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 10K Annual Report

Part I
Item 1. Description of Business
Item 1A. Risk Factors
Item 1B. 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 and Director Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships, Related Transactions and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits
EX-31.1 gala_ex3101.htm
EX-32.1 gala_ex3201.htm

Gala Pharmaceutical Earnings 2016-11-30

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 gala_10k-20161130.htm FORM 10-K

Table of Contents

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, 2016

 

☐ 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 ☐    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 ☐     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 ☐

 

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. ☐

 

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 ☐            Accelerated filer ☐         Non-accelerated filer ☐        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 ☐    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 registrant’s most recently completed fiscal quarter: $262,797

 

As of January 24, 2017 the registrant’s outstanding stock consisted of 1,369,224 common shares.

 

 

 

   
 

 

GALA GLOBAL INC.

 

Table of Contents

 

PART I    
     
Item 1. Description of Business 1
Item 1A. Risk Factors 1
Item 1B. Unresolved Staff Comments 1
Item 2. Description of Property 1
Item 3. Legal Proceedings 1
Item 4. Mine Safety Disclosures 1
     
PART II    
     
Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities 2
Item 6. Selected Financial Data 4
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 4
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 8
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 10
Item 9A. Controls and Procedures 10
Item 9B. Other Information 10
     
PART III    
     
Item 10. Directors, Executive Officers and Corporate Governance 11
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 15
Item 13. Certain Relationships, Related Transactions and Director Independence 16
Item 14. Principal Accountant Fees and Services 18
Item 15. Exhibits and Financial Statement Schedules 19
Signatures 20

 

 

 

 

   
 

 

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.

 

The Company 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.

 

Research and Development

 

We have not spent any amounts on research and development activities during the years ended November 30, 2016 or 2015. 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.

 

Item 1A. Risk Factors

 

Not applicable to smaller reporting companies.

 

Item 1B. 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 18881 Von Karman Avenue #1440, Irvine, California 92612. 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.

 

 

 

 1 
 

 

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 2016    
First Quarter ended February 29, 2016 $3.00 $1.00
Second Quarter ended May 31, 2016 $2.00 $1.00
Third Quarter ended August 31, 2016 $1.00 $0.00
Fourth Quarter ended November 30, 2016 $2.00 $0.00
     
Fiscal 2015    
First Quarter ended February 28, 2015 $9.00 $31.00
Second Quarter ended May 31, 2015 $5.00 $17.00
Third Quarter ended August 31, 2015 $3.00 $1.00
Fourth Quarter ended November 30, 2015 $2.00 $1.00

 

Number of Holders

 

As of November 30, 2016, the 1,369,224 issued and outstanding shares of common stock were held by a total of 52 shareholders of record.

 

Dividends

 

No cash dividends were paid on our shares of common stock during the fiscal years ended November 30, 2016 and 2015. 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, 2016:

 

(a)On December 23, 2015, the Company issued 12,500 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 25,000 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. 12,500 shares were issued for the consultant’s services as a director, and 12,500 shares for services as the Company’s Chief Financial Officer.

 

(c)On December 23, 2015, the Company issued 12,500 of shares of common stock with a fair value of $21,250 to the former 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 6,250 of shares of common stock with a fair value of $10,625 to the former Chief Executive Officer of the Company for services as the Company’s Chief Executive Officer pursuant to the consulting agreement dated June 29, 2015.

 

 

 

 

 2 
 

 

(e)On December 23, 2015, the Company issued 12,500 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.

 

Stock transactions for the year ended November 30, 2015:

 

(g)On January 6, 2015, the Company issued 15,000 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.

 

(h)On January 15, 2015, the Company issued 20,000 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.

 

(i)On January 22, 2015, the Company issued 5,000 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.

 

(j)On April 23, 2015, the Company issued 21,250 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.

 

(k)On June 16, 2015, the Company issued 14,000 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.

 

(l)On May 19, 2015, the Company issued 12,500 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.

 

(m)On July 28, 2015, the Company issued 6,250 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.

 

(n)On August 31, 2015, the Company issued 6,250 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.

 

(o)On August 31, 2015, the Company issued 8,824 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.

 

Purchase of our Equity Securities by Officers and Directors

 

None.

 

Other Stockholder Matters

 

None.

 

 

 3 
 

 

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 $170,176 and $679,466, respectively, for the fiscal years ended November 30, 2016 and November 30, 2015. 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.

 

 

 

 

 4 
 

 

RESULTS OF OPERATIONS

 

Operating Revenues

 

During the fiscal years ended November 30, 2016 and 2015, the Company recognized revenue of $nil and $1,592, respectively.

 

Operating Expenses

 

Operating expenses for the year ended November 30, 2016 were $168,432 compared with $616,074 for the year ended November 30, 2015. A summary of the operating expenses are as follows:

 

Analysis of Operating Expenses

 

   November 30,   November 30,   Variance 
Operating Expense  2016   2015   $   % 
                 
Bad debts      $182   $(182)   N/A 
Consulting fees  $17,500   $213,600   $(196,100)   (91.81)% 
Consulting fees - related party  $26,354   $219,908   $(193,554)   (88.02)% 
General and administrative  $50,028   $57,384   $(7,356)   (12.82)% 
General and administrative - related party  $36,000   $76,500   $(40,500)   (52,94)% 
Option expense - related party      $48,500   $(48,500)   N/A 
Rent  $38,550       $38,550    N/A 
   $168,432   $616,074   $(447,642)   72.66% 

 

Overall, the decrease in operating expenses was partially due to a decrease in the amount of $384,029 for the fair value of common stock issued to officers and consultants of the Company in regards to general advisory services in regards to the cannabis industry. Additionally, the Company saw a decrease in general and administrative fees of $1,601 relating to the Company’s accounting, audit, and legal fees due to a general decrease in operating activity. The Company also saw a decrease in legal fees of $40,500 incurred to a related party due to less services being rendered. The Company also saw a decrease of $48,500 in option expense as the Company decided to discontinue pursuing the purchase of a certain property in Vancouver to facilitate the cultivation of medical marijuana. The decrease in operating expense is offset by an increase of $38,550 in rent expense for a new office rented by the Company in the current fiscal year. The Company had a decrease of $8,391 in overhead and administration expense, and a minor decrease of $566 in transfer agent and filing fees relating to costs incurred with respect to shares issued for consulting services during the year.

 

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). During the year ended November 30, 2015, the Company discontinued the filing process, and recorded an impairment charge of $63,750 for the intangible asset.

 

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 $8,583 in additional paid-in capital.

 

Net Loss

 

Net loss for the year ended November 30, 2016 was $170,176 or $(0.12) loss per share compared with a net loss of $679,466 or $(0.54) loss per share for the year ended November 30, 2015 due to the factors discussed above.

 

 

 

 

 5 
 

 

Liquidity and Capital Resources

 

As of November 30, 2016, the Company had a working capital deficit of $448,108 and an accumulated deficit of $1,236,713. 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,
2016
$
   November 30,
2015
$
 
Current Assets   13,082    7,422 
Current Liabilities   (461,190)   (471,411)
Working Capital (Deficit)   (448,108)   (463,989)

 

As at November 30, 2016, the Company had current assets of $13,082 and current liabilities of $461,190 compared with current assets of $7,422 and current liabilities of $471,411 at November 30, 2015. The decrease in the working capital deficit was largely attributable to an increase of $75,000 for proceeds in loans payable, net of a decrease of $5,460 in amounts due to related parties, $35,741 in loans payable - related parties, $7,998 in accounts payable and accrued liabilities, and $36,022 in accounts payable and accrued liabilities - related party. The decrease in loans payable - related parties is partly attributable to the conversion of $47,805 of principal and $648 of accrued interest owed to a related party offset by $10,000 in procedures received from related parties. The decrease in accounts payable due to related parties was attributable to a decrease of $24,167 owed to a related party through the issuance of preferred shares, and issuance of common shares valued at $53,125 due to company officers as part of their 2015 share based compensation. These decreases in accounts payable due to related parties were offset by $36,000 in legal services incurred and owed to a significant shareholder of the Company.

 

Cash Flows

 

   Year ended
November 30,
2016
$
   Year ended
November 30,
2015
$
 
Cash Flows from (used in) Operating Activities   (70,503)   (126,679)
Cash Flows from (used in) Investing Activities       (182)
Cash Flows from (used in) Financing Activities   79,540    128,665 
Net Increase (decrease) in Cash During Period   10,841    1,804 

 

Cash flow from Operating Activities

 

During the year ended November 30, 2016, the Company used $70,503 of cash for operating activities compared to the use of $126,679 of cash for operating activities during the year ended November 30, 2015. 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 year ended November 31, 2016 the Company used $nil of cash for investing activities compared to $182 for the year ended November 31, 2015. In the prior year, the Company had advanced $12,467 to an unrelated party and received a repayment of $12,285; the remaining balance of $182 was recognized as bad debt as uncollectible principal and interest. There was no such transaction in the current year.

 

 

 

 

 6 
 

 

Cash flow from Financing Activities

 

During the year ended November 30, 2016, $79,540 was provided by financing activities compared to $128,665 provided during the year ended November 30, 2015. During the current year, the Company received $75,000 as loans from unrelated parties, $640 from related parties, $10,000 in notes issued to related parties offset by $6,100 paid to a related party for amounts owed. During the prior year, the Company repaid $12,000 to a related party, received $93,465 in advances from related parties, and received $47,200 in proceeds from notes payable issued to a related parties. The Company required less financing in the year ended November 30, 2016 as fewer operating expenses were incurred in the year as 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.

 

Subsequent Events

 

a)On December 9, 2016, the Company issued a $2,500 promissory note to a related party. Under the terms of the note, the amount due is unsecured, bears interest at 2% per annum, and is due 180 days from the date of issuance.

 

b)On January 3, 2017, the Company issued a $6,000 promissory note to a related party. Under the terms of the note, the amount due is unsecured, bears interest at 2% per annum, and is due 180 days from the date of issuance.

 

c)On January 9, 2017, the Company dissolved its wholly owned subsidiary, CBD Life, Inc.

 

d)On January 30, 2017, the Company effected a share consolidation on a 100 old shares for 1 new share basis. The share consolidation has been applied retroactively to the beginning of the earliest period presented.

 

e)On February 12, 2017, the Company entered into an agreement to acquire 51% of the issued and outstanding common stock of Chill-N-Out Cryotherapy in exchange of the Company's preferred shares. Pursuant to the agreement, the Company shall fund an initial minimum investment of $100,000 within 14 days and up to $250,000 in aggregate within 30 - 45 days of the definitive agreement. Thereafter, the Company will fund an additional $2,750,000 within a 12 month period as needed. After a minimum of an additional 12 months, the Company shall formalize a spin-off of the new subsidiary at 70% to Chill-N-Out and 30% to the Company. On March 1, 2017, the parties agreed to cancel the agreement dated February 12, 2017.

 

f)On February 14, 2017, the Company entered into an agreement whereby the Company agreed to acquire 80% of the issued and outstanding common stock of a to be incorporated company, Controlled Environment Genomics Inc (“CEG Inc.”), in exchange for a new series of the Company’s preferred shares. Pursuant to the agreement, the Company will appoint CEG Inc.’s executive as the Chief Executive officer of the Company. An additional 5,000,000 restricted common shares will also be issued to acquire CEG's intellectual property. In the case that CEG, Inc. becomes its own public entity, the executive shall receive 51% ownership of the new entity, and the Company will retain the remaining 49%. The purpose of this acquisition is to retain the services of CEG Inc.’s executive, and to acquire CEG's intellectual property as part of the Company's plan to expand in the cannabis industry.

 

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.

 

 

 

 

 7 
 

 

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.

 

 

 

 

 8 
 

 

Item 8. Financial Statements

 

GALA GLOBAL INC.

 

Consolidated Financial Statements

 

For the Years Ended November 30, 2016 and 2015

 

 

Report of Independent Registered Public Accounting Firm F-1
   
Consolidated Balance Sheets F-2
   
Consolidated Statements of Operations F-3
   
Consolidated Statements of Stockholders’ Deficit F-4
   
Consolidated Statements of Cash Flows F-5
   
Notes to the Consolidated Financial Statements F-6

 

 

 9 
 

 

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 sheets of Gala Global, Inc. as of November 30, 2016 and 2015 the related consolidated statements of operations, changes in stockholders' 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 consolidated financial statements based on our audits.

 

We conducted our audits 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, 2016 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 1 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 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

/s/ Pritchett, Siler and Hardy PC

 

Pritchett, Siler and Hardy PC

Salt Lake, City Utah

March __, 2017

 

 

 

 

 

 F-1 

 

GALA GLOBAL INC.

Consolidated Balance Sheets

 

   November 30,
2016
$
   November 30,
2015
$
 
         
ASSETS          
           
Current assets          
Cash   10,841    1,804 
Inventory   2,241    2,701 
Prepaid expenses – related parties       2,917 
           
Total assets   13,082    7,422 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current liabilities          
Accounts payable and accrued liabilities   20,052    28,050 
Accounts payable and accrued liabilities – related party   94,039    130,061 
Due to related parties   249,835    255,295 
Loans payable   75,000     
Loans payable - related parties   22,264    58,005 
           
Total liabilities   461,190    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: 1,369,224 and 1,300,474 shares, respectively.     1,369       1,300  
           
Additional paid-in capital   786,736    601,248 
           
Deficit   (1,236,713)   (1,066,537)
           
Total stockholders’ deficit   (448,108)   (463,989)
           
Total liabilities and stockholders’ deficit   13,082    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,
2016
$
   Year ended
November 30,
2015
$
 
         
Revenues       1,592 
           
Cost of sales       798 
           
Gross margin       794 
           
Operating expenses          
Bad debt       182 
Consulting fees   17,500    213,600 
Consulting fees – related party   26,354    219,908 
General and administrative   50,028    57,384 
General and administrative – related party   36,000    76,500 
Option expense on failed property acquisition - related party       48,500 
Rent   38,550     
           
Total operating expense   168,432    616,074 
           
Loss before other expense   (168,432)   (615,280)
           
Other expense          
Impairment of intangible assets       (63,750)
Interest expense   (1,744)   (436)
           
Total other expense   (1,744)   (64,186)
           
Net loss   (170,176)   (679,466)
Net loss per share, basic and diluted    (0.12)   (0.52)
Weighted average common shares outstanding    1,369,224    1,300,474 

 

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

 

 

 

 

 F-3 

 

GALA GLOBAL INC.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

 

 

   Preferred stock   Common stock   Additional
paid-in
         
   Shares   Par value   Shares   Par value   capital   Deficit   Total 
   #   $   #   $   $   $   $ 
                             
Balance, November 30, 2014           1,191,400    1,191    193,207    (387,071)   (192,673)
                                    
Shares issued for consulting services           35,000    35    187,965        188,000 
                                    
Shares issued for consulting services - related party           38,824    39    119,778        119,817 
                                    
Shares issued for intangible asset - related party           21,250    21    63,729        63,750 
                                    
Shares issued for option payment           14,000    14    27,986        28,000 
                                    
Forgiveness of related party debt                   8,583        8,583 
                                   
Net loss for the year                       (679,466)   (679,466)
                                    
Balance, November 30, 2015           1,300,474    1,300    601,248    (1,066,537)   (463,989)
                                    
Shares issued for consulting services – related party           43,750    44    70,893        70,937 
                                    
Shares issued for consulting services           25,000    25    42,475        42,500 
                                    
Shares issued for conversion of debt   500,000    500            72,120        72,620 
                                    
Net loss for the year                       (170,176)   (170,176)
                                    
Balance, November 30, 2016   500,000    500    1,369,224    1,369    786,736    (1,236,713)   (448,108)

 

(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,
2016
$
  Year Ended
November 30,
2015
$
         
Operating activities        
Net loss for the year   (170,176)   (679,466)
Adjustments to reconcile net loss to net cash used in operating activities:          
Bad debt provision       182 
Expenses paid by related parties on behalf of the Company   2,064     
Impairment of intangible asset       63,750 
Stock-based compensation   17,500    188,000 
Stock-based compensation - related party   26,354    119,817 
Shares issued for failed acquisition of property       28,000 
           
Changes in operating assets and liabilities:          
Inventory   460    (2,701)
Prepaid expenses       (2,917)
Accounts payable and accrued liabilities   17,002    32,895 
Accounts payable and accrued liabilities – related party   36,293    125,761 
Net cash used in operating activities   (70,503)   (126,679)
           
Investing activities          
Advances under loan receivable       (12,467)
Repayment of note receivable       12,285 
          
Net cash used in investing activities       (182)
           
Financing activities          
Proceeds from related party operating advances   640    93,465 
Repayments of related party operating advances   (6,100)   (12,000)
Proceeds from note payable - related party   10,000    47,200 
Proceeds from loan payable   75,000     
Net cash provided by financing activities   79,540    128,665 
           
Increase (decrease) in cash   9,037    1,804 
Cash, beginning of period   1,804     
Cash, end of period   10,841    1,804 
           
Non-cash investing and financing activities:          
Expenses paid with notes payable - related party   2,064     
Forgiveness of related party debt offset to equity       8,583 
Common shares issued for consulting services   17,500     
Common shares issued to settle accounts payable - related parties   53,125     
Common shares issued to settle outstanding payables   25,000     
Common shares issued for intangible assets       63,750 
Preferred shares issued to settle accounts payable - related parties   24,167     
Preferred shares issued to settle notes payable - related party and accrued interest   48,453     
           
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, 2016 and 2015

 

 

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.

 

The Company 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 November 30, 2016, the Company has a working capital deficit of $448,108 and an accumulated deficit of $1,236,713. 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

 

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.

 

(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. All inter-company transactions and balances have been eliminated on consolidation.

 

(c)Use of Estimates

 

The preparation of consolidated financial statements in conformity with US GAAP requires 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 net realizable value of inventory, 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.

 

 

 

 F-6 

 

GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

2. Summary of Significant Accounting Policies (continued)

 

(d)Inventory

 

Inventory is comprised of finished goods related to hemp and the CBD industry 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.

 

(e)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, 2016 and 2015, there were no cash equivalents.

 

(f)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.

 

(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 products related to hemp and CBD, including modified electronic cigarettes and vape pens. Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured.

 

(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.

 

(j)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.

 

 

 

 

 F-7 

 

 GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

2.Summary of Significant Accounting Policies (continued)

 

(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 years ended November 30, 2016 and 2015. All effects of the reverse stock split discussed at Note 9(d) has been applied retroactively to calculations of basic and diluted net loss per share for periods presented.

 

(l)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 6(j). During the year ended November 30, 2015, the Company discontinued the filing process, and recorded an impairment charge for the intangible asset.

 

4. Related Party Transactions

 

a)During the year ended November 30, 2016, the Company issued 6,250 shares of common stock with a fair value of $10,625 to the former Chief Executive Officer of the Company for services as a director of the Company. During the year ended November 30, 2016, the Company incurred consulting services of $13,540 (2015 - $21,250). As at November 30, 2016, the Company had a prepaid expense balance of $nil (2015 - $2,917) to the former Chief Executive Officer of the Company related to these services.

 

b)During the year ended November 30, 2016, the Company issued 6,250 shares of common stock with a fair value of $7,187 to the Chief Financial Officer for consulting services. During the year ended November 30, 2016, the Company incurred consulting services of $12,813 (2015 - $31,875). As at November 30, 2016, the Company owed $5,625 to the Chief Financial Officer, which has been included in accounts payable and accrued liabilities - related party.

 

c)As at November 30, 2016, the Company owed $249,835 (2015 - $255,295) 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)As at November 30, 2016, the Company owed $10,000 (2015 - $10,000) to a company controlled by a significant shareholder of the Company. The amount owing is unsecured, non-interest bearing, and due on demand.

 

e)As at November 30, 2016, the Company owed $2,064 (2015 - $nil) 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 November 30, 2016, accrued interest of $20 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.

 

 

 

 F-8 

 

GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

 

4. Related Party Transactions (continued)

 

f)On September 21, 2016, the Company owed $10,000 (2015 - $nil) to the former spouse of a significant shareholder of the Company. 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. As at November 30, 2016, accrued interest of $58 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.

 

g)As at November 30, 2016, the Company owed $200 (2015 - $200) to the former 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 November 30, 2016, accrued interest of $3 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.

 

h)As at November 30, 2016, the Company owed $nil (2015 - $42,000) to a significant shareholder of the Company. The amount was unsecured, bore interest at 3% per annum, and due 180 days from the date of issuance. As at November 30, 2016, accrued interest of $nil (2015 - $435) has been included in accounts payable and accrued liabilities - related party. 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 notes payable and accrued interest owed to this related party as noted in Note 6(f).

 

i)As at November 30, 2016, the Company owed $nil (2015 - $5,000) to a significant shareholder of the Company. The amount was unsecured, bore interest at 1% per annum, and due 180 days from the date of issuance. As at November, 2016, accrued interest of $nil (2015 - $1) has been included in accounts payable and accrued liabilities - related party. 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 notes payable and accrued interest owed to this related party as noted in Note 6(f).

 

j)As at November 30, 2016, the Company owed $nil (2015 - $805) to a significant shareholder of the Company. The amount was unsecured, bore 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 notes payable and accrued interest owed to this related party as noted in Note 6(f).

 

k)As at November 30, 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 party. The amount is unsecured, non-interest bearing, and due on demand. During the year ended November 30, 2016, the Company incurred legal fees of $36,000 (2015 - $76,500) 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.

 

l)During the year ended November 30, 2016, the Company recognized revenue of $nil (2015 - $1,592) from a Company controlled by significant shareholders of the Company.

 

m)During the year ended November 30, 2016, the Company incurred $nil (2015 - $101,500) in consulting fees to the former President of the Company. During the year ended November 30, 2015, the Company issued 21,324 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.

 

n)On May 9, 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”).
   
  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 shares of common stock on June 16, 2015 as part of the non-refundable deposit towards the purchase of the property. During the year ended November 30, 2016, the Company paid $nil (2015 - $48,500).

 

 

 

 

 F-9 

 

GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

5.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.

 

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.

 

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.

 

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.

 

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.

 

6.Stockholders’ Equity

 

Stock transactions for the year ended November 30, 2016:

 

(a)On December 23, 2015, the Company issued 12,500 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 25,000 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. 12,500 shares were issued for the consultant’s services as a director, and 12,500 shares for services as the Company’s Chief Financial Officer.

 

(c)On December 23, 2015, the Company issued 12,500 of shares of common stock with a fair value of $21,250 to the former 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 6,250 of shares of common stock with a fair value of $10,625 to the former 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 12,500 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.

 

Stock transactions for the year ended November 30, 2015:

 

(g)On January 6, 2015, the Company issued 15,000 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.

 

 

 

 

 F-10 

 

GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

6.Stockholders’ Equity (continued)

 

(h)On January 15, 2015, the Company issued 20,000 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.

 

(i)On January 22, 2015, the Company issued 5,000 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.

 

(j)On April 23, 2015, the Company issued 21,250 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.

 

(k)On June 16, 2015, the Company issued 14,000 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.

 

(l)On May 19, 2015, the Company issued 12,500 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.

 

(m)On July 28, 2015, the Company issued 6,250 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.

 

(n)On August 31, 2015, the Company issued 6,250 shares of common stock with a fair value of $17,500 to the former 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(b).

 

(o)On August 31, 2015, the Company issued 8,824 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.

 

7.Commitments

 

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 12,500 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 6,250 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.

 

 

 

 

 F-11 

 

GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

8.Income Taxes

 

As at November 30, 2016, the Company has $827,000 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030. 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, 2016, the Company had no uncertain tax positions and has not filed tax returns since its inception. All prior tax years from inception will be subject to examination by major tax jurisdictions when they are filed.

 

   2016
$
   2015
$
 
         
Net loss before taxes   (170,176)   (679,466)
Statutory rate   34%    34% 
           
Computed expected tax recovery   (57,860)   (231,017)
Permanent differences       114,177 
Redetermination of prior year taxes   (86,588)    
Change in Valuation allowance   144,448    116,840 
           
Income tax provision        

 

 

The significant components of deferred income tax assets and liabilities at November 30, 2016 and 2015 are as follows:

 

   2016
$
   2015
$
 
         
Net operating losses carried forward   281,180    248,445 
Related party share based compensation   21,498     
Share based compensation   58,269     
Payables to related parties   31,946     
Valuation allowance   (392,893)   (248,445)
           
Net deferred income tax asset        

 

 

9.Subsequent Events

 

(a)On December 9, 2016, the Company issued a $2,500 promissory note to a related party. Under the terms of the note, the amount due is unsecured, bears interest at 2% per annum, and is due 180 days from the date of issuance.

 

(b)On January 3, 2017, the Company issued a $6,000 promissory note to a related party. Under the terms of the note, the amount due is unsecured, bears interest at 2% per annum, and is due 180 days from the date of issuance.

 

(c)On January 9, 2017, the Company dissolved its wholly owned subsidiary, CBD Life, Inc.

 

(d)On January 30, 2017, the Company effected a share consolidation on a 100 old shares for 1 new share basis. The share consolidation has been applied retroactively to the earliest period presented.

 

(e)On February 12, 2017, the Company entered into an agreement to acquire 51% of the issued and outstanding common stock of Chill-N-Out Cryotherapy in exchange of the Company's preferred shares. Pursuant to the agreement, the Company shall fund an initial minimum investment of $100,000 within 14 days and up to $250,000 in aggregate within 30 - 45 days of the definitive agreement. Thereafter, the Company will fund an additional $2,750,000 within a 12 month period as needed. After a minimum of an additional 12 months, the Company shall formalize a spin-off of the new subsidiary at 70% to Chill-N-Out and 30% to the Company. On March 1, 2017, the parties agreed to cancel the agreement dated February 12, 2017.

 

 

 

 F-12 

 

GALA GLOBAL INC.

Notes to the Consolidated Financial Statements

Years ended November 30, 2016 and 2015

 

 

9.Subsequent Events (continued)

 

(f)On February 14, 2017, the Company entered into an agreement whereby the Company agreed to acquire 80% of the issued and outstanding common stock of a to be incorporated company, Controlled Environment Genomics Inc ("CEG Inc"), in exchange for a new series of the Company’s preferred shares. Pursuant to the agreement, the Company will appoint CEG Inc.’s executive as the Chief Executive officer of the Company. An additional 5,000,000 restricted common shares will also be issued to acquire CEG's intellectual property. In the case that CEG, Inc. becomes its own public entity, the executive shall receive 51% ownership of the new entity, and the Company will retain the remaining 49%. The purpose of this acquisition is to retain the services of CEG Inc.’s executive, and to acquire CEG's intellectual property as part of the Company's plan to expand in the cannabis industry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 F-13 

 

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, 2016.

 

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.

 

 

 

 

 10 

 

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, 2016 and as of the date of the filing of this report:

 

Name and Address Age Position(s) Held
     
Allison Hess 26 President, CEO, Secretary, Treasurer, Chief Financial Officer and Director

 

Background of Directors and Executive Officers

 

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.

 

 

 

 

 11 

 

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 12 

 

 

Item 11. Executive and Director Compensation.

 

SUMMARY COMPENSATION TABLE

 

Name and
Principal
Position
(a)
Year
(b)
    Salary
($)
(c) 
   Bonus
($)
(d)
    Stock
Awards
($)(e)
    Option
Awards
($)(f)
    Non-Equity
Incentive
Plan
Compensation
($)(g)
    Change in
Pension
Value
Nonqualified
Deferred
Compensation
Earnings
($)(h)
    All
Other
Compensation
($)(i)
    Total
($)(j) 
   
Allison Hess, CEO, President, Secretary, Treasurer, CFO  2016   0   0   12,812   0   0   0   0   12,812 
   2015   0   0   31,875   0   0   0   0   31,875 
                                     
Calvin Frye, Former Chairman and CEO  2016   0   0   13,542   0   0   0   0   13,542 
   2015   0   0   35,833   0   0   0   0   35,833 
                                     
Harold Millburn, Former President, CEO, CFO,  2016   0   0   0   0   0   0   0   0 
Treasurer  2015   0   0   51,617   0   0   0   49,883   101,500 
                                     
George Lefevre, Former Chairman, President, CEO, Treasurer, CFO  2016   0   0   0   0   0   0   0   0 
   2015   0   0   0   0   0   0   0   0 

 

 

 

 

 13 

 

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

 

 

   OPTION AWARDS  STOCK AWARDS 

Name and Principal Position(s)

(a)

 

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, Former Chairman and Principal Executive Officer  0   0   0   0   0   0   0   0   0 
                                     
Allison Hess, CEO, 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, 2016 and 2015.

 

We had no warrants or stock options issued or outstanding during the fiscal years ending November 30, 2016 and 2015.

 

 

 

 

 14 

 

 

Director Compensation

 

(a)On June 29, 2015, the Company entered into a consulting agreement with the former Chief Executive Officer of the Company for consulting services relating to the cannabis industry. Pursuant to the agreement, the Company shall issue 6,250 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 12,500 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 6,250 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 former Chief Executive Officer of the Company for assuming the role as Chief Executive Officer. Pursuant to the agreement, the Company shall issue 12,500 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 former Chief Executive Officer.

 

Employment Agreements

 

None.

 

Report on Repricing of Options

 

None.

 

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, 2016 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, 2016, we had a total of 1,369,224 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.

 

 

 

 

 15 

 

 

Name and Address of

Beneficial Owner

Title of Class

Amount and

Nature of Beneficial

Ownership (1)

(#)

Percent of

Class (2)

(%)

Calvin Frye, Former Chairman and former Principal Executive Officer

Common Shares

25,000 1.826%
Allison Hess, CEO, President, Secretary, Treasurer, CFO

Common Shares

25,000 1.826%
James Haas, Significant shareholder

Common Shares

389,986 28.482%
George Lefevre, Significant shareholder

Common Shares

177,350 12.953%
Owen Naccarato, Significant shareholder

Common Shares

188,550 13.771%
All Officers and Directors as a Group 

Common Shares

805,886 55.381%

 

 

Item 13. Certain Relationships, Related Transactions and Director Independence

 

a)During the year ended November 30, 2016, the Company issued 6,250 shares of common stock with a fair value of $10,625 to the former Chief Executive Officer of the Company for services as a director of the Company. During the year ended November 30, 2016, the Company incurred consulting services of $13,540 (2015 - $21,250). As at November 30, 2016, the Company had a prepaid expense balance of $nil (2015 - $2,917) to the former Chief Executive Officer of the Company related to these services.

 

b)During the year ended November 30, 2016, the Company issued 6,250 shares of common stock with a fair value of $7,187 to the Chief Financial Officer for consulting services. During the year ended November 30, 2016, the Company incurred consulting services of $25,936 (2015 - $31,875). As at November 30, 2016, the Company owed $5,625 to the Chief Financial Officer, which has been recorded in accounts payable and accrued liabilities - related party.

 

c)As at November 30, 2016, the Company owed $249,835 (2015 - $255,295) 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)As at November 30, 2016, the Company owed $10,000 (2015 - $10,000) to a company controlled by a significant shareholder of the Company. The amount owing is unsecured, non-interest bearing, and due on demand.

 

e)As at November 30, 2016, the Company owed $2,064 (2015 - $nil) 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 November 30, 2016, accrued interest of $20 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.

 

f)On September 21, 2016, the Company owed $10,000 (2015 - $nil) to the former spouse of a significant shareholder of the Company. 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. As at November 30, 2016, accrued interest of $58 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.

 

g)As at November 30, 2016, the Company owed $200 (2015 - $200) to the former 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 November 30, 2016, accrued interest of $3 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.

 

 

 

 

 16 

 

 

h)As at November 30, 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 November 30, 2016, accrued interest of $nil (2015 - $435) has been included in accounts payable and accrued liabilities - related party.

 

i)As at November 30, 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 November, 2016, accrued interest of $nil (2015 - $1) has been included in accounts payable and accrued liabilities - related party.

 

j)As at November 30, 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.

 

k)As at November 30, 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 party. The amount is unsecured, non-interest bearing, and due on demand. During the year ended November 30, 2016, the Company incurred legal fees of $36,000 (2015 - $76,500) 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.

 

l)During the year ended November 30, 2016, the Company recognized revenue of $nil (2015 - $1,592) from a Company controlled by significant shareholders of the Company.

 

m)During the year ended November 30, 2016, the Company incurred $nil (2015 - $101,500) in consulting fees to the former President of the Company. During the year ended November 30, 2015, the Company issued 21,324 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.

 

n)On May 9, 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver, Canada for $600,000 (“the Contract”).
   
  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 is to issue 1,400 shares of common stock as part of a non-refundable deposit towards the property. On June 16, 2015, 1,400 shares of common stock were issued to the property owner.
   
  During the year ended November 30, 2016, the Company paid $nil (2015 - $48,500) under the term of a contract to purchase property in Vancouver, Canada to a director of CVI.

  

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.

 

 

 

 

 17 

 

 

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.

 

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, Pritchett, Siler and Hardy PC for the year ended November 30, 2016 and 2015:

 

   For the Year Ended November 30,
   2016  2015
Audit Fees  $13,500  $7,850
Audit-Related Fees  $0  $0
Tax Fees  $0  $0
All Other Fees  $0  $0
Total Fees  $13,500  $7,850

 

"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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 18 

 

 

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
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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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/ Allison Hess
Date:  March 9, 2017 Allison Hess
  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/ Allison Hess Chairman and Principal Executive Officer March 9, 2017
Allison Hess    

 

 

 

 

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