Company Quick10K Filing
Gala Pharmaceutical
Price0.00 EPS-0
Shares108 P/E-0
MCap0 P/FCF-0
Net Debt0 EBIT-3
TEV0 TEV/EBIT-0
TTM 2019-05-31, in MM, except price, ratios
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8-K 2018-01-10

GLAG 10K Annual Report

Part I
Item 1. Description of Business
Item 1A. Risk Factors
Item 1A. Unresolved Staff Comments
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information.
Part III
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(A) of The Exchange Act
Item 11. Executive Compensation.
Item 12.
Item 13. Certain Relationships, Related Transactions and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits
EX-31.1 exhibit311.htm
EX-31.2 exhibit312.htm
EX-32.1 exhibit321.htm
EX-32.2 exhibit322.htm

Gala Pharmaceutical Earnings 2015-11-30

Balance SheetIncome StatementCash Flow
0.4-0.3-1.0-1.6-2.3-3.02012201420172020
Assets, Equity
0.1-0.4-0.8-1.3-1.7-2.22012201420172020
Rev, G Profit, Net Income
0.30.20.1-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

10-K 1 form10k.htm FORM 10-K Filed by OTC Filings Inc. - www.otcedgar.com - 1-866-832-FILE (3453) - Gala Global Inc. - Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

þ  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended November 30, 2015

 

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

 

For the transition period from _________ to _________

 

Commission File Number: 000-52044

 

GALA GLOBAL INC.

(Name of Small Business Issuer in its charter)

 

Nevada

42-1771014

(state or other jurisdiction of incorporation or organization)

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


2780 South Jones Blvd. #3725

Las Vegas, Nevada 89146

(Address of principal executive offices)

 

(775) 321-8238

Issuer’s telephone number


Securities registered under Section 12(b) of the Exchange Act: None


Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par value


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o    No þ


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ


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 þ    No o


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o


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 definition of large accelerated filer and accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  (Check one):


Large accelerated filer o            Accelerated filer o         Non-accelerated filer o        Smaller reporting company þ


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


Aggregate market value of the voting and non-voting stock of the registrant held by non-affiliates of the registrant as of the last business day of the registrants most recently completed fiscal quarter:  $5,299,200


As of January 27, 2016 the registrant’s outstanding stock consisted of 136,922,353 common shares.

 

 

                
             

 

 


GALA GLOBAL INC.


Table of Content

PART I

 

 

 

Item 1.     Description of Business

3

Item 1A.  Risk Factors

5

Item 1B.  Unresolved Staff Comments

5

Item 2.     Description of Property

5

Item 3.     Legal Proceedings

5

Item 4.     Mine Safety Disclosures

5

 

 

PART II

 

 

 

Item 5.     Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

6

Item 6.     Selected Financial Data

7

Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operation

7

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

11

Item 8.     Financial Statements and Supplementary Data

12

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                                      

13

Item 9A.  Controls and Procedures

13

Item 9B.  Other Information

13

 

 

PART III

 

 

 

Item 10.   Directors, Executive Officers and Corporate Governance

13

Item 11.   Executive Compensation

14

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                    

17

Item 13.   Certain Relationships, Related Transactions and Director Independence

17

Item 14.    Principal Accountant Fees and Services

17

Item 15.    Exhibits and Financial Statement Schedules

18

Signatures

19




2              

             

PART I


Item 1.  Description of Business


General


Gala Global Inc. (the “Company”) was incorporated in the State of Nevada on March 10, 2010. The Company was formed to provide garment tailoring and alteration services.

On May 19, 2014, a change in control of the Company occurred when IDG Ventures Ltd. sold all of its 3,547,000 common shares, representing 60.04% of our issued and outstanding common shares, in a private share purchase transaction to Messrs Haas, Lefevre and Naccarato.

On June 26, 2014, the Company had a change in management when Mr. Robert Frei resigned as President and Director of the Company and Mr. Lefevre was appointed as his successor. Concurrent with the change of management, the Company acquired two 100% owned subsidiary companies, Cannabis Ventures Inc (USA), incorporated on February 27, 2014 in the state of Nevada and Cannabis Ventures Inc. (Canada), incorporated on April 9, 2014 in Vancouver, British Columbia. Neither of these subsidiary companies had traded prior to their acquisition by the Company other than as described below.

The Company, since its change in management effective June 26, 2014, has expanded into the Hemp and Cannabidiol (“CBD”) industry. The expansion is focusing on the development, research, and commercialization of products derived from the Hemp and Cannabis Plant. The Company currently is finalizing its marketing strategy for a new CBD flavored thin-film strip. The film strip delivery system uses a dissolving film strip that is absorbed in the mouth. The film-strip method is an advanced method of providing CBD for dietary supplement. GALA also is seeking acquisition candidates in this area of interest in the nutraceutical and pharmaceutical industries. The Company also plans to enter into the medical marijuana cultivation industry as approved in the United States and Canada to build legalized cultivation operations

The Company’s services include the development of cannabinoid based health and wellness products; the development of medical grade compounds; the licensing of proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal herb industry.


Cannabis Ventures Inc. (USA) (“CVI”)

In September 2014, CVI entered into a promissory note agreement with Globe Farmacy, Inc., an Arizona non-profit corporation (“GFI”), to finance a potential cultivation project. CVI has advanced funds of $189,972 to GFI under the promissory note, which is unsecured, bears interest at 5% per annum, and was due on December 31, 2014. As GFI was delinquent in performing certain obligations under the terms of the promissory note and our ability to recover this advance is currently uncertain, we have a provided in full against the value of this promissory note and recognized an impairment expense of $189,972 effective December 31, 2014.   


Cannabis Ventures, Inc. (Canada) (“CVI (Canada)”)

In May 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”). It is the Company’s intention to facilitate the cultivation of medical marijuana on the property if it is able to acquire the necessary license from Health Canada. The property is owned personally by a director of CVI (Canada).

The Contract had an initial term of 4 months, expiring August 31, 2014, to give the Company the time to acquire the necessary license from Health Canada. During this four month period, the Company paid the owner of the property a non-refundable payment of $4,000 per month and this expense has been recognized in our statement of operations. The Contract was extended on a month to month basis and the Company paid the property owner a reduced non-refundable payment of $2,500 per month while it awaits the determination from Health Canada.

On May 9, 2015, the Company entered into an addendum with the owner of the property. In addition to the non-refundable payment of $2,500 a month to extend the Contract, the Company is to issue 1,400,000 shares of common stock with a fair value of $28,000 non-refundable consideration to extend the purchase option on the property. On June 16, 2015, 1,400,000 shares of common stock were issued to the property owner. During the period ended August 31, 2015, the Company decided to discontinue extending the purchase options.

In July 2014, CVI (Canada) filed the application with Health Canada for the MMPR License (Marihuana for Medical Purposes Regulations). The Company subsequently discontinued with the licensing process.


3            

             

Trademark


We do not have a trademark registered at this time.  At present, we have not established a valuable brand which requires protection.  We may register a trademark in the next 12 months when we feel that our brand is able beginning to gain value and recognition.  


Government Regulation


To comply with U.K. laws, in order to do business in the U.K., since we are a Nevada corporation, we will have to register as an overseas company at the Companies House in Britain within one month from the beginning of trade.  Companies House is the United Kingdom Registrar of Companies.  All forms of companies are incorporated and registered with Companies House as required by the current Companies Act 2006.  All registered limited companies, including subsidiary, small and inactive companies, must file annual financial statements, in addition to annual company returns, which are all public records.  All forms of companies as permitted by United Kingdom Companies Act are incorporated and registered with Companies House.  We are not required to be registered as an overseas company in London until we start to execute business transactions with our U.K. customers and start to earn revenue.

 

We do not believe that government regulations will have a material impact on the way we conduct business.

Research and Development

We have not spent any amounts on research and development activities during the years ended November 30, 2015 or 2014. We anticipate that we will not incur any expenses on research and development over the next 12 months. Our planned expenditures on our operations or a business combination are summarized under the section of this annual report entitled “Management’s Discussion and Analysis of Financial Position and Results of Operations”.

 

Employees and Employment Agreements


At present, we have no employees other than our sole officer and director who devotes approximately 20-30 hours a week to our business. We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to any officers, directors or employees.

 

  4             

             

Item 1A.  Risk Factors

 

Not applicable to smaller reporting companies.


Item 1A.  Unresolved Staff Comments


 Not applicable to smaller reporting companies.


Item 2.  Description of Property


We do not currently own any property or real estate of any kind. Our mailing address located at 2780 South Jones Blvd. #3725, Las Vegas, Nevada 89146.  We currently do not maintain an office at this time and have no need of a dedicated office at this stage of our business plan.

 

Item 3.  Legal Proceedings


We are currently unaware of any legal matters pending or threatened against us.


Item 4.  Mine Safety Disclosures

 

Not applicable to our Company.

 

 5             

             



PART II


Item 5.  Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

 

Market Information


Our shares of common stock are listed on the Over the Counter Bulletin Board under the symbol GALA.  Set forth below are high and low bid prices for our common stock for each quarterly period in the two most recent fiscal years.  Such quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions in the common stock.  

 

Period

High

Low

Fiscal 2015

 

 

First Quarter ended February 28, 2015

$0.09

$0.31

Second Quarter ended May 31, 2015

$0.05

$0.17

Third Quarter ended August 31, 2015

$0.03

$0.01

Fourth Quarter ended November 30, 2015

$0.02

$0.01

 

 

 

Fiscal 2014

 

 

First Quarter ended February 28, 2014

$0.18

     $0.18

Second Quarter ended May 31, 2014

$0.18

$0.18

Third Quarter ended August 31, 2014

$0.18

$0.10

Fourth Quarter ended November 30, 2014

$0.18

$0.00


Number of Holders


As of November 30, 2015, the 130,047,353 issued and outstanding shares of common stock were held by a total of 51 shareholders of record.


Dividends

 

No cash dividends were paid on our shares of common stock during the fiscal years ended November 30, 2015 and 2014. We have not paid any cash dividends since our inception and do not foresee declaring any dividends on our common stock in the foreseeable future.


Recent Sales of Unregistered Securities


Stock transactions for the year ended November 30, 2015:

(a)

On January 6, 2015, the Company issued 1,500,000 shares of common stock with a fair value of $105,000 for advertising consulting services.  The fair value of the shares of shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(b)

On January 15, 2015, the Company issued 2,000,000 shares of common stock with a fair value of $83,000 for business development consulting services. The fair value of the shares of common stock was calculated based on the closing price of the Company’s shares of common stock on the date of the agreement.

(c)

On January 22, 2015, the Company issued 500,000 shares of common stock with a fair value of $39,450 to a former director of the Company for marketing consulting services. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(d)

On April 23, 2015, the Company issued 2,125,000 shares of common stock with a fair value of $63,750 to a former director of the Company for consulting services relating to patent applications. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(e)

On June 16, 2015, the Company issued 1,400,000 shares of common stock with a fair value of $28,000 as part of a non-refundable payment to further extend the Company’s option to acquire certain property in Vancouver, Canada. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(f)

On May 19, 2015, the Company issued 1,250,000 shares of common stock with a fair value of $37,500 to the former President of the Company for consulting services rendered. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(g)

On July 28, 2015, the Company issued 625,000 shares of common stock with a fair value of $11,250 to a director of the Company for services relating to the formation and development of business contacts. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(h)

On August 31, 2015, the Company issued 625,000 shares of common stock with a fair value of $17,500 to the Chief Executive Officer of the Company for consulting services rendered. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(i)

On August 31, 2015, the Company issued 882,353 shares of common stock with a fair value of $14,117 to the former President of the Company as settlement for his outstanding compensation of $12,882. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

Stock transactions for the year ended November 30, 2014:

(a)

On September 2, 2014, the Company issued 1,000,000 shares of common stock at $0.10 per share for proceeds of $100,000.


Purchase of our Equity Securities by Officers and Directors


None.


Other Stockholder Matters


None

 

 6             

             

 

Item 6.  Selected Financial Data

 

Not applicable to smaller reporting companies.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations


You should read the following discussion and analysis in conjunction with our financial statements, including the notes thereto, included in this Report.  Some of the information contained in this Report may contain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements 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 our future plans, strategies and expectations, are generally identifiable by the 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 the projections included in these forward-looking statements will come to pass.  Our actual results could differ materially from those expressed or implied by the forward looking statements as a result of various factors.  We undertake 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.


Our auditors’ reports contain a statement that our net loss and limited working capital raise substantial doubt about our ability to continue as a going concern. Our independent registered public accountants have stated in their report (included in Item 8. Financial Statements) that our significant operating losses and working capital deficit raise substantial doubt about our ability to continue as a going concern. We incurred net losses of $679,466 and $278,875, respectively, for the fiscal years ended November 30, 2015 and November 30, 2014. We will be required to raise substantial capital to fund our capital expenditures, working capital, and other cash requirements since our current cash assets are exhausted and we have generated no revenues to date to sustain our operations. We will need to seek other financing to complete our business plans. The successful outcome of future financing activities cannot be determined at this time and there are no assurances that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operational results.


In addition to our current deficit, we expect to incur additional losses during the foreseeable future.  Until we are able to successfully execute our business plan. Consequently, we will require substantial additional capital to continue our development and marketing activities. There is no assurance that we will be able to obtain additional financing through private placements and/or public offerings necessary to support our working capital requirements. To the extent that funds generated from any private placements and/or public offerings are insufficient, we will have to raise additional working capital through other sources, such as bank loans and/or financings. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms.


We are incurring increased costs as a result of being a publicly-traded company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have required changes in corporate governance practices of public companies. These new rules and regulations have increased our legal and financial compliance costs and have made some activities more time-consuming and costly. For example, as a result of becoming a public company, we have created additional board committees and have adopted policies regarding internal controls and disclosure controls and procedures. In addition, we have incurred additional costs associated with our public company reporting requirements. In addition, these new rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance, which we currently cannot afford to do. As a result of the new rules, it may become more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company or the timing of such costs.


  7             

             

RESULTS OF OPERATIONS


Operating Revenues


During the fiscal years ended November 30, 2015 and 2014, the Company recognized revenue of $1,592 and $nil, respectively.


Operating Expenses


Operating expenses for the year ended November 30, 2015 were $616,074 compared with $88,903 for the year ended November 30, 2014. A summary of the operating expenses are as follows:  


Analysis of Operating Expenses


 

November 30,

November 30,

Variance

Operating Expense

2015

2014

$

%

 

 

 

 

 

Bad debts

$182

-

$182

N/A

Consulting fees

$433,508

-

$433,508

N/A

Land Purchase Option

$48,500

$28,000

$20,500

73.2%

Management Fees

-

$6,000

$(6,000)

(100)%

Professional Fees

$98,900

$25,054

$73,846

294.7%

Overhead and Administration

$21,861

$23,905

($2,044)

(8.6)%

Transfer Agent and Filing Fees

$13,123

$5,944

$7,179

120.8%

 

 

 

 

 

 

$616,074

$88,903

$527,171

598%


Overall, the increase in operating expenses was partially due to the Company making payments of $20,500 more than in prior year in respect of our proposed purchase of property in Canada. There was also an increase in consulting fees of $433,508 relating to the fair value of common stock issued to officers and consultants of the Company in regards to license filing consulting work and general advisory services in regards to the cannabis industry. Additionally, the Company saw an increase in professional fees of $73,846 relating to the Company’s accounting, audit, and legal fees that were incurred as part of the SEC filing process. The Company had a minor decrease of $2,044 in overhead and administration expense, and a minor increase of $7,179 in transfer agent and filing fees relating to costs incurred with respect to shares issued for consulting services during the year.


Impairment of Loan Receivable


During the year ended November 30, 2015 we recognized an impairment expense of $nil (2014 - $189,972) in respect of funds we had advanced under a promissory note to Global Farmacy, Inc (“GFI”).


In September 2014, CVI entered into a promissory note agreement with GFI, an Arizona non-profit corporation, to finance a potential cultivation project. CVI has advanced funds of $189,972 to GFI under a promissory note which is unsecured, bears interest at 5% per annum and was due on December 31, 2014. As GFI was delinquent in performing certain obligations under the terms of the promissory note and our ability to recover this advance is currently uncertain, we have a provided in full against the value of this promissory note and recognized an impairment expense of $189,972 effective November 30, 2014.   


Impairment of Intangible Assets


During the year ended November 30, 2015, we issued common stock with a fair value of $63,750 to a former officer of the Company in regards to the filing of an application with Health Canada for the MMPR License (Marihuana for Medical Purposes Regulations). We subsequently discontinued with the licensing process and therefore impaired the costs of the shares that were capitalized as intangible assets.


Forgiveness of Debt


During the year ended November 30, 2015, we entered into a settlement of debt agreement with a former officer of the Company. Pursuant to the agreement, we paid $4,300 to settle debt of $12,883, therefore recognizing forgiveness of debt of $8,283 in additional paid-in capital.


Net Loss


Net loss for the year ended November 30, 2015 was $679,466 or $(0.01) loss per share compared with a net loss of $278,875 or $(0.00) loss per share for the year ended November 30, 2014 due to the factors discussed above.   

  8             

             

Liquidity and Capital Resources


As of November 30, 2015, the Company had recognized revenue of $1,592 due to the sale of Vape Mods, has a working capital deficit of $463,989 and an accumulated deficit of $1,066,537. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, its ability to obtain the necessary debt or equity financing, and generate profitable operations from the Company’s planned future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  

 

Working Capital


 

November 30,

2015

$

November 30,

2014

$

Current Assets

7,422

-

Current Liabilities

471,411

192,673

Working Capital (Deficit)

(463,989)

(192,673)


As at November 30, 2015, the Company had current assets of $7,422 and current liabilities of $463,989 compared with current assets of $nil and current liabilities of $192,673 at November 30, 2014. The increase in the working capital deficit was largely attributable to an increase in amounts due to related parties of $80,660 for amounts paid on behalf of the Company for operating expenses. The change is also attributable to an increase of $150,073 in accounts payable and accrued liabilities, partly attributable for an increase of $76,500 for legal services incurred to a significant shareholder of the Company and an increase of $53,125 in consulting services incurred to officers of the Company. Lastly, the change is attributable to an increase of $48,005 for proceeds in loans payable to related parties.


Cash Flows

 

Year ended

November 30,

2015

$

Year ended

November 30,

2014

$

Cash Flows from (used in) Operating Activities

(126,679)

(89,767)

Cash Flows from (used in) Investing Activities

(182)

(189,972)

Cash Flows from (used in) Financing Activities

128,665

279,635

Net Increase (decrease) in Cash During Period

1,804

(104)



Cash flow from Operating Activities


During the year ended November 30, 2015, the Company used $126,679 of cash for operating activities compared to the use of $89,767 of cash for operating activities during the year ended November 30, 2014. The increase in cash used for operating activities was mainly due to an increase in overall operating expenditures during the year.  


9             

             

 

Cash flow from Investing Activities


During the year ended November 31, 2015 the Company used $182 of cash for investing activities compared to $189,972 for the year ended November 31, 2014. The decrease in the cash used for investing activities was due to funds advanced by the Company under a promissory note receivable to GFI in the prior year. The note receivable was written off during the year ended November 30, 2014.   


Cash flow from Financing Activities


During the year ended November 30, 2015, $128,665 was provided by financing activities compared to $279,635 provided during the year ended November 30, 2014. Proceeds received include $140,665 provided by related parties, offset by a $12,000 repayment to a related party. The Company required the increased financing in the year ended November 31, 2015 to finance the operating expenses described above.


Off-Balance Sheet Arrangements


We have no 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.


Other events


Cannabis Ventures, Inc. (Canada) (“CVI (Canada)”)

In May 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”). It was the Company’s intention to facilitate the cultivation of medical marijuana on the property if it is able to acquire the necessary license from Health Canada. The property is owned personally by a director of CVI (Canada).

In July 2014, CVI (Canada) filed the application with Health Canada for the MMPR License (Marihuana for Medical Purposes Regulations). The response to last round of comments received from Health Canada was received by CVI (Canada) in February 6, 2015. We responded on February 26, 2015 and Health Canada acknowledged receipt on February 27, 2015. The Company subsequently discontinued with the licensing process.    

The Contract had an initial term of 4 months, expiring August 31, 2014, to give the Company the time to acquire the necessary license from Health Canada. During this four month period, the Company paid the owner of the property a nonrefundable payment of $4,000 a month and this expense has been recognized in our statement of operations.

The Contract had been extended on a month to month basis and as of February 2015, the Company continued to pay the property owner a reduced nonrefundable payment of $2,500 a month while it awaited the determination from Health Canada. During the period ended August 31, 2015, the Company decided to discontinue extending the purchase options.


Subsequent Events


(a)

On December 23, 2015, the Company issued 1,250,000 shares of common stock to a consultant pursuant to a consulting agreement dated May 1, 2015.

(b)

On December 23, 2015, the Company issued 2,500,000 of shares of common stock to the Chief Financial Officer of the Company pursuant to the agreement dated September 1, 2015.

(c)

On December 23, 2015, the Company issued 1,250,000 of shares of common stock to the Chief Executive Officer of the Company pursuant to the consulting agreement dated September 1, 2015.

(d)

On December 23, 2015, the Company issued 625,000 of shares of common stock to the Chief Executive Officer of the Company pursuant to the consulting agreement dated June 29, 2015.

(e)

On December 14, 2015, the Company entered into a consultant agreement for marketing and promotion services. Pursuant to the agreement, the consultant is to be compensated by being issued 1,250,000 shares of common stock on an annual basis until the agreement is cancelled or terminated. Either party may terminate the agreement by providing written thirty days notice. On December 23, 2015, the Company issued 1,250,000 of shares of common stock to the consultant pursuant to this agreement.

(f)

On December 29, 2015, the Company issued a $20,000 promissory note to an unrelated party. Under the terms of the note, the amount is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance.

(g)

On January 27, 2016, the Company issued 500,000 shares of preferred stock to significant shareholders to settle debt of $500. Each preferred share has 500 to 1 voting power as according to the Company’s certificate of designation. Of the 500,000 shares issued, 166,666 shares were issued to a significant shareholder to settle debt of $167, and the remaining 333,334 shares are issued to another significant shareholder to settle debt of $333.


Going Concern


We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited 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 planned acquisitions and activities.


10             

             


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 note (1) of 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.


Use of Estimates


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for the reporting period. Significant areas requiring the use of management estimates relate to the valuation of its mineral leases and claims and our ability to obtain final government permission to complete the project.


Stock-Based Compensation


The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.


Recently Issued Accounting Pronouncements


We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company other than those relating to Development Stage Entities as discussed below in our financial statements

Contractual Obligations


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 7A.  Quantitative and Qualitative Disclosures about Market Risk


Not applicable to smaller reporting companies.


11             

             


Item 8.  Financial Statements





GALA GLOBAL INC.


Consolidated Financial Statements


For the Years Ended November 30, 2015 and November 30, 2014



Report of Independent Registered Public Accounting Firm F-1

Balance Sheets

F-2

Statement of Operations

F-3

Statements of Cash Flows

F-4

Statements of Changes in Stockholder’s Deficit

F-5

Notes to the Financial Statements

F-6

 

 

  12             

             

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Directors and Stockholders of

Gala Global, Inc.

Las Vegas, NV

 

We have audited the accompanying consolidated balance sheet of Gala Global, Inc. as of November 30, 2015 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Gala Global, Inc. as of November 30, 2015 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered continuing losses and has yet to establish a reliable, consistent and proven source of revenue to meet its operating costs on an ongoing basis and currently does not have sufficient available funding to fully implement its business plan. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 


[form10k001.jpg]

 

Pritchett, Siler and Hardy PC

Farmington Utah

March 22, 2016

 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Directors of

Gala Global, Inc.

Las Vegas, Nevada, 89146

 

We have audited the accompanying balance sheet of Gala Global, Inc. as of November 30, 2014 and the related statement of operations, changes in stockholders' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.


We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gala Global, Inc. as of November 30, 2014 and 2013, and the results of its operations, changes in stockholders’ (deficit) and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements the Company has suffered losses and negative cash flow from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 


 

Cutler & Co, LLC

Wheat Ridge, formerly Arvada, Colorado

March 13, 2015



 


9605 West 49th Ave. Suite 200 Wheat Ridge, Colorado 80033   ~   Phone 303-968-3281   ~   Fax 303-463-5416   www.cutlercpas.com

 F-1          

             

GALA GLOBAL INC.

Consolidated Balance Sheets


 

November 30,

2015

$

November 30,

2014

$

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash

1,804

Inventory

2,701

Prepaid expenses

2,917

 

 

 

Total assets

7,422

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

28,050

8,038

Accounts payable and accrued liabilities – related party

130,061

Due to related parties

255,295

174,635

Loans payable to related parties

58,005

10,000

 

 

 

Total liabilities

471,411

192,673

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Preferred stock

Authorized: 10,000,000 shares with a par value of $0.001 per share

 

 

Issued and outstanding: none

 

 

 

Common stock

Authorized: 500,000,000 shares with a par value of $0.001 per share

 

 

Issued and outstanding: 130,047,353 and 119,140,000 shares, respectively.


130,047


119,140

 

 

 

Additional paid-in capital

472,501

75,258

 

 

 

Accumulated Deficit

(1,066,537)

(387,071)

 

 

 

Total stockholders’ deficit

(463,989)

(192,673)

 

 

 

Total liabilities and stockholders’ deficit

7,422



(The accompanying notes are an integral part of these consolidated financial statements)


F-2            

             


GALA GLOBAL INC.

Consolidated Statements of Operations

 


 

Year ended November 30, 2015

$

Year ended November 30, 2014

$

 



Revenues – related party

1,592

 –

 

 

 

Cost of sales

  798

 –

 

 

 

Gross margin

794

 

 

 

Operating expenses

 

 

 

 

 

Bad debts

182

Consulting fees

213,600

Consulting fees – related party

219,908

General and administrative

57,384

54,903

General and administrative – related party

76,500

Management fees

6,000

Option expense on failed property acquisition - related party

48,500

28,000

 

 

 

Total operating expenses

616,074

88,903

 

 

 

Loss before other income (expenses)

(615,280)

(88,903)

 

 

 

Other income (expense)

 

 

 

 

 

Impairment of intangible assets

(63,750)

Impairment of note receivable

(189,972)

Interest expense

(436)

 

 

 

Total other income (expense)

(64,186)

(189,972)



 

 

Net loss

(679,466)

(278,875)


Net loss per share, basic and diluted


(0.01)



Weighted average common shares outstanding


125,859,608

118,386,575




(The accompanying notes are an integral part of these consolidated financial statements)


 F-3            

             



GALA GLOBAL INC.

Consolidated Statements of Stockholders’ Deficit

For the Years Ended November 30, 2015 and 2014

 


 

Common stock


Additional

paid-in

 


Accumulated

Total Shareholders’ Deficit

 

Shares

 

Par value

capital

Deficit

 

#

 

$

$

$

$

 

 

 

 

 

 

 

Balance, November 30, 2013

118,140,000

 

118,140

(47,040)

(108,196)

(37,096)

 

 

 

 

 

 

 

Forgiveness of related party debt

 

23,298

23,298

 

 

 

 

 

 

 

Proceeds from sale of common stock

1,000,000

 

1,000

99,000

100,000

 

 

 

 

 

 

 

Net loss for the year

 

(278,875)

(278,875)

 

 

 

 

 

 

 

Balance, November 30, 2014

119,140,000

 

119,140

75,258

(387,071)

(192,673)

 

 

 

 

 

 

 

Shares issued for consulting services

3,500,000

 

3,500

184,500

188,000

 

 

 

 

 

 

 

Shares issued for consulting services – related party

3,882,353

 

3,882

115,935

119,817

 

 

 

 

 

 

 

Shares issued for intangible asset - related party

2,125,000

 

2,125

61,625

63,750

 

 

 

 

 

 

 

Shares issued for option payment

1,400,000

 

1,400

26,600

28,000

 

 

 

 

 

 

 

Forgiveness of related party debt

 

8,583

8,583

 

 

 

 

 

 

 

Net loss for the year

 

(679,466)

(679,466)


 

 

 

 

 

 

Balance, November 30, 2015

130,047,353

 

130,047

472,501

(1,066,537)

(463,989)

 

 

 

 

 

 

 



(The accompanying notes are an integral part of these consolidated financial statements)


 F-4            

             


GALA GLOBAL INC.

Consolidated Statements of Cash Flows

 


 

Year ended

November 30,

2015

$

Year ended

November 30,

2014

$

 

 

 

Operating activities

 

 

 

 

 

Net loss

(679,466)

(278,875)

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Bad debts

182

Impairment of intangible asset

63,750

 –

Impairment of note receivable

 189,972

Stock-based compensation

188,000

 –

Stock-based compensation – related party

119,817

 –

Shares issued for failed acquisition of property

28,000

 –

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Inventory

(2,701)

Prepaid expenses

(2,917)

Accounts payable and accrued liabilities

32,895

(864)

Accounts payable and accrued liabilities – related party

125,761

 

 

 

 

Net cash used in operating activities

(126,679)

(89,767)

 

 

 

Investing activities

 

 

 

 

 

Advances under note receivable

 (12,467)

 –

Repayment of note receivable

12,285

 –

Note receivable

 –

(189,972)

 

 

 

Net cash used in investing activities

(182)

(189,972)

 

 

 

Financing activities

 

 

 

 

 

Proceeds from related party debt

93,465

 174,635

Repayments to related party debt

 (12,000)

 (5,000)

Proceeds from loans payable to related parties

 47,200

 10,000

Proceeds from issuance of common stock

 –

 100,000

 

 

 

Net cash provided by financing activities

128,665

279,635

 

 

 

Increase (decrease) in cash

1,804

(104)

 

 

 

Cash, beginning of year

104

 

 

 

Cash, end of year

1,804

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

Forgiveness of related party debt offset to equity

8,583

23,298

Shares issued for intangible asset

63,750


 

 

Supplemental disclosures:

 

 

 

 

 

Interest paid

Income tax paid

 

 

 


(The accompanying notes are an integral part of these consolidated financial statements)


 F-5            

             

 

GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2015 and 2014



1.

Organization and Nature of Operations

Gala Global Inc. (the “Company”) was incorporated in the State of Nevada on March 10, 2010. The Company was formed to provide garment tailoring and alteration services.

On May 19, 2014, a change in control of the Company occurred when IDG Ventures Ltd. sold all of its 3,547,000 common shares, representing 60.04% of our issued and outstanding common shares, in a private share purchase transaction to Messrs Haas, Lefevre and Naccarato.

On June 26, 2014, the Company had a change in management when Mr. Robert Frei resigned as President and Director of the Company and Mr. Lefevre was appointed as his successor. Concurrent with the change of management, the Company acquired two 100% owned subsidiary companies, Cannabis Ventures Inc (USA), incorporated on February 27, 2014 in the state of Nevada and Cannabis Ventures Inc. (Canada), incorporated on April 9, 2014 in Vancouver, British Columbia. Neither of these subsidiary companies had traded prior to their acquisition by the Company other than as described below.

The Company, since its change in management effective June 26, 2014, has expanded into the Hemp and Cannabidiol (“CBD”) industry. The expansion is focusing on the development, research, and commercialization of products derived from the Hemp and Cannabis Plant. The Company currently is finalizing its marketing strategy for a new CBD flavored thin-film strip. The film strip delivery system uses a dissolving film strip that is absorbed in the mouth. The film-strip method is an advanced method of providing CBD for dietary supplement. GALA also is seeking acquisition candidates in this area of interest in the nutraceutical and pharmaceutical industries. The Company also plans to enter into the medical marijuana cultivation industry as approved in the United States and Canada to build legalized cultivation operations

The Company’s services include the development of cannabinoid based health and wellness products; the development of medical grade compounds; the licensing of proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal herb industry.

 

Cannabis Ventures, Inc. (Canada) (“CVI (Canada)”)

In May 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”). It was the Company’s intention to facilitate the cultivation of medical marijuana on the property if it is able to acquire the necessary license from Health Canada. The property is owned personally by a director of CVI (Canada).

The Contract had an initial term of 4 months, expiring August 31, 2014, to give the Company the time to acquire the necessary license from Health Canada. During this four month period, the Company paid the owner of the property a non-refundable payment of $4,000 per month and this expense has been recognized in our statement of operations. The Contract was extended on a month to month basis and the Company paid the property owner a reduced non-refundable payment of $2,500 per month while it awaited the determination from Health Canada.

On May 9, 2015, the Company entered into an addendum with the owner of the property. In addition to the non-refundable payment of $2,500 a month to extend the Contract, the Company issued 1,400,000 shares of common stock with a fair value of $28,000 non-refundable consideration to extend the purchase option on the property. On June 16, 2015, 1,400,000 shares of common stock were issued to the property owner (related party). Refer to Note 8(b). During the period ended August 31, 2015, the Company decided to discontinue extending the purchase options.

In July 2014, CVI (Canada) filed the application with Health Canada for the MMPR License (Marihuana for Medical Purposes Regulations). The Company subsequently discontinued with the licensing process.

 

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at November 30, 2015, the Company has a working capital deficit of $463,989 and an accumulated deficit of $1,066,537. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.



 F-7            

             

 

2.

Summary of Significant Accounting Policies

a)

Basis of Presentation and Principles of Consolidation

These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is November 30.

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Cannabis Ventures Inc (USA), Cannabis Ventures Inc (Canada), and CBD Life, Inc. All inter-company transactions and balances have been eliminated on consolidation.

(b)

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As of November 30, 2015 and 2014, there were no cash equivalents.

(d)

Inventory

Inventory is comprised of Vape Mods purchased for resell, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future market conditions.  

(e)

Financial Instruments

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, and amounts due to related party. The recorded values of all these financial instruments approximate their current fair values because of the short term nature of these financial instruments.

(f)

Long-Lived Assets

In accordance with ASC 360, “Property Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

(g)

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

(h)

Revenue Recognition

The Company earns revenue from the sale of Vape Mods. Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the significant risk and rewards of ownership has been passed to the buyer, and collectability is assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services. During the year ended November 30, 2015, the Company recognized $1,592 in revenue for products sold to a Company which is controlled by significant shareholders of the Company.

(i)

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.


 F-8            

             


2.

Summary of Significant Accounting Policies (continued)

(j)

Comprehensive Loss

Comprehensive income is defined as all changes in stockholders' equity (deficit), exclusive of transactions with owners, such as capital investments. Comprehensive income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. Comprehensive loss was identical to the net loss for the years ended November 30, 2015 and 2014.

(k)

Foreign Currency Translation

The Company’s functional and reporting currency is the U.S. dollar.  Monetary assets and liabilities of integrated operations and other monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date.  Non-monetary assets and liabilities are translated at historical rates.  Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset.  The resulting exchange gains or losses are recognized in the statements of operations.

(l)

Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. No potentially dilutive debt or equity instruments were issued and outstanding during the years ended November 30, 2015 and 2014.

(m)

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and 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.

3.

Intangible Asset

In April 2015, the Company incurred costs relating to the commencement of a patent application process at a fair value of $63,750. Refer to Note 7(d). The Company subsequently decided to discontinue with the filing process, recognizing an impairment of $63,750 for the intangible asset.

4.

Related Party Transactions

a)

As at November 30, 2015, the Company incurred consulting services with a fair value $31,875 to the Chief Financial Officer of the Company. The amount has been recorded in accounts payables and accrued liabilities. The shares were issued December 23, 2015. Refer to Note 8(b).

b)

As at November 30, 2015, the Company incurred consulting services with a fair value of $21,250 to the Chief Executive Officer of the Company. The amount has been recorded in accounts payables and accrued liabilities. The shares were issued December 23, 2015. Refer to Notes 8(c) and 10.


 F-9            

             


4.

Related Party Transactions (continued)

c)

As at November 30, 2015, the Company owes $255,295 (2014 - $174,635) to a company controlled by a significant shareholder of the Company to fund payment of operating expenditures. The amount owing is unsecured, non-interest bearing, and due on demand.

d)

During the year ended November 30, 2015, the Company incurred $nil (2014 - $6,000) in management fees to the former President of the Company.

e)

During the year ended November 30, 2015, the Company incurred $101,500 in consulting fees to the former President of the Company. During the year ended November 30, 2015, the Company issued 2,132,353 shares of common stock with a fair value of $51,617 to settle the amount owing in addition to paying $8,300 to settle debt owed to the former President of the Company. During the year ended November 30, 2015, $33,000 of the amount owing was paid by a significant shareholder and the remainder of $8,583 has been forgiven and recorded as additional paid-in capital.

f)

On May 9, 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”). It was the Company’s intention to facilitate the cultivation of medical marijuana on the property if it is able to acquire the necessary license from Health Canada. The property is owned personally by a director of CVI Canada.

On May 9, 2015, the Company entered into an addendum with the owner of the property. In addition to the nonrefundable payment of $2,500 a month to extend the Contract, the Company issued 1,400,000 shares of common stock as part of a non-refundable deposit towards the property. On June 16, 2015, 1,400,000 shares of common stock were issued to the property owner.

During the year ended November 30, 2015, the Company paid $48,500 (2014 - $28,000) under the term of a contract to purchase property.

g)

During the year ended November 30, 2015, the Company recognized revenue of $1,592 (2014 - $nil) from a Company controlled by significant shareholders of the Company.

h)

During the year ended November 30, 2014, the former President of the Company forgave all amounts outstanding totaling $23,298 which was recorded as additional paid-in capital.

5.

Notes Receivable

(a)

On September 30, 2014, Cannabis Ventures Inc. (USA), a wholly-owned subsidiary of the Company entered into a promissory note agreement with Anthony McDonald (“McDonald”) and Globe Farmacy Inc. (“GFI”), an Arizona non-profit corporation, for $189,972. The amounts owing were unsecured, bears interest at 5% per annum, and was due on December 31, 2014. As at November 30, 2014, the amount receivable was deemed to be uncollectible and a full impairment charge on the loan receivable was made by the Company.

(b)

On January 26, 2015, the Company entered into a promissory note receivable with Holy Smokes, LLC for $12,467 to assist Holy Smokes, LLC in completing its agreement to sell 50% of equity with Gala Global, LLC. The amounts owing are unsecured, bears interest at 10% per annum, and is due upon the closing of escrow in conjunction with borrowers’ transactions with Gala Global, LLC. The Company received a repayment of $12,285 and deemed the remaining balance of $182 to be uncollectible.

6.

Loan Payable to Related Parties

(a)

As at November 30, 2015, the Company owed $10,000 (2014 - $10,000) to a company controlled by a significant shareholder of the Company. The amount due is unsecured, non-interest bearing, and due on demand.

(b)

As at November 30, 2015, the Company owed $42,000 (2014 - $nil) to a significant shareholder of the Company. The amount due is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance.

(c)

As at November 30, 2015, the Company owed a $200 (2014 - $nil) to the Chief Executive Officer of the Company. The amount due is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance.

(d)

As at November 30, 2015, the Company owed $5,000 (2014 - $nil) to a significant shareholder of the Company. The amount due is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance.

(e)

As at November 30, 2015, the Company owed $805 (2014 - $nil) to a significant shareholder of the Company. The amount due is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance.

7.

Common Stock

Stock transactions for the year ended November 30, 2015:

(a)

On January 6, 2015, the Company issued 1,500,000 shares of common stock with a fair value of $105,000 for advertising consulting services.  The fair value of the shares of shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(b)

On January 15, 2015, the Company issued 2,000,000 shares of common stock with a fair value of $83,000 for business development consulting services. The fair value of the shares of common stock was calculated based on the closing price of the Company’s shares of common stock on the date of the agreement.

(c)

On January 22, 2015, the Company issued 500,000 shares of common stock with a fair value of $39,450 to a former director of the Company for marketing consulting services. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(d)

On April 23, 2015, the Company issued 2,125,000 shares of common stock with a fair value of $63,750 to a former director of the Company for consulting services relating to patent applications. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(e)

On June 16, 2015, the Company issued 1,400,000 shares of common stock with a fair value of $28,000 as part of a non-refundable payment to further extend the Company’s option to acquire certain property in Vancouver, Canada. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(f)

On May 19, 2015, the Company issued 1,250,000 shares of common stock with a fair value of $37,500 to the former President of the Company for consulting services rendered. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(g)

On July 28, 2015, the Company issued 625,000 shares of common stock with a fair value of $11,250 to a director of the Company for services relating to the formation and development of business contacts. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

(h)

On August 31, 2015, the Company issued 625,000 shares of common stock with a fair value of $17,500 to the Chief Executive Officer of the Company for consulting services rendered. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement. Refer to Note 8(a).

(i)

On August 31, 2015, the Company issued 882,353 shares of common stock with a fair value of $14,117 to the former President of the Company as settlement for his outstanding compensation of $12,882. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.

Stock transactions for the year ended November 30, 2014:

(j)

On September 2, 2014, the Company issued 1,000,000 shares of common stock at $0.10 per common stock for proceeds of $100,000.

 F-10            

             

8.

Commitments

(a)

On June 29, 2015, the Company entered into a consulting agreement with the Chief Executive Officer of the Company for consulting services relating to the cannabis industry. Pursuant to the agreement, the Company is to issue 625,000 shares of common stock to the consultant upon execution of the agreement (issued) and every six months thereafter as compensation. Either party may terminate the agreement by providing written thirty days notice.

(b)

On September 1, 2015, the Company entered into an agreement with the Chief Financial Officer of the Company. Pursuant to the agreement, the Company is to issue 1,250,000 shares of common stock to the Chief Financial Officer upon execution and every twelve months as compensation for being the Chief Financial Officer. The Company shall also issue an additional 625,000 shares of common stock to the Chief Financial Officer upon execution and every six months as compensation for being a director. The agreement shall be terminated upon mutual agreement with the Company and the Chief Financial Officer.

(c)

On September 1, 2015, the Company entered into an agreement with the Chief Executive Officer of the Company for assuming the role as Chief Executive Officer. Pursuant to the agreement, the Company is to issue 1,250,000 shares of common stock to the Chief Executive Officer upon execution and every twelve months thereafter. The agreement shall be terminated upon mutual agreement with the Company and the Chief Executive Officer.


 

9.     Income Taxes

The Company has $730,720 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030. The Company has not submitted tax returns since its inception on March 10, 2010. As such, the years 2010 to 2015 remain subject to examination by the Company’s major tax jurisdiction. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes. As at November 30, 2015, the Company had no uncertain tax positions.

 

 

2015

$

2014

$

 

 

 

 

Net loss before taxes

 

(679,466)

(278,875)

Statutory rate

 

34%

34%

 

 

 

 

Computed expected tax recovery

 

231,017

94,818

Permanent differences

 

(114,177)

Change in valuation allowance

 

(116,840)

(94,818)

 

 

 

 

Income tax provision

 

 

The significant components of deferred income tax assets and liabilities at November 30, 2015 and 2014 are as follows:

 

 

2015

$

2014

$

 

 

 

 

Net operating losses carried forward

 

248,445

131,605

Valuation allowance

 

(248,445)

(131,605)

 

 

 

 

Net deferred income tax asset

 



10.

Subsequent Events

(a)

On December 23, 2015, the Company issued 1,250,000 shares of common stock to a consultant pursuant to a consulting agreement dated May 1, 2015. Refer to Note 7(j).

(b)

On December 23, 2015, the Company issued 2,500,000 of shares of common stock to the Chief Financial Officer of the Company pursuant to the agreement dated September 1, 2015. Refer to Notes 4(a) and 8(b).

(c)

On December 23, 2015, the Company issued 1,250,000 of shares of common stock to the Chief Executive Officer of the Company pursuant to the consulting agreement dated September 1, 2015. Refer to Notes 4(b) and 8(c).

(d)

On December 23, 2015, the Company issued 625,000 of shares of common stock to the Chief Executive Officer of the Company pursuant to the consulting agreement dated June 29, 2015. Refer to Note 8(a).

(e)

On December 14, 2015, the Company entered into a consultant agreement for marketing and promotion services. Pursuant to the agreement, the consultant is to be compensated by being issued 1,250,000 shares of common stock on an annual basis until the agreement is cancelled or terminated. Either party may terminate the agreement by providing written thirty days notice. On December 23, 2015, the Company issued 1,250,000 of shares of common stock to the consultant pursuant to this agreement.

(f)

On December 29, 2015, the Company issued a $20,000 promissory note to an unrelated party. Under the terms of the note, the amount is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance.

(g)

On January 27, 2016, the Company issued 500,000 shares of preferred stock to significant shareholders to settle debt of $500. Each preferred share has 500 to 1 voting power as according to the Company’s certificate of designation. Of the 500,000 shares issued, 166,666 shares were issued to a significant shareholder to settle debt of $167, and the remaining 333,334 shares are issued to another significant shareholder to settle debt of $333.


 F-11            

             



Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 

None


Item 9A.  Controls and Procedures  


(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report on Form 10-K (the "Evaluation Date"), concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.


(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the Effectiveness of Internal Controls


Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process.


Management's Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("1992 COSO Framework").


A material weakness is a deficiency or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.


Our management concluded we have a material weakness due to lack of segregation of duties. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. There is mainly one person involved in processing of transactions. Therefore, it is difficult to effectively segregate accounting duties.   We have hired an additional administrative person and retained an outside professional firm to assist in the separation of duties on an ongoing basis.  The use of the outside firm has proven successful in assisting in the separation of duties.  However, additional people are not needed to do the administrative work therefore segregation of duties will continue to be an ongoing weakness.


Based on this evaluation and because of the material weaknesses, management has concluded that our internal control over financial reporting was not effective as of November 30, 2015.  


This annual report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the SEC that permit the company to provide only management's report on internal control in this annual report.


 Item 9B.  Other Information.


None.

 

  13            

             


PART III


Item 10.  Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act


Directors, Executive Officers and Key Employees

 

The following table sets forth certain information regarding our directors, executive officers and key employees as of November 30, 2015 and as of the date of the filing of this report:

 

Name and Address

Age

Position(s) Held


Calvin Frye

47

CEO, Principal Executive Officer and

Chairman of the Board of Directors


Allison Hess

25

President, Secretary, Treasurer, Chief

Financial Officer and Director


Background of Directors and Executive Officers


Calvin Frye


Calvin Frye for the past five years has been both a dispensary owner and an MMJ industry consultant.  Mr. Frye has held several key positions in the Biotech industry for major companies like Xoma, Amgen and Baxter Biosciences, such as working his way up from Research Associate to Associate Scientist.  Mr. Frye also has over a decade of experience in the cannabis industry, having worked with some of the founders of the MMJ industry (Dennis Peron and Richard Eastman) as well as many of the industry pioneering groups in Los Angeles (Americans For Safe Access and Norml). Mr. Frye has traveled the country to many (current) MMJ states on speaking engagements in order to help get MMJ legislation passed in those states.  Mr. Frye has working knowledge of the regulatory issues within this industry from his experience with working with local LA government bodies and Agencies.  Mr. Frye has also branded his line of cannabis genetics and trademarked the name “Cloneville” which he has attached to his genetics.  In 2009, Mr. Frye consulted in hydroponics industry where he gained extensive knowledge in the actual growing, set up and production of cannabis.  
 

Allison Hess


Allison Hess, for the past year has been President of Hssy Inc., an international business finance and operations consulting firm based out of San Diego, CA.  Prior to Hssy Inc., Ms. Hess worked in the legal field for more than seven years having been with two local firms from 2010 up to 2014.  She is knowledgeable with regard to all levels of the courts from local Small Claims actions to federal district Court matters and is experienced in a number of commercial practice areas including corporate finance, real estate, licensing and contracts. She has helped numerous companies with their creation of a new business and the issues that arise therefrom such as public relations, government permitting and legislation, interacting with suppliers and vendors, and the public company markets. For the last several years Ms. Hess' efforts have been focused on the legal medicinal and recreational cannabis and Industrial Hemp markets.



Term of Office of Directors

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our Board of Directors and hold office until the officer dies or resigns or the Board elects a successor or removes the officer.

 

Key Employees

 

None.

 

Family Relationships

 

None.

 

Involvement in Certain Legal Proceedings

 

None.

 

  14            

             

 

Audit Committee Financial Expert

 

No determination has been made as to whether any member of the audit committee qualified as an audit committee financial expert as defined in Item 401 of Regulation S-K.


Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of beneficial ownership and changes in the beneficial ownership of our securities with the SEC of Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial Ownership of Securities). Directors, executive officers and beneficial owners of more than 10% of our Common Stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file.  The required filings have been made.

 

Code of Ethics

 

We have adopted an informal Code of Ethics that applies to our officers, directors, which we feel is sufficient at this time, given we are still in the start-up, development stage and have no employees, other than our officers and directors.

 

Item 11.  Executive Compensation.

SUMMARY COMPENSATION TABLE


Name and Principal Position

Year

Salary

Bonus

Stock

Option

Non-Equity

Change in Pension

All Other

Total

(a)

(b)

($)

($)

Awards

Awards

Incentive

Value Nonqualified

Compensation

($)

 

 

(c)

(d)

($)

($)

Plan

Deferred

($)

(j)

 

 

 

 

(e)

(f)

Compensation

Compensation

(i)

 

 

 

 

 

 

 

($)

Earnings

 

 

 

 

 

 

 

 

(g)

($)

 

 

 

 

 

 

 

 

 

(h)

 

 

 

 

 

 

 

 

 

 

 

 

Calvin Frye, Chairman and Principal Executive Officer

2015

0

0

35,833

0

0

0

0

35,833


Allison Hess, President, Secretary, Treasurer, CFO   

2015

0

0

31,875

0

0

0

0

31,875

 

 

 

 

 

 

 

 

 

 

Harold Millburn,

Former President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary

2015

0

0

51,617

0

0

0

49,883

101,500

 

 

 

 

 

 

 

 

 

 

George Lefevre, Chairman, President, CEO, Secretary, Treasurer, CFO and Principal Executive Officer

2014

0

0

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



  15            

             


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

 

 

 

 

  

Name and Principal Position(s)

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPTION AWARDS

STOCK AWARDS

Number of

Securities

Underlying

Unexercised

Options

(#)

(Exercisable)

(b)

 

 

 

 

 

 

 

 

 

Number of

Securities

Underlying

Unexercised

Options

(#)

(Unexercisable)

(c)

 

 

 

 

 

 

 

 

 

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)

(d)

 

 

 

 

 

Option

Exercise

Price

($)

(e)

 

 

 

 

 

 

 

 

 

 

 

 

Option

Expiration

Date

(f)

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

of Shares

or Units

of Stock

That Have

Not

Vested

(#)

(g)

 

 

 

 

 

 

 

 

Market

Value of

Shares or

Units

of Stock

That Have

Not

Vested

($)

(h)

 

 

 

 

 

 

 

Equity

Incentive

Plan

Awards:

Number

of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

(#)

(i)

 

Equity

Incentive

Plan

Awards:

Market

or Payout

Value of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

($)

(j)

Calvin Frye, Chairman and Principal Executive Officer

0

0

0

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

 

Allison Hess, President, Secretary, Treasurer, CFO

0

0

0

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

 


Option Grants


No options were granted during the fiscal years ended November 30, 2015 and 2014.  


We had no warrants or stock options issued or outstanding during the fiscal years ending November 30, 2015 and 2014.

 

Director Compensation

 

(a)

On June 29, 2015, the Company entered into a consulting agreement with the Chief Executive Officer of the Company for consulting services relating to the cannabis industry. Pursuant to the agreement, the Company shall issue 625,000 shares of common stock to the consultant upon execution of the agreement (issued) and every six months thereafter as compensation. Either party may terminate the agreement by providing written thirty days notice.

(b)

On September 1, 2015, the Company entered into an agreement with the Chief Financial Officer of the Company. Pursuant to the agreement, the Company shall issue 1,250,000 shares of common stock to the Chief Financial Officer upon execution and every twelve months to compensation for being the Chief Financial Officer. The Company shall also issue an additional 625,000 shares of common stock to the Chief Financial Officer upon execution and every six months as compensation for being a director. The agreement shall be terminated upon mutual agreement with the Company and the Chief Financial Officer.

(c)

On September 1, 2015, the Company entered into an agreement with the Chief Executive Officer of the Company for assuming the role as Chief Executive Officer. Pursuant to the agreement, the Company shall issue 1,250,000 shares of common stock to the Chief Executive Officer upon execution and every twelve months. The agreement shall be terminated upon mutual agreement with the Company and the Chief Executive Officer.

(d)

On March 29, 2015, the Company entered into an agreement with the former President of the Company for consulting services. Pursuant to the agreement, the former President received 1,250,000 shares of common stock of the Company with a fair value of $37,500. On May 1, 2015, the Company also entered into an agreement with the former President, agreeing to compensate the former President by a monthly fee of $15,000. Upon the former President’s resignation, the Company issued 882,353 shares of common stock with a fair value of $14,117 to the former President of the Company as settlement for his outstanding compensation of $12,882. The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement. During the year ended November 30, 2015, the Company also paid $4,000 to the former President for consulting services.

 

Employment Agreements

 

None.

 

Report on Repricing of Options

 

None.

 

  16            

             

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table provides certain information regarding the ownership of our common stock, as of November 30, 2015 and as of the date of the filing of this annual report by:

 

 

 

each of our executive officers;


 

 

each director;

 

 

 

each person known to us to own more than 5% of our outstanding common stock; and

 

 

 

all of our executive officers and directors and as a group.


As of November 30, 2015, we had a total of 130,047,353 shares of common stock issued and outstanding.  Except as indicated in footnotes to this table, the persons named in this table have sole voting and investment power with respect to all shares of common stock indicated below.  Except where noted, the address of all listed beneficial owners is in care of our office address.

 

Name and Address of  

Beneficial Owner

Title of Class

Amount and  

Nature of Beneficial  

Ownership (1)

(#)

Percent of  

Class (2)  

(%)

Calvin Frye, Chairman and Principal Executive Officer

Common

Shares

625,000

0.481

James Haas, Significant shareholder

Common

Shares

34,238,600

26.33

George Lefevre. Significant shareholder

Common

Shares

17,735,000

13.64

Owen Naccarato, Significant shareholder

Common

Shares

18,855,000

14.50

All Officers and Directors as a Group 

Common

Shares

71,453,600

54.94

 

Item 13.  Certain Relationships, Related Transactions and Director Independence


a)

As at November 30, 2015, the Company owes $255,295 (2014 - $174,635) to a company controlled by a significant shareholder of the Company to fund payment of operating expenditures. The amount owing is unsecured, non-interest bearing, and due on demand.

b)

During the year ended November 30, 2015, the Company incurred $nil (2014 - $6,000) in management fees to the former President of the Company.

c)

During the year ended November 30, 2015, $8,582 owed to the former President of the Company was recognized as forgiveness of debt.

d)

On May 9, 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”). It was the Company’s intention to facilitate the cultivation of medical marijuana on the property if it is able to acquire the necessary license from Health Canada. The property is owned personally by a director of CVI Canada.

During the year ended November 30, 2015, the Company paid $38,000 (2014 - $24,000) under the term of a contract to purchase property in Vancouver, Canada to a director of CVI.

On May 9, 2015, the Company entered into an addendum with the owner of the property. In additional to the nonrefundable payment of $2,500 a month to extend the Contract, the Company was to issue 1,400,000 shares of common stock as part of a non-refundable deposit towards the property. On June 16, 2015, 1,400,000 shares of common stock were issued to the property owner.

e)

During the year November 30, 2014, the former President of the Company forgave all amounts outstanding totaling $23,298 which was recorded as additional paid-in capital.


Director Independence

 

The OTC Bulletin Board does not have a requirement that a majority of our Board of Directors be independent.  However, with respect to the definition of independence utilized by NASDAQ, our officers and directors would be deemed to be independent.


Our Audit Committee is comprised of our officers and directors.  NASDAQ requires at least three members on the Audit Committee, each of whom must be independent.  NASDAQ also requires that, if its Chief Executive Officer’s compensation is determined by its Compensation Committee, the Compensation Committee must be comprised solely of independent directors.  The Company currently does not meet either of these requirements.

 

The NASDAQ rules have both objective tests and a subjective test for determining who is an “independent director.”  The objective tests state, for example, that a director is not considered independent if he or she is an employee of the Company or is a partner, executive officer or controlling stockholder of an entity to which the company made, or from which the Company received, payments in the current or any of the past three fiscal years that exceed the greater of $200,000 or 5% of the recipient’s consolidated gross revenue for that year or a family member serves in the current fiscal year or has served at any time during the last three fiscal years as an executive officer of the Company. The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

  17            

             

Item 14.  Principal Accountant Fees and Services 


The Company paid or accrued the following fees in each of the prior two fiscal years to its independent certified public accountants, Cutler & Co. Certified Public Accountants for the year ended November 30, 2014, and Pritchett, Siler and Hardy PC for the year ended November 30, 2015:


 

For the Year Ended November 30,

 

2015

2014

Audit Fees

$7,850

$7,500

Audit-Related Fees

$0

$0

Tax Fees

$0

$0

All Other Fees

$0

$0

Total Fees

$7,850

$7,500


"Audit Fees" consisted of fees billed for services rendered for the audit of the Company’s annual financial  statements and audit related fees are for review of the financial statements included in the Company’s quarterly reports on Form 10-Q.


Item 15.

Exhibits 

 

The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or related notes thereto.


Exhibits


Exhibit

Number

Exhibit

Description

31.1

Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

  31.1

  Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

  32.2

  Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-101.INS

XBRL Instance Document

EX-101.SCH

XBRL Taxonomy Extension Schema

EX-101.CAL

XBRL Taxonomy Extension Calculation Linkbase

EX-101.LAB

XBRL Taxonomy Extension Label Linkbase

EX-101.PRE

XBRL Taxonomy Extension Presentation Linkbase

EX-101.DEF

XBRL Taxonomy Extension Definition Linkbase



  18            

             
SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


  

GALA GLOBAL INC.

  

  

  

By: /s/ Calvin Frye

Date:  March 22, 2016

Calvin Frye

  

Chairman and Principal Executive Officer

 

 


Pursuant to the requirements of the Exchange Act this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature

Title

Date

 

  

  

/s/ Calvin Frye

Chairman and Principal Executive Officer

March 22, 2016

Calvin Frye

 

 



  19