) On October 26, 2009, the Company entered into a property option agreement whereby the Company was granted an option to earn up to a 50% interest in 19 mineral claims (the "KRK West" claims) located in the Thunder Bay Mining Division of Ontario. The option agreement is denominated in Canadian dollars.

 

Consideration for the option was the issuance of 1,334 common shares of the Company, cash payments totaling $103,718 (CDN$110,000), and aggregate exploration expenditures of $969,268 (CDN$1,000,000) as follows:

 

i)

Cash payments:

 

*

$46,640 (CDN$50,000) upon execution of the Option agreement (paid);

*

$57,078(CDN$60,000) on or before December 1, 2009 (paid)

 

ii)

Exploration expenditures of $484,768 (CDN$500,000) on or before December 31, 2010, and $969,268 (CDN$1,000,000) in aggregate on or before December 31, 2011.

 

In aggregate to July 31, 2011, the Company incurred exploration expenditures aggregating $32,080 (CDN$32,836) (See below regarding status of the agreement)

 

iii)

The issuance of 1,334 common shares (none issued) to the shareholders of the option or, as directed by the option or.

 

Upon earning its 50% interest in the option, the Company was to enter into a joint venture agreement to develop and operate the property.

 

Pursuant to the agreement, if commercial production had been achieved and the Company sold or otherwise disposed of metals and minerals that had been produced and removed from the KRK West properties, the Company would pay Thunder Bay a 3% Net Smelter Return royalty.

 

In the event the Company sold or caused the sale of products other than to a smelter or refinery or otherwise caused the removal of products from the Property, the Company would pay a 2% Net Smelter Return Royalty. Alternatively, the Company could buy back the royalty right for $1,000,000 for each breccia pipe that reached commercial production.

 

The property option agreement was stated in Canadian dollars. The US dollar equivalent was converted using the foreign exchange rate at July 31, 2010 for all future commitments.

 

During the year ended July 31, 2010, the Company learned that the option or had allowed the underlying claims to lapse, and therefore the option agreement was null and void.

 

 
44

Table of Contents

 

The Company, and a director of the Company (The Company subsequently purchased these claims from the director), purchased the claims from persons who re-staked the claims for an aggregate amount of $27,577. Subsequent to acquisition, the claims were transferred to the Company's wholly owned subsidiary, Northern Bonanza Inc. Due to the lapse of the underlying claims the Company impaired a total of $131,295 of acquisition costs incurred as of July 31, 2010 made up of the initial $103,718 payment and the additional payment of $27,577.

 

The original option or represents that control of the claims remains with the option or and that the Company has no right to further explore the property. The Company disagrees with this assertion and accordingly, ownership to the claims is in dispute. On January 6, 2011 the Ministry of Northern Development, Mines and Forestry, Canada, was to adjudicate upon the ownership of the claims. The hearing did not occur as the other party filed for a change of venue. A determination regarding the change of venue has not yet been made and a date for rendering the decision has not yet been established. Mediation regarding the matter was deferred until late 2011 and prior to the hearing the optionor cancelled the mediation.

 

In October 2011, the Company, as a result of the cancellation of the mediation hearing with William J. Wheeler regarding the Thunder Bay claims, decided the best course of action was to file suit. Accordingly, a suit was filed against Thunder Bay and Wheeler in Ontario Superior Court of Justice. In the suit we detail the breach of the Agreement by Thunder Bay and Wheeler and request:

 

 

*

An order transferring an application regarding mining claims pending before the Office of the Mining and Lands Commissioner to the Ontario Superior Court of Justice to be consolidated with this action;

 

 

 

 

*

A declaration regarding our ownership and Thunder Bay and Wheeler's ownership with respect to certain mining claims; and

 

 

 

 

*

$1,200,000 in damages from Thunder Bay and Wheeler.

 

This dispute was closed and no damages were awarded to the Company.

 

b) During the year ended July 31, 2010, the Company entered into a property purchase agreement, which was formalized on May 4, 2010, to acquire a 100% interest in 21 mining claims located in the Northern Ontario for $50,767 (Cdn$51,800). During the year ended July 31, 2010, the Company incurred an additional $17,741 in staking costs in relation to these claims. Subsequent to acquisition the claims and exploration costs were transferred to NBI at cost.

 

During the year ended July 31, 2010, the Company made exploration advances to the operator amounting to $47,806. As of July 31, 2010 the operator had incurred exploration expenses aggregating $20,118 resulting in net advances held being $26,968. During the year ended July 31, 2011, the Company made further advances to the operator of $7,040.

 

During the year ended July 31, 2011 the operator incurred exploration expenditures of $34,008 and the Company also incurred direct exploration expenditures of $47,335.

 

As of January 31, 2016, the operator held exploration advances amounting to $0 (2014 - $0). Due to lack of funding, the Company has no immediate plans to explore these mines to determine resources available and consequently the costs incurred of $68,599 for these mineral properties was deemed to be fully impaired as of July 31, 2011.

 

 
45

Table of Contents

 

c) On August 7, 2010, the Company acquired a 100% interest in Vulture Gold LLC, ("Vulture") a Nevada limited Liability Company. Vulture holds 27 mineral claims in Maricopa County, Arizona, known as the Vulture Mine. As consideration for the acquisition the Company issued 4,000,000 common shares with a fair value of $2,000,000.

 

This transaction has been recorded as an asset acquisition and the fair value paid has been allocated to the cost of acquisition of the mineral property.

 

Due to lack of funding, the Company has no immediate plans to explore these mines to determine resources available and consequently the costs of $2,000,000 incurred for these mineral properties is deemed to be fully impaired.

 

During the ninemonths April 30, 2016, the Company incurred exploration expenditures of $0 (January 31, 2015 - $0) on the property.

 

d) On March 28, 2012, the Company entered into a property option agreement whereby the Company was granted an option to earn a 100% interest in 3 mineral tenures located in Northern British Columbia. The option agreement is denominated in US dollars.

 

Consideration for the option was the issuance of 667 common shares of the Company on March 28, 2012 valued at $80,000, (issued) and cash payment of $5,000 by April 2, 2012 (paid) and aggregate exploration expenditures of $25,000 by September 15, 2013.

 

As of April 30, 2016, no exploration expenditures have been incurred on the property.

 

Note 13 - Income Taxes

 

The Company had no income tax expense during the reported period due to net operating losses.

 

A reconciliation of income tax expense to the amount computed at the statutory rates is as follows:

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Operating loss for the nine months ended April 30,

 

$ (25,756,104 )

 

$ (1,455,387 )

Average statutory tax rate

 

 

34 %

 

 

34 %

Expected income tax provisions

 

$ (8,757,075 )

 

$ (494,832 )

Unrecognized tax loses

 

 

(8,757,075 )

 

 

(494,832 )

Income tax expense

 

$ -

 

 

$ -

 

 

The Company has net operating losses carried forward of approximately $43,946,888 for tax purposes whichmay be recognized in future periods, not to exceed 20 years.

 

 
46

Table of Contents

 

Note 14 - Commitments

 

None.

 

Note 15 - Subsequent events

 

On May 27, 2016, the Company entered into Cancellation and Release Agreements with four different parties cancelling convertible debt the parties held with the Company, in the total amount of Two Million Six Hundred Ninety Three Thousand Six Hundred Ninety Seven Dollars ($2,693,697).

 

 
47

Table of Contents

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

 

RESULTS OF OPERATIONS

 

Working Capital

 

 

 

April 30,

2016

 

 

July 31,

2015

 

 

 

$

 

 

$

 

Current Assets

 

 

49,539

 

 

 

63,115

 

Current Liabilities

 

 

29,797,809

 

 

 

2,971,382

 

Working Capital (Deficit)

 

 

(29,748,270 )

 

 

(2,908,267 )

  

Cash Flows

 

Nine months Ended

 

 

April 30,

2016

 

 

April 30,

2015

 

 

 

$

 

 

$

 

 

 

 

 

 

 

 

Cash Flows from (used in) Operating Activities

 

 

(862,065 )

 

 

(1,109,636 )

Cash Flows from (used in) Investing Activities

 

 

(650,000 )

 

 

 

 

Cash Flows from (provided by) Financing Activities

 

 

1,512,065

 

 

 

1,109,000

 

Net Increase (decrease) in Cash During Period

 

 

-

 

 

 

(636 )

 

 
48

Table of Contents

  

Results for the Three Months Ended April 30, 2016 Compared to the Three Months Ended April 30, 2015

 

Operating Revenues

 

The Company's revenues for the three months ended April 30, 2016 and April 30, 2015 were $0 and $0, respectively. We do not anticipate earning additional revenues until such time that we enter into commercial production of our claims. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources, or if such resources are discovered, that we will enter into commercial production.

 

Cost of Revenues

 

The Company's cost of revenues for the three months ended April 30, 2016 and April 30, 2015 were $0 and $0, respectively.

 

Operating Expenses

 

Operating expenses for the three months ended April 30, 2016 and April 30, 2015 were $658,284 and $246,971, respectively. Operating expenses consisted primarily of consulting fees, management fees, legal fees and accounting and audit fees. The increase was primarily attributable to an increase in general and administrative expenses for normal operations.

 

Other Income (Expense):

 

Other income (expense) primarily consisted of gain on derivative valuation and interest expense. The loss or gain on derivative valuation is directly attributable to the change in fair value of the derivative liability from date of issuance during 2015 through January 31, 2016. Interest expense is primarily attributable to the initial interest expense associated with the valuation of derivative instruments at issuance and the accretion of the convertible debentures over their respective terms. Interest associated with the derivative instruments amounted to $(916,207) for the three months ended April 30, 2016 and $(141,666) for the three months ended April 30, 2015. There was a loss of $20,900,753 on derivative valuation for the three months ended April 30, 2016 and $891 for the three months ended April 30, 2015.

 

Net Loss

 

Net loss for the three months ended April 30, 2016 was $(22,475,244) compared with a net loss of $(389,528) for the three months ended April 30, 2015. The increased net loss is due to an increase in interest expenses associated with convertible debentures.

 

 
49

Table of Contents

  

Results for the Nine Months Ended April 30, 2016 Compared to the Nine Months Ended April 30, 2015

 

Operating Revenues

 

The Company's revenues for the nine months ended April 30, 2016 and April 30, 2015 were $0 and $0, respectively. We do not anticipate earning additional revenues until such time that we enter into commercial production of our claims. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources, or if such resources are discovered, that we will enter into commercial production.

 

Cost of Revenues

 

The Company's cost of revenues for the nine months ended April 30, 2016 and April 30, 2015 were $0 and $0, respectively.

 

Operating Expenses

 

Operating expenses for the nine months ended April 30, 2016 and April 30, 2015 were $1,542,589 and $1,138,906, respectively. Operating expenses consisted primarily of consulting fees, management fees, legal fees and accounting and audit fees. The increase was primarily attributable to an increase in general and administrative expenses for normal operations.

 

Other Income (Expense):

 

Other income (expense) primarily consisted of gain on derivative valuation and interest expense. The loss or gain on derivative valuation is directly attributable to the change in fair value of the derivative liability from date of issuance during 2015 through April 30, 2016. Interest expense is primarily attributable to the initial interest expense associated with the valuation of derivative instruments at issuance and the accretion of the convertible debentures over their respective terms. Interest associated with the derivative instruments amounted to $(3,509,312) for the nine months ended April 30, 2016 and $(493,046) for the nine months ended April 30, 2015. There was a loss of $20,725,354 on derivative valuation for the nine months ended April 30, 2016 and $176,565 gain for the three months ended April 30, 2015.

 

Net Loss

 

Net loss for the nine months ended April 30, 2016 was $(25,756,104) compared with a net loss of $(1,455,387) for the nine months ended April 30, 2015. The increased net loss is due to an increase in interest expenses associated with convertible debentures.

 

 
50

Table of Contents

 

Liquidity and Capital Resources

 

As at April 30, 2016, the Company had a cash balance and total assets of $0 and $2,901,007, respectively, compared with $0 and $148,115 of cash and total assets, respectively, as of July 31, 2015. The increase in assets was due to the purchase of intellectual property.

 

As at April 30, 2016, the Company had total liabilities of $29,797,809compared with $2,971,382 as of July 31, 2015. The increase in total liabilities was attributed to an increase in related party loans and new promissory notes issued.

 

The overall working capital deficit increased from $2,908,267 at July 31, 2015 to $-29,748,270 at April 30, 2016.

 

Cash flows from Operating Activities

 

During the nine months ended April 30, 2016, cash used in operating activities was $(862,065) compared to $(1,109,636) for the nine months ended April 30, 2015. The decrease in the amounts of cash used for operating activities was primarily due to the noncash expenses relating to the increase in interest on convertible notes.

 

Cash flows from Investing Activities

 

During the nine months ended April 30, 2016 cash used in investing activities was $650,000 compared to $0 for the nine months ended April 30, 2015. The increase in the amounts of cash used for investing activities was primarily due to the shares issued to acquire intangible assets.

 

Cash flows from Financing Activities

 

During the nine months ended April 30, 2016, cash provided by financing activities was $1,512,065 compared to $1,109,000 for the nine months ended April 30, 2015.

 

Quarterly Developments

 

None.

 

Subsequent Developments

 

None.

 

 
51

Table of Contents

  

Going Concern

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited 2015 financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

 

Future Financings

 

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Recently Issued Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

 
52

Table of Contents

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of April 30, 2015, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on November 12, 2014 for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

 

 
53

Table of Contents

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The Company has no known legal disputes at this time.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

1. Quarterly Issuances:

 

On February 1, 2016, the holder of a convertible note converted $2, 600 of principal into 4,333 shares of common stock.

 

On February 3, 2016, the holder of a convertible note converted $1,950 of principal into 4,333 shares of common stock.

 

On February 3, 2016 the holder of a convertible note converted $1,000 of principal into 9,000 shares of common stock.

 

On February 4, 2016 the holder of a convertible note converted $232 of principal into 6,200 shares of common stock.

 

On February 5, 2016, the holder of a convertible note converted $1,660 of principal into 5,533 shares of common stock.

 

On February 9, 2016, the holder of a convertible note converted $1,000 of principal into 11,000 shares of common stock.

 

On February 11, 2016, the holder of a convertible note converted $950 of principal into 6,333 shares of common stock.

 

On February 12, 2016, the holder of a convertible note converted $1,000 of principal into 6,667 shares of common stock.

 

On February 25, 2016, the holder of a convertible note converted $12,500 of principal into 16,667 shares of common stock.

 

On February 29, 2016, the holder of a convertible note converted $6,850 of principal into 91,333 shares of common stock.

 

On March 8, 2016, the holder of a convertible note converted $25,000 of principal and $332.60 accrued interest into 37,768 shares of common stock.

 

On April 11, 2016, the holder of a convertible note converted $250 of principal into 100,000 shares of common stock.

 

On April 21, 2016, the holder of a convertible note converted $247.5 of principal into 99,000 shares of common stock.

 

On April 28, 2016, the holder of a convertible note converted $750 of principal into 100,000 shares of common stock.

 

 
54

Table of Contents

  

2. Subsequent Issuances:

 

On May 2, 2016 the holder of a convertible note converted $720 of principal and $ 104 accrued interest into 109,929 shares of common stock.

 

On May 6, 2016 the holder of a convertible note converted $825 of principal into 110,000 shares of common stock.

 

On May 10, 2016 the holder of a convertible note converted $650 of principal into 130,000 shares of common stock.

 

On May 11, 2016 the holder of a convertible note converted $495 of principal and $72.80 accrued interest into 136,819 shares of common stock.

 

On May 12, 2016 the holder of a convertible note converted $650 of principal into 130,000 shares of common stock.

 

On May 16, 2016 the holder of a convertible note converted $1,200 of principal into 288,462 shares of common stock.

 

On May 17, 2016 the holder of a convertible note converted $1,036 of principal into 249,000 shares of common stock.

 

On May 17, 2016 the holder of a convertible note converted $522 of principal and $ 77 accrued interest into 144,448 shares of common stock.

 

On May 18, 2016 the holder of a convertible note converted $650 of principal into 130,000 shares of common stock.

 

On May 23, 2016 the holder of a convertible note converted $1,195 of principal and $188 accrued interest into 288,083 shares of common stock.

 

On May 23, 2016 the holder of a convertible note converted $650 of principal into 130,000 shares of common stock.

 

On May 24, 2016 the holder of a convertible note converted $300,000 of principal into 5,385,996 shares of common stock.

 

On May 24, 2016 the holder of a convertible note converted $1,590 of principal into 382,212 shares of common stock.

 

On May 24, 2016 the holder of a convertible note converted $3,564 of principal into 712,750 shares of common stock.

 

On May 24, 2016 the holder of a convertible note converted $534 of principal and $ 93 accrued interest into 150,983 shares of common stock.

 

On May 25, 2016 the holder of a convertible note converted $2,750 of principal into 661,058 shares of common stock.

 

On May 26, 2016 the holder of a convertible note converted $3,000 of principal into 232,558 shares of common stock.

 

On May 26, 2016 the holder of a convertible note converted $2,700 of principal into 540,000 shares of common stock.

 

On May 31, 2016 the holder of a convertible note converted $3,950 of principal and $628 accrued interest into 381,473 shares of common stock.

 

On June 9, 2016 the holder of a convertible note converted $1,000 of principal into 693,000 shares of common stock.

 

 
55

Table of Contents

  

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

On August 10, 2015, the Company reassigned the principal amount of a note with DhugaldPinchin to Santa Rosa Resources. The note amount is in the sum of $57,500 and matured on November 30, 2013.

 

On October 31, 2015, the Company executed a Convertible Promissory Note with Direct Capital Group, Inc. Under the terms of the note, the Company pays the holder a total of $240,000, which accrues interest at an annual rate of 8% and has a maturity date of May 1, 2016. This note also contains customary events of default.

 

On November 1, 2015, the Company executed a Convertible Promissory Note with Rider Capital Corp. Under the terms of the note, the Company pays the holder a total of $150,000, which accrues interest at an annual rate of 8% and has a maturity date of May 1, 2016. This note also contains customary events of default.

 

On November 1, 2015, the Company executed a Convertible Promissory Note with Xploration, Inc. Under the terms of the note, the Company pays the holder a total of $140,000, which accrues interest at an annual rate of 8% and has a maturity date of May 1, 2016. This note also contains customary events of default.

 

On November 1, 2015, the Company executed a Convertible Promissory Note with Direct Capital Group, Inc. Under the terms of the note, the Company pays the holder a total of $80,000, which accrues interest at an annual rate of 8% and has a maturity date of May 1, 2016. This note also contains customary events of default.

 

On December 1, 2015, the Company executed a Convertible Promissory Note with Direct Capital Group, Inc. Under the terms of the note, the Company pays the holder a total of $80,000, which accrues interest at an annual rate of 8% and has a maturity date of June 1, 2016. This note also contains customary events of default.

 

On January 2, 2016, the Company executed a Convertible Promissory Note with Direct Capital Group, Inc. Under the terms of the note, the Company pays the holder a total of $80,000, which accrues interest at an annual rate of 8% and has a maturity date of July 2, 2016. This note also contains customary events of default.

 

On January 31, 2016, the Company executed a Convertible Promissory Note with Rider Capital Corp. Under the terms of the note, the Company pays the holder a total of $75,000, which accrues interest at an annual rate of 8% and has a maturity date of July 31, 2016. This note also contains customary events of default.

 

On March 1, 2016, the Company executed a Convertible Promissory Note with Luxor Capital, LLC. Under the terms of the note, the Company pays the holder a total of $2,374,712, which accrues interest at an annual rate of 6% and has a maturity date of March 1, 2017.

 

 
56

Table of Contents

 

ITEM 6. EXHIBITS

 

Exhibit Number

Description of Exhibit

Filing

31.1

 

Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer and Principal Financial/Accounting Officer

 

Filed herewith.

32.1

 

Section 1350 Certifications of Principal Executive Officer and Principal Financial/Accounting Officer

 

Furnished herewith.

101.INS

 

XBRL Instance Document

 

Filed herewith.

101.SCH

 

XBRL Taxonomy Extension Schema Document

 

Filed herewith.

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

Filed herewith.

101.LAB

 

XBRL Taxonomy Extension Labels Linkbase Document

 

Filed herewith.

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

Filed herewith.

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

 

Filed herewith.

 

 
57

Table of Contents

 

SIGNATURES

 

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

 

GOLDEN MATRIX GROUP, INC.

Dated: October 28, 2020

By:

/s/ Anthony Brian Goodman

Anthony Brian Goodman

Its:

Chief Executive Officer and President

 

 

Principal Executive Officer and Principal Accounting/Financial Officer

 

 

 
58

 

 Exhibit 31.1

 

CERTIFICATION

 

I, Anthony Brian Goodman, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q/A of Golden Matrix Group, Inc.;

 

 

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

 

 

 

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

(c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

(d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

 

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

 

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: October 28, 2020

By:

/s/ Anthony Brian Goodman

 

Anthony Brian Goodman

 

Chief Executive Officer and President

 

 

 

Principal Executive Officer and Principal Accounting/Financial Officer

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Anthony Brian Goodman, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Golden Matrix Group, Inc. on Form 10-Q/A for the period ended April 30, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Golden Matrix Group, Inc. at the dates and for the periods indicated.

 

Date: October 28, 2020 By:

/s/ Anthony Brian Goodman

 

 

Anthony Brian Goodman

 
   

Chief Executive Officer and President

 
   

Principal Executive Officer and Principal Accounting/Financial Officer