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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GLAG 10Q Quarterly Report

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Securities
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-17 ex_17-0.htm
EX-31.1 ex_31-1.htm
EX-32.1 ex_32-1.htm

Gala Pharmaceutical Earnings 2016-08-31

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-Q 1 gala-global_10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended August 31, 2016
 
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
 
For the transition period from _________ to _________
 
Commission File Number: 333-172744
 
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

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer       Accelerated filer      Non-accelerated filer      Smaller reporting company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No  
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
As of October 3, 2016 the registrant had 136,922,353 shares of common stock outstanding.


                



GALA GLOBAL INC.

Condensed Consolidated Financial Statements
(unaudited)

For the Three and Nine Month Periods Ended August 31, 2016 and 2015

 

Condensed Consolidated Balance Sheets (unaudited)
2
 
Condensed Consolidated Statements of Operations (unaudited) 3
3
 
 
Condensed Consolidated Statements of Operations (unaudited) 3
3
   
Condensed Consolidated Statements of Stockholders' Deficit (unaudited)4
4
   
Condensed Consolidated Statements of Cash Flows (unaudited) 5 5
   
Notes to the Condensed Consolidated Financial Statements (unaudited) 6 6

GALA GLOBAL INC.
Condensed Consolidated Balance Sheets
(unaudited)

   
August 31,
2016
$
   
November 30,
2015
$
 
         
ASSETS
       
         
Current assets
       
         
Cash
   
2,011
     
1,804
 
Inventory
   
7,041
     
2,701
 
Prepaid expenses – related parties
   
     
2,917
 
                 
Total assets
   
9,052
     
7,422
 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
Current liabilities
               
                 
Accounts payable and accrued liabilities
   
14,975
     
28,050
 
Accounts payable and accrued liabilities – related party
   
83,090
     
130,061
 
Due to related parties
   
247,352
     
255,295
 
Loans payable
   
75,000
     
 
Loans payable - related parties
   
12,264
     
58,005
 
                 
Total liabilities
   
432,681
     
471,411
 
                 
STOCKHOLDERS' DEFICIT
               
                 
Preferred stock
Authorized: 10,000,000 shares with a par value of $0.001 per share
               
Issued and outstanding: 500,000 and nil shares, respectively.
   
500
     
 
                 
Common stock
Authorized: 500,000,000 shares with a par value of $0.001 per share
               
Issued and outstanding: 136,922,353 and 130,047,353 shares, respectively.
   
136,922
     
130,047
 
                 
Additional paid-in capital
   
651,183
     
472,501
 
                 
Accumulated deficit
   
(1,212,234
)
   
(1,066,537
)
                 
Total stockholders' deficit
   
(423,629
)
   
(463,989
)
                 
Total liabilities and stockholders' deficit
   
9,052
     
7,422
 

 

GALA GLOBAL INC.
Condensed Consolidated Statements of Operations
(unaudited)

   
Three months
ended
August 31,
2016
$
   
Three months
ended
August 31,
2015
$
   
Nine months
ended
August 31,
2016
$
   
Nine months
ended
August 31,
2015
$
 
                 
Operating expenses
               
                 
Bad debt
   
     
     
     
7,182
 
Consulting fees
   
     
67,900
     
17,500
     
238,400
 
Consulting fees – related party
   
9,114
     
95,834
     
24,479
     
147,784
 
General and administrative
   
8,638
     
18,824
     
38,125
     
54,253
 
General and administrative – related party
   
9,000
     
22,500
     
27,000
     
67,500
 
Option expense on failed property acquisition - related party
   
     
2,500
     
     
48,500
 
Rent
   
22,500
     
     
37,500
     
 
                                 
Total operating expenses
   
49,252
     
207,558
     
144,604
     
563,619
 
                                 
Loss before other expenses
   
(49,252
)
   
(207,558
)
   
(144,604
)
   
(563,619
)
                                 
Other expenses
                               
                                 
Interest expense
   
(540
)
   
(117
)
   
(1,093
)
   
(117
)
                                 
Net loss
   
(49,792
)
   
(207,675
)
   
(145,697
)
   
(563,736
)
Net loss per share, basic and diluted
   
(0.00
)*
   
(0.00
)*
   
(0.00
)*
   
(0.00
)*
Weighted average common shares outstanding
   
136,922,353
     
127,952,563
     
136,349,436
     
124,473,845
 

'* denotes a loss of less than $(0.01).
 


GALA GLOBAL INC.
Condensed Consolidated Statements of Changes in Stockholders' Deficit
(unaudited)

   
Preferred stock
   
Common stock
   
Additional
paid-in
   
Accumulated
     
   
Shares
#
   
Par value
$
   
Shares
#
   
Par value
$
   
capital
$
   
Deficit
$
   
Total
$
 
Balance, November 30, 2015
   
     
     
130,047,353
     
130,047
     
472,501
     
(1,066,537
)
   
(463,989
)
                                                         
Shares issued for consulting services – related party
   
     
     
4,375,000
     
4,375
     
66,562
     
     
70,937
 
                                                         
Shares issued for consulting services
   
     
     
2,500,000
     
2,500
     
40,000
     
     
42,500
 
                                                         
Shares issued for conversion of related party payable
   
166,666
     
167
     
     
     
24,000
     
     
24,167
 
                                                         
Shares issued for conversion of related party debt
   
333,334
     
333
     
     
     
48,120
     
     
48,453
 
                                                         
Net loss for the period
   
     
     
     
     
     
(145,697
)
   
(145,697
)
                                                         
Balance, August 31, 2016
   
500,000
     
500
     
136,922,353
     
136,922
     
651,183
     
(1,212,234
)
   
(423,629
)

 

GALA GLOBAL INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)

   
For the Nine Months Ended August 31,
2016
$
   
For the Nine
Months Ended August 31,
2015
$
 
Operating activities
       
         
Net loss for the period
   
(145,697
)
   
(563,736
)
     
-
         
Adjustments to reconcile net loss to net cash used in operating activities:
               
                 
Bad debt provision
   
     
7,182
 
Expenses paid by related parties on behalf of the Company
   
8,157
     
 
Stock-based compensation
   
17,500
     
271,000
 
Stock-based compensation – related party
   
73,855
     
119,817
 
Shares issued for extension of property option – related party
   
     
28,000
 
                 
Changes in operating assets and liabilities:
               
                 
Inventory
   
(4,340
)
   
 
Prepaid expenses
   
     
(51,117
)
Accounts payable and accrued liabilities
   
11,925
     
7,895
 
Accounts payable and accrued liabilities – related party
   
(22,157
)
   
67,617
 
                 
Net cash used in operating activities
   
(60,757
)
   
(113,342
)
                 
Investing activities
               
                 
Advances under loan receivable
   
     
(12,467
)
Repayment of note receivable
   
     
5,285
 
             
 
Net cash used in investing activities
   
     
(7,182
)
                 
Financing activities
               
                 
Proceeds from related party debt
   
     
83,524
 
Repayments of related party debt
   
(6,100
)
   
(5,000
)
Proceeds from note payable - related party
   
2,064
     
42,000
 
Proceeds from loan payable
   
65,000
     
 
                 
Net cash provided by financing activities
   
60,964
     
120,524
 
                 
Increase in cash
   
207
     
 
                 
Cash, beginning of period
   
1,804
     
 
                 
Cash, end of period
   
2,011
     
 
                 
Non-cash investing and financing activities:
               
                 
Expenses paid by related parties that increased related party debt
   
8,157
     
 
Common shares issued for consulting services
   
17,500
     
 
Common shares issued for consulting services to a related party
   
70,937
     
14,117
 
Common shares issued to settle outstanding payables
   
25,000
     
 
Common shares issued for intangible assets
   
     
63,750
 
Preferred shares issued to settle related party payables
   
24,167
     
 
Preferred shares issued to settle related party debt
   
48,453
     
 
                 
Supplemental disclosures:
               
                 
Interest paid
   
     
 
Income tax paid
   
     
 
                 

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. The Company 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.
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 August 31, 2016, the Company has a working capital deficit of $423,629 and an accumulated deficit of $1,212,234. 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.
2. Summary of Significant Accounting Policies
a)
Basis of Presentation
The 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.
b)
Principles of Consolidation
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, from the date of their acquisition by the Company effective June 26, 2014. All inter-company transactions and balances have been eliminated on consolidation.


2. Summary of Significant Accounting Policies (continued)
c)
Use of Estimates
The preparation of 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 long-lived assets, share-based compensation, and 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.
d)
Interim Financial Statements
The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management's opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the three and nine months ended August 31, 2016 are not necessarily indicative of the results that may be expected for the year ended November 30, 2016. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended November 30, 2015 included in our Form 10-K filed with the SEC.
e)
Inventory
Inventory is comprised of Vape Mods and cannabidiol products purchased for resale, 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.
f)
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 August 31, 2016 and November 30, 2015, there were no cash equivalents.
g)
Financial Instruments
Company's financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, loan payable, and amounts due to related parties. The recorded values of all these financial instruments approximate their current fair values because of the short term nature of these financial instruments.

2.    Summary of Significant Accounting Policies (continued)
h)
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.
i)
Revenue Recognition
The Company earns revenue from the sale of Vape Mods, which are modified electronic cigarettes and vape pens. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured.  The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services.
j)
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.
k)
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 three and nine months ended August 31, 2016 and 2015.
l)
Reclassification
Prior year amounts have been reclassified to conform with the current year presentation
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. Related Party Transactions
a)
During the three months ended February 29, 2016, the Company issued 625,000 shares of common stock with a fair value of $10,625 to the Chief Executive Officer of the Company for services as a director of the Company. The Company incurred consulting services of $17,292 during the nine months ended August 31, 2016. As at August 31, 2016, the Company had a prepaid expense balance of $nil (2015 - $2,917) to the Chief Executive Officer of the Company related to these services.
b)
As at February 29, 2016, the Company issued 625,000 common shares with a fair value of $7,187 to the Chief Financial Officer for consulting services. During the nine months ended August 31, 2016, the Company incurred consulting services of $7,187 (2015 - $nil).
c)
As at August 31, 2016, the Company owed $247,352 (2015 - $255,295) to a company controlled by a significant shareholder of the Company to fund payment of operating expenditures. The amount owed is unsecured, non-interest bearing, and due on demand.
d)
As at August 31, 2016, the Company owed $10,000 (2015 - $10,000) to a company controlled by a significant shareholder of the Company. The amount owed in unsecured, non-interest bearing, and due on demand.
e)
On August 5, 2016, the Company issued a promissory note for $2,064 to a significant shareholder of the Company. The amount is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance. As at August 31, 2016, accrued interest of $4 (2015 - $nil) has been included in accounts payable and accrued liabilities. The promissory note contains a conversion provision in case the company cannot fulfill its obligation.  The terms of the conversion will be determined at the time of conversion.
f)
As at August 31, 2016, the Company owed $200 (2015 - $200) to the Chief Executive Officer of the Company. The amount is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. As at August 31, 2016, accrued interest of $2 (2015 - $nil) has been included in accounts payable and accrued liabilities.
g)
As at August 31, 2016, the Company owed $nil (2015 - $42,000) to a significant shareholder of the Company. The amount is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance. As at August 31, 2016, accrued interest of $nil (2015 - $435) has been included in accounts payable and accrued liabilities.
h)
As at August 31, 2016, the Company owed $nil (2015 - $5,000) to a significant shareholder of the Company. The amount is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. As at August 31, 2016, accrued interest of $nil (2015 - $1) has been included in accounts payable and accrued liabilities.
i)
As at August 31, 2016, the Company owed $nil (2015 - $805) to a significant shareholder of the Company. The amount is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. On January 27, 2016, the Company issued 333,334 shares of preferred stock to the loan holder as part of settling all of the outstanding debt and accrued interest.
j)
As at August 31, 2016, the Company owed $79,333 (2015 - $76,500) to a significant shareholder of the Company, which has been recorded in accounts payable and accrued liabilities - related parties. The amount is unsecured, non-interest bearing, and due on demand.  During the nine months ended August 31, 2016, the Company incurred legal fees of $27,000 (2015 - $67,500) to this significant shareholder.  On January 27, 2016, the Company issued 166,666 shares of preferred stock to settle outstanding debt owed to related parties of $24,167.


4.    Loans Payable
a)
On December 29, 2015, the Company issued a $20,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance. The promissory note contains a conversion provision in case the company cannot fulfill its obligation.  The terms of the conversion will be determined at the time of conversion.
b)
On April 19, 2016, the Company issued a $3,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance. The promissory note contains a conversion provision in case the company cannot fulfill its obligation.  The terms of the conversion will be determined at the time of conversion.
c)
On April 22, 2016, the Company issued a $22,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.  The promissory note contains a conversion provision in case the company cannot fulfill its obligation.  The terms of the conversion will be determined at the time of conversion.
d)
On June 3, 2016, the Company issued a $20,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance. The promissory note contains a conversion provision in case the company cannot fulfill its obligation.  The terms of the conversion will be determined at the time of conversion.
e)
On June 23, 2016, the Company issued a $10,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.  The promissory note contains a conversion provision in case the company cannot fulfill its obligation.  The terms of the conversion will be determined at the time of conversion.
5.    Stockholders' Equity
(a)
On December 23, 2015, the Company issued 1,250,000 shares of common stock with a fair value of $25,000 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 with a fair value of $39,063 to the Chief Financial Officer and director of the Company pursuant to the agreement dated September 1, 2015. 1,250,000 shares were issued for the consultant's services as a director, and 1,250,000 shares for services as the Company's Chief Financial Officer.
(c)
On December 23, 2015, the Company issued 1,250,000 of shares of common stock with a fair value of $21,250 to the Chief Executive Officer of the Company for the consultant's services as a director pursuant to the consulting agreement dated September 1, 2015.
(d)
On December 23, 2015, the Company issued 625,000 of shares of common stock with a fair value of $10,625 to the Chief Executive Officer of the Company for services as the Company's Chief Executive Officer pursuant to the consulting agreement dated June 29, 2015.
(e)
On December 23, 2015, the Company issued 1,250,000 of shares of common stock with a fair value of $17,500 to a consultant pursuant to a consulting agreement dated December 14, 2015.
(f)
On January 27, 2016, the Company issued 500,000 shares of preferred stock to significant shareholders to settle debt of $72,620. Each preferred share is entitled to receive dividends when and if declared by the Company's board of directors, has 500 to 1 voting power and liquidation rights in the amount of the shares; par value in accordance with the Company's certificate of designation. Of the 500,000 shares issued, 166,666 shares were issued to a significant shareholder to settle outstanding payables to a significant shareholder of $24,167, and the remaining 333,334 shares are issued to another significant shareholder to settle debts of $42,638, $5,009, and $806 described at Note 4 for a total of $48,453 in outstanding principal and accrued interest.
 

 
(g)
As at August 31, 2016, the Company owed 625,000 of shares of common stock with a fair value of $3,750 issuable to the Chief Executive Officer as compensation for consulting services, which has been recorded as accounts payable and accrued liabilities – related party until the shares have been issued.
6.    Commitments
a)
On May 1, 2015, the Company entered into a consulting agreement for website development and maintenance 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.
b)
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 issued 625,000 shares of common stock to the consultant upon execution of the agreement and will issue 625,000 shares of common stock every six months thereafter as compensation. Either party may terminate the agreement by providing written thirty days notice. As of August 31, 2016, the Company has issued 1,250,000 common shares and has recorded an additional 625,000 shares issuable as accounts payable and accrued liabilities – related party.  Refer to Note 5(g).
c)
On September 1, 2015, the Company entered into an agreement with the Chief Executive Officer of the Company for assuming the role of Chief Executive Officer. Pursuant to the agreement, the Company issued 1,250,000 shares of common stock to the Chief Executive Officer upon execution and will issue 1,250,000 shares of common stock every twelve months thereafter. The agreement shall be terminated upon mutual agreement with the Company and the Chief Executive Officer. On October 20, 2016, the Chief Executive Officer resigned and has agreed to forgo any additional compensation due to him as of August 31, 2016.
d)
On September 1, 2015, the Company entered into an agreement with the Chief Financial Officer of the Company. Pursuant to the agreement, the Company issued 1,250,000 shares of common stock to the Chief Financial Officer upon execution and will issue 1,250,000 shares of common stock 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 will issue 625,000 shares of common stock 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.
e)
On December 14, 2015, the Company entered into a consulting agreement for marketing and promotion services. Pursuant to the agreement, the consultant was 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.
7. Subsequent Events
a) On September 21, 2016, the Company issued a $10,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.


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

Safe Harbor Statement

This report on Form 10-Q contains certain forward-looking statements.  All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues.  Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors.  These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements.  The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States.  It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q.  The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

RESULTS OF OPERATIONS

Working Capital

 
 
August 31,
2016
$
   
November 30,
2015
$
 
Current Assets
   
9,052
     
7,422
 
Current Liabilities
   
432,681
     
471,411
 
Working Capital (Deficit)
   
(423,629
)
   
(463,989
)


Cash Flows

   
Nine months ended August 31,
2016
$
   
Nine months ended August 31,
2015
$
 
Cash Flows from (used in) Operating Activities
   
(60,757
)
   
(113,342
)
Cash Flows from (used in) Investing  Activities
   
-
     
(7,182
)
Cash Flows from (used in) Financing Activities
   
60,964
     
120,524
 
Net Increase (decrease) in Cash During Period
   
207
     
-
 

Operating Expenses

Three Months Ended August 31, 2016 and 2015

During the three months ended August 31, 2016, the Company incurred operating expenses of $49,252 compared with $207,558 during the three months ended August 31, 2015. The Company recorded a $Nil of consulting fees during the three months ended August 31, 2016 compared to $67,900 cost of consulting fees incurred during the three months ended August 31, 2015.  Consulting fees incurred to related parties for management services decreased by $86,720 due to a reduction in the number of officers and directors compensated. General and administrative expenses decreased by $10,186 due to a general decrease in operating activities. General and administrative expenses charged by related parties decreased $13,500 due to a reduction in the rates charge by the Company's related party for legal fees. The Company terminated its property acquisition agreement for the British Columbia, Canada property at the end of 2015 resulting in a reduction of $2,500 in option payments from the prior period. The Company entered into a lease for a new facility during the three months ended August 31, 2016 resulting in $22,500 of rent expense.

Nine Months Ended August 31, 2016 and 2015

During the nine months ended August 31, 2016, the Company incurred operating expenses of $144,604 compared with $563,619 during the nine months ended August 31, 2015. The Company reduced consulting expense by $220,900 during the nine months ended August 31, 2016 compared to the nine months ended August 31, 2015 due to the Company focusing on the commercialization of products derived from the Hemp and Cannabis plant. Consulting fees incurred to related parties for management services decreased by $123,305 due to a reduction in the number of officers and directors compensated during the nine months ended August 31, 2016. General and administrative expenses decreased by $16,128 due to a general decrease in operations. General and administrative expenses charged by related parties decreased by $40,500 when compared to the nine months ended August 31, 2016 due to a reduction in the rates charge by the Company's related party for legal fees. The Company terminated its property acquisition agreement for the British Columbia, Canada property at the end of 2015 resulting in a reduction of $48,500 in option payments from the prior period.  The Company entered into a lease for a new facility March, 2016 resulting in $37,500 of rent expense as of August 31, 2016.
 


Net Loss

During the three months August 31, 2016, the Company incurred a net loss of $49,792 and a net loss per share of $0.00 compared with a net loss of $207,675 and a net loss per share of $0.00 for the three months ended August 31, 2015 due to the factors discussed above.

During the nine months ended August 31, 2016, the Company incurred a net loss of $145,697 and a net loss per share of $0.00 compared with a net loss of $563,736 and a net loss per share of $0.00 for the nine months ended August 31, 2015 due to the factors discussed above.

Liquidity and Capital Resources

As of August 31, 2016, the Company has a working capital deficit of $423,629, and an accumulated deficit of $1,212,234. 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 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.

Cash flow from Operating Activities

During the nine months ended August 31, 2016, the Company used $60,757 of cash in operating activities compared to the use of $113,342 of cash for operating activities during the nine months ended August 31, 2015 for a decrease of $52,585 in cash used in operating activities. The decrease in cash used for operating activities is due to a decrease in the overall operating activity of the Company compared to prior year.

Cash flow from Investing Activities

During the nine months ended August 31, 2016, the Company used $nil of cash for investing activities compared with $7,182 during the nine months ended August 31, 2015. The decrease in the use of cash is due to the fact that the Company had advanced $12,467 to an unrelated party during the nine month period ended August 31, 2015. The Company received a repayment of $5,285, and deemed the remaining balance to be uncollectible. Consequently, the Company recognized bad debt of $7,182 on the loan receivable for uncollectible principal and interest.

Cash flow from Financing Activities

During the nine months ended August 31, 2016, the Company received $60,964 of cash from financing activities compared with $120,524 during the nine months ended August 31, 2015.  During the current period, the Company received $65,000 as loans from unrelated parties and $2,064 in loans from related parties, offset by $6,100 paid to a related party for amounts owed. During the prior period, the Company repaid $5,000 to a related party and received $120,524 in advances from related parties, which included $42,000 from a note payable issued to a related party.

 
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.

Subsequent Events

On September 21, 2016, the Company issued a $10,000 promissory note to an unrelated party. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.

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.

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

The Company has reviewed all the recently issued, but not yet effective, accounting pronouncements and does not believe that the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations as reported in its 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 3.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
 
ITEM 4.  CONTROLS AND PROCEDURES
 
Management's Report on Internal Control over Financial Reporting.

Our Internal control over financial reporting is a process that, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, was designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that our controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As management, it is our responsibility to establish and maintain adequate internal control over financial reporting.  As of August 31, 2016, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting using criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").  Based on our evaluation, we concluded that the Company has not maintained effective internal control over financial reporting as of August 31, 2016, based on criteria established in the Internal Control Integrated Framework issued by the COSO.

This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this quarterly report.
 
Evaluation of disclosure controls and procedures.

As of August 31, 2016, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act.  Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the date of filing this annual report applicable for the period covered by this report.

Changes in internal controls.  

During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
             

 

PART II – OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

As of August 31, 2016 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject.  Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

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

For the nine months ended August 31, 2016, 6,875,000 shares of common stock were issued for consulting services, and 500,000 shares of preferred stock were issued for conversion of debt.  No unregistered sales of equity securities were completed during the nine months ended August 31, 2016.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
  
No senior securities were issued or outstanding during the nine months ended August 31, 2016 and 2015.
  
ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable to our Company.

ITEM 5.  OTHER INFORMATION

On October 20, 2016, Calvin Frye, the Chief Executive Officer and a director of the Company, resigned.


ITEM 6.  EXHIBITS

Exhibit
Number
Exhibit
Description
17.0
Resignation of Director
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
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


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.
     
  
GALA GLOBAL INC.
 
 
(REGISTRANT)
  
 
Date:  November 4, 2016
/s/   Alison Hess
 
 
Allison Hess
  
 
President, Chief Financial Officer and Director
 
 
(Authorized Officer for Registrant)