UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   FOR THE QUARTERLY PERIOD ENDED  November 30, 2015

 

OR

 

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   FOR THE TRANSITION PERIOD FROM _______ TO ________.

 

COMMISSION FILE NUMBER: 0-52518

 

EVENT CARDIO GROUP INC.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada		20 - 8051714
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
7694 Colony Palm Drive Boynton Beach, Florida		33436
(Address of principal executive offices)		(Zip code)

 

212-321-0091

 (Registrant’s telephone number, including area code)

 

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 [x] No [ ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [x] No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

  

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)		Smaller reporting company [x]

 

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

 

As of November 30, 2015, 116,205,321 shares of Common Stock, $0.001 par value, were outstanding.

EVENT CARDIO GROUP INC.

CONTENTS TO FORM 10-Q

 

PART I -	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets at November 30, 2015 (Unaudited) and August 31, 2015	1
	Consolidated Statements of Comprehensive Loss for the Three Months ended November 30, 2015 (Unaudited)	2
	Consolidated Statements of Cash Flows for the Three Months ended November 30, 2015 (Unaudited)	3
	Notes to Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4.	Controls and Procedures	16
PART II -	OTHER INFORMATION	18
Item 1.	Legal Proceedings	18
Item 1A	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Sales of Registered Securities	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	18
Signatures		19
Exhibit/Index

 

PART I - FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS

 

EVENT CARDIO GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		November 30, 2015				August 31, 2015
ASSETS:
Current Assets
Cash		$	19,214			$	32,427
Prepaid expenses			561,754				568,537
Financing costs, net			71,423				105,999
Total Current Assets			652,391				706,963
Prepaid expenses - non-current portion			310,021				392,516
Property and Equipment, net			905				1,214
Deposit on equipment purchase			250,000				150,000
TOTAL ASSETS		$	1,213,317			$	1,250,693
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities
Accounts payable		$	663,552			$	598,835
Due to related parties			41,284				55,864
Notes payable - related parties			546,320				549,502
Total Current Liabilities			1,251,156				1,204,201
Convertible Notes Payable			525,000				525,000
TOTAL LIABILITIES			1,776,156				1,729,201
Stockholders' Deficit
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 10,000,000 shares issued and outstanding			10,000				10,000
Common stock,190,000,000 shares authorized at $0.001 par value, 116,205,321 shares issued and outstanding at November 30, 2015 and 109,460,321 issued and outstanding at August 31, 2015			116,205				109,460
Additional paid in capital			2,533,492				2,110,237
Equity instruments to be issued			125,950				168,950
Accumulated other comprehensive income			161,916				103,432
Accumulated deficit			(3,510,402	)			(2,980,587	)
TOTAL STOCKHOLDERS' DEFICIT			(562,839	)			(478,508	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	1,213,317			$	1,250,693

 

EVENT CARDIO GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED NOVEMBER 30,

(Unaudited)

 

		2015				2014
Revenue		$	—			$	—
Operating Expenses
General and administrative			387,533				112,639
Research and development - related party			—				134,813
Research and development - other			80,210				10,000
Total Operating Expenses			467,743				257,452
Loss from Operations			(467,743	)			(257,452	)
Other Expenses
Interest expense - related parties			16,990				19,590
Interest expense - other			10,500				—
Amortization - loan costs			34,582				8,707
Loss before Income Taxes			(529,815	)			(285,749	)
Provision for Income Taxes			—				—
Net Loss		$	(529,815	)		$	(285,749	)
Other Comprehensive Income
Foreign currency translation adjustment			58,484				(16,156	)
Comprehensive Loss		$	(471,331	)		$	(301,905	)
Loss per Share:
Basic and Diluted loss per share		$	(0.005	)		$	(0.004	)
Weighted Average Number of Shares Outstanding Basic and Diluted			113,783,783				80,871,696

EVENT CARDIO GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED NOVEMBER 30,

(Unaudited)

 

			2015				2014
Cash Flows from Operating Activities
Net loss		$	(529,815	)		$	(285,749	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of prepaid expenses			283,503				—
Depreciation of property and equipment			304				500
Amortization of financing costs			34,582				10,707
Changes in assets and liabilities:
Prepaid expenses			12,775				(62,500	)
Accounts payable			64,717				66,918
Net cash used in operating activities			(133,934	)			(270,124	)
Cash Flows from Investing Activities
Deposit on equipment purchase			(100,000	)			—
Net cash used in investing activities			(100,000	)			—
Cash Flows from Financing Activities
Repayments of due to related parties			(14,358	)			—
Advances from related parties			—				7,241
Proceeds from notes payable - related parties			—				195,205
Proceeds from issuance of common shares			180,000				100,000
Net cash provided by financing activities			165,642				302,446
Effect of exchange rate on cash			55,079				(16,156	)
Increase (Decrease) in Cash			(13,213	)			16,166
Cash, beginning of period			32,427				86,617
Cash, end of period		$	19,214			$	102,783
Suppmental Cash Flow Information:
Cash paid during the period for:
Interest		$	—			$	—
Taxes			—				—
Non-Cash Suppmental Cash Flow Information:
Issuance of common shares for services recorded as prepaid expense		$	207,000			$	—

 

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

1. OVERVIEW

 

Description of Business

 

Event Cardio Group Inc. (the “Company") was incorporated under the name Sunrise Holdings Limited on October 26, 2005 under the laws of Nevada and changed its name to Event Cardio Group Inc. on November 7, 2014. The Company is developing a cardiac monitoring device based on a wireless and leadless advanced cardiac monitor. Upon completion of the development the device will collect medical data and transmit it to physicians for diagnostic evaluation. The Company also has a license agreement to distribute a patented product in the use of breast disease detection.

 

On September 8, 2014, the Company entered into a share exchange agreement with 2340960 Ontario Inc.'s shareholders whereby the Company acquired all of the issued and outstanding common shares of 2340960 Ontario Inc. in exchange for 79,500,000 common shares of the Company. Upon completion of this transaction, the shareholders of 2340960 Ontario Inc. held approximately 93.6% of voting control of the Company. This transaction has been accounted for as a reverse merger with 2340960 Ontario Inc. being the accounting acquirer and the Company being the acquiree. In connection with this transaction, the Company changed its fiscal year end from September 30th to August 31st.

  

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has not generated any revenue since inception, has incurred losses, and has an accumulated deficit of $3,510,402 as of November 30, 2015. These factors among others raise substantial doubt about the ability of the Company to continue as a going concern.

 

The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiating with other business entities for potential acquisitions and/or acquiring new clients to generate revenues. There is no assurance that the Company will ever be profitable. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

Basis of Presentation

 

These financial statements include the accounts of the Company and its wholly owned subsidiaries 2340960 Ontario Inc. and EFIL Sub of ECG Inc. All inter-company accounts and transactions have been eliminated.

 

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of  November 30, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended November 30, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future period. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the form 10-K filed with the SEC on December 14, 2015.

 

The Company has elected to adopt early application of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements and does not present or disclose inception-to-date information and other remaining disclosure requirements of Topic 915.

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

In preparing these financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting years. Actual results could differ from those estimates.

 

Fair Value Measurements

 

ASC 820, “Fair Value Measurements”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, inputs other than level one that are either directly or indirectly observable such as quoted prices for identical or similar assets or liabilities on markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company had no assets or liabilities required to be recorded at fair value on a recurring basis as of November 30, 2015 or August 31, 2015.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents, and accounts payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features  are comparable to rates of returns for instruments of similar credit risk. 

 

Share Based Compensation

 

The Company applies ASC 718 Share-Based Compensation and ASC 505 Equity to account for service provider share-based payments. In accordance with ASC 718 and ASC 505, the Company determines whether a share based payment should be classified and accounted for as a liability award or equity award. All grants of share-based payments to service providers are classified as equity awards and are recognized in the financial statements over the period in which the services are received based on the fair value determined as of the measurement date. Included in prepaid expenses on the accompanying balance sheet at November 30, 2015 and August 31, 2015 is the unamortized portion of share based payments for services to be rendered of $728,247 and $791,962 respectively.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions.

 

Income Taxes

 

Under ASC 740, "Income Taxes", deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.

 

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Income Taxes (Continued)

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, the Company has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not be realized.

 

The Company files income tax returns in Canada and the United States with varying statutes of limitations. The Company's policy is to recognize interest expense and penalties related to income tax matters as a component of our provision for income taxes.

  

Foreign Currency Translation

 

The Company's reporting and functional currency is the U.S. dollar. The Company's Canadian operation's functional currency is the Canadian dollar. The Company's U.S. subsidiary's functional currency is the U.S. dollar.

 

Transactions originating in Canadian dollars are translated to the functional currency of the US dollar as follows: using period end rates of exchange for assets and liabilities, average rates of exchange for the period of transactions for revenues and expenses and historical rates for equity.

 

The financial statements of the Company's Canadian operations are translated from the functional currency of the Canadian dollar into the reporting currency of the United States dollar in accordance with ASC 830, Foreign Currency Matters, using period end rates of exchange for assets and liabilities, average rates of exchange for the period for revenues and expenses and historical rates for equity.

 

Translation adjustments resulting from the process of translating the functional currency of Canadian dollar Canadian operation's financial statements into the reporting currency of U.S. dollar financial statements are included in determining comprehensive income. As of November 30, 2015 and August 31, 2015, the cumulative translation adjustment of $161,916 and $103,432 respectively was classified as accumulated other comprehensive income in the stockholders' deficit section of the balance sheet. For the periods ended November 30, 2015 and November 30, 2014, the foreign currency translation adjustment to accumulated other comprehensive income was $58,484 and $(16,156) respectively.

 

Comprehensive Loss

 

Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, Accounting Standards Codification (ASC) 200, Comprehensive Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. For the year presented, the Company's comprehensive loss includes net loss and foreign currency translation adjustments and is presented in the statement of comprehensive loss.

 

Research and Development Expenses

 

All research and development costs are expensed as incurred.

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

 

 The Company accounts for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: To record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

 

New Accounting Pronouncements

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. generally accepted accounting principles (GAAP). The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers Deferral of the Effective Date, which defers the effective date of the new revenue recognition standard by one year, as a result, public entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2017 and interim periods therein, which is the Company's first quarter of fiscal 2019. Early adoption is permitted for all entities only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The guidance allows for the amendment to be applied either retrospectively to each prior reporting period presented or retrospectively as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of adoption on its consolidated financial statements.

 

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis (ASU 2015-02). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in this guidance using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively. The adoption of ASU 2015-02 in the first quarter of fiscal 2017 is not expected to have a material impact on the Company’s financial condition or results of operations.

 

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

New Accounting Pronouncements (Continued)

 

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASU 2014-12), which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2014-12 in the first quarter of fiscal 2017 is not expected to have a material impact on the Company's financial condition or results of operations.

 

In August 2014, the FASB issued Accounting Standards Update 2014–15 (“ASU 2014-15), “Presentation of Financial Statements – Going Concern (Subtopic 205 – 40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern.” ASU 2014-15 requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Since this guidance is primarily around certain disclosures to the financial statements, we anticipate no impact on our financial position or results of operations from adopting this standard. We are currently assessing the additional disclosure requirements, if any, of ASU 2014-15. ASU 2014-15 is effective for the annual period ended December 31, 2016 and for annual periods and interim periods thereafter with early adoption permitted.

 

3. DUE TO RELATED PARTIES

 

The amounts due to related parties are non-interest bearing, with no fixed terms of repayment, are payable on demand and are unsecured. As of November 30, 2015 and August 31, 2015, the amounts of due to related parties are $41,284 and $55,864 respectively.

  

4. NOTES PAYABLE - RELATED PARTIES

 

As at November 30, 2015 and August 31, 2015, the Company has a promissory note to 2399371 Ontario Inc., a company owned by an affiliate, for $583,000 Canadian ($438,346 US$) and $583,000 Canadian ($440,898 US$), respectively. There have been no repayments to date on this note since its inception. The note bears interest at 12% per annum with principal and interest both payable on the maturity date of June 1, 2016, which has been extended from the original maturity date of December 1, 2015, in conjunction with the issuance of the additional promissory note described below and the commitment to issue equity instruments as described in Note 6. The note is secured by the common shares of 2340960 Ontario Inc. and a lien on all of the company's assets. This note has a provision whereby the company is restricted from issuing any shares of capital stock or borrowing any money unless one-half of the net proceeds of such issuance or borrowing, up to the amount of the outstanding principal and accrued interest on the note, are used to satisify the amounts due under the note. As at November 30, 2015, the Company has a promissory note to 2399371 Ontario Inc., a company owned by an affiliate, for $64,500 Canadian ($48,496 US$) bearing interest at 12% per annum, principal and interest both payable on June 1, 2016. This note was issued in conjunction with the extension of the promissory note described above and the commitment to issue equity instruments as described in Note 6. The note is secured by the common shares of 2340960 Ontario Inc. and a lien on all of the company's assets.

 

As at November 30, 2015, the Company has a promissory note to 9058583 Canada Inc., a company owned by affiliates, for $79,106 Canadian ($59,478 US$) bearing interest at 12% per annum, principal and interest both payable on June 1, 2016. In conjunction with this note, the Company entered into a Sublicense agreement with 9508583 Canada Inc. whereby 9508583 Canada Inc. was granted the exclusive rights to distribute the BreastCare DTS™ product in Canada with royalties payable at the rate of 5.5% of net sales, as to be defined in the Sublicense Agreement, to the Company.

 

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

4. NOTES PAYABLE - RELATED PARTIES (Continued)

 

Accrued interest on notes payable - related parties as at November 30, 2015 and August 31, 2015 was $81,594 and $65,100 respectively and is included in accounts payable.

 

5. CONVERTIBLE NOTES PAYABLE

 

The company offerred, pursuant to a Regulation S Subscription Agreement and Investment Representation dated February 3, 2015, up to $2,000,000 of 8% convertible notes with interest payable annually on January 31st. The holder upon written notice to the company may elect to have accrued but unpaid interest added to the principal amount of the note in lieu of payment of interest. The principal amount of the note is payable on January 31, 2018. The note, or any part thereof and any unpaid interest is convertible into common shares of the company at any time at the option of the holder at a conversion price of $0.15 per common share. The note may be prepaid at any time in full by the company upon ten days notice to the holder. As at November 30, 2015, $525,000 of the convertible notes payable have been issued as follows.

 

Medpac Asia Pacific PTY Ltd. of Australia ("Medpac") for $500,000. In addition to the terms of the convertible note payable described above, if the note is prepaid by the company at any time prior to the maturity date, if the volume weighted average price of the common shares of the company for the ten trading days preceding the early repayment date is less than $0.15 per common share, then Medpac shall receive a number of common share purchase warrants sufficient to purchase up to 1% of the then outstanding number of common shares of the Company. Such common share purchase warrants once issued would be exercisable for a period of three years at an exercise price of $0.15 per common share, but may be exercised on a cashless basis in accordance with a specified formula.

 

Medpac has also received, for its services as part of the transaction noted above, a convertible note payable of $25,000 having terms and conditions identical to Medpac's other convertible note payable described above, except that the number of common share purchase warrants potentially issuable upon early payment of the note would be sufficient to only purchase up to 0.0005% of the then outstanding common shares of the company.

 

At the time of Medpac's investment noted above, the Company agreed to enter into an exclusive Distribution Agreement with Medpac for the Company's BreastCare DTS™ and Now Cardio devices in Australia, New Zealand, Singapore, Thailand, Malaysia, Indonesia, Philippines, Vietnam, Laos, Cambodia Myanmar and Bangladesh. The Distribution Agreement will have an initial term of five years and can be renewed for an additional five years provided that agreed upon sales targets are met. If the company does not establish a manufacturing facility for its BreastCare DTS™ device in Southeast Asia within eighteen months of this agreement, Medpac and the company will form a joint venture to establish such a facility in the Philippines.

 

6. STOCKHOLDERS' DEFICIT

 

Common Shares and Common Share Purchase Warrant Issuance

 

On September 28, 2015, the Company issued 4,100,000 common shares for proceeds of $205,000. In conjunction with this common share offering the company also issued 520,000 common shares in respect of finders fees.

 

On September 28, 2015, the Company issued 1,250,000 common shares in exchange for a service agreement for a fair value of $137,500.

 

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

6. STOCKHOLDERS' DEFICIT (Continued)

 

Common Shares and Common Share Purchase Warrant Issuance (Continued)

 

On November 3, 2015, the Company issued 750,000 common shares in exchange for a service agreement for a fair value of $75,000.

 

On November 3, 2015, the Company issued 125,000 common shares in exchange for a service agreement for a fair value of $12,500.

 

Common Share Purchase Warrants

 

As of November 30, 2015 there are 6,550,000 common share purchase warrants issued and outstanding. 250,000 common share purchase warrants allow the holder to purchase 1 common share of the company at an exercise price of $0.20 per warrant up to the expiration date of January 31, 2016. 2,200,000 common share purchase warrants allow the holder to purchase 1 common share of the company at an exercise price of $0.10 per warrant up to the expiration date of August 27, 2019. 4,100,000 common share purchase warrants allow the holder to purchase 1 common share of the company at an exercise price of $0.10 per warrant up to the expiration date of September 28, 2019.

 

Equity Instruments to be Issued

 

For the extension of a note payable - related party and issuance of a new note payable related party as described in Note 4, the company is committed to issue 600,000 common shares, valued at $43,200 and 600,000 common share purchase warrants, which allow the holder to purchase 1 common share of the company at an exercise price of $0.10 per warrant up to four years from the date of issuance, valued at $42,750.

 

The company has received $40,000 related to subscriptions for 800,000 common shares to be issued in the future.

 

Equity Incentive Plan

 

The Company has created the Event Cardio Group Inc. 2015 Equity Incentive Plan ("equity incentive plan") which allows for the granting of incentive stock options to employees of the company, a parent or a subsidiary and the granting of awards other than incentive stock options to employees, directors and consultants. The maximum number of common shares which may be issued pursuant to the equity incentive plan at November 30, 2015 is 10,000,000. No incentive stock options have been granted as of November 30, 2015. A total of 2,750,000 common shares have been issued as of November 30, 2015 under this plan to a consultant.

 

7. RELATED PARTY

 

The Company is related to Contex International Technologies (Canada) Inc. ("Contex") through the fact that affiliates of the Company hold a 34% interest in 2419596 Ontario Inc, which owns Contex.

 

The Company has entered into a service agreement with Contex, whereby Contex will provide services related to the design and development of a wireless and leadless ECG cardiac monitor. The agreement runs for a term of one year to May 22, 2016 and will automatically renew for subsequent terms of one year unless notice of termination is given by either party in writing.

 

For the period ended November 30, 2015 and November 30, 2014, $nil and $134,813 respectively, have been incurred related to this agreement and have been expensed in research and development expense.

 

EVENT CARDIO GROUP INC.

NOTES TO FINANCIAL STATEMENTS

November 30, 2015 and August 31, 2015

 

7. RELATED PARTY (Continued)

 

See Note 4 regarding notes payable - related parties.

 

The company has entered into an employment agreement with the CEO for $225,000 per year up to August 27, 2018. The Company is related to the Chief Execuitive Officer ("CEO"), who is also the company's president and sole board member. For the three months ended November 30, 2015 and November 30, 2014, $56,250 and $nil respectively, have been expensed related to compensation to the CEO and included in general and administrative expense. Included in accounts payable at November 30, 2015 and August 31, 2015 is $181,250 and $125,000 respectively related to this employment agreement.

  

8. COMMITMENTS

 

In exchange for a service agreement, the Company is committed to pay $5,000 per month through August 5, 2016.

 

On October 24, 2014, the Company entered into a License Agreement with Life Medical Technologies, Inc. ('Life Medical") with respect to Life Medical’s “BreastCare DTS™” product and certain other technologies. The License Agreement grants the Company the exclusive right to distribute the BreastCare DTS™ in the United States, Canada and certain countries in Asia, including China. The Agreement calls for royalties of 5% on net sales, as defined in the License Agreement, and requires minimum annual royalties of $100,000 in 2015 and $200,000 each year thereafter.

 

As part of entering into the License Agreement, the Company has made prepayments of the royalties commitment noted above and such are included in prepaid expenses on the accompanying balance sheet at November 30, 2015. For the three months ended November 30, 2015, and November 30, 2014 $25,000 and $nil respectively of the above noted prepayment has been expensed. The recipients of 526,315 shares related to prepaid royalties are also to be paid in cash or shares of common stock, at the company's option, an amount equal to the excess, if any, of $70,000 over the value of such shares as of December 12, 2015.

 

9. CONTINGENCIES

 

On November 30, 2015, the company's subsidiary EFIL Sub of ECG Inc. received a breach of contract notice related to its license agreement with Life Medical as described in Note 8. Life Medical contends that the company has defaulted under the provisions of this agreement and have thus triggered penalty clauses in the agreement. Life Medical is now demanding payment of these penalties. As per the breach of contract notice details, it is estimated that the total penalty could be as high as $770,000 based on the formula: $1 per every 100 people in each designated country, up to a maximum of $150,000 per designated country, with a total of seven countries identified in the notice. In addition due to this breach, Life Medical also contends that the license rights to the seven countries identified now belongs exclusively to Life Medical. It is management's contention that the company has not defaulted under the provisions of the agreement and thus is not required to pay any such penalties, nor have the licensing rights reverted back to Life Medical in the seven countries identified. The outcome of this contingency is not determinable at this time.

  

10. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date which the consolidated financial statements were available to be issued. Based on the evaluation no material events have occurred that require recognition or disclosure therein.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations. The words “may,” “will,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “continue” and other similar expressions are intended to identify forward-looking statements. We have based these forward looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short term and long-term business operations and objectives, and financial needs. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission, or the SEC, particularly those contained in the Section entitled “Risk Factors” in our Form 10-K filed with the SEC on December 14, 2015. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Our fiscal year ends on August 31 each year.

  

OVERVIEW

 

Event Cardio Group Inc. and its subsidiaries (collectively, “ECGI”, “we”, “our” or the “Company”) were organized on October 26, 2005 and have had no operations since December, 2008, when we discontinued our previous business of mineral exploration. Most of our activities since January, 2009 have been centered on the acquisition of a new business.

 

On June 9, 2014 we experienced a change of control as a result of a transaction (the “Transaction”) in which 1,412,619 shares of our common stock, par value $0.001 and 10,000,000 shares of our preferred stock, par value $0.001, constituting approximately 97% of the cumulative voting power of our capital stock on that date, was acquired by Mr. John Bentivoglio, who is now our sole director and chief executive officer, as nominee for 2340960 Ontario Inc., a private company organized in Ontario, Canada, which we hereinafter refer to as “ECG”. On November 14, 2014, we consummated a share exchange agreement (the “Exchange Agreement”), pursuant to which we acquired all of the issued and outstanding capital stock of ECG from ECG’s stockholders, The Nick Bozza Family Trust, The John Bentivoglio Family Trust and The Sgro (2010) Family Trust. In exchange for all of the outstanding capital stock of ECG, we issued to ECG’s stockholders an aggregate of 79,500,000 shares of our Common Stock (the “Share Exchange”). As a result of the consummation of the Share Exchange, (i) ECG became our wholly owned subsidiary and (ii) the ECG’s former stockholders own an aggregate of 79,500,000 shares which constituted approximately 92.8% of the cumulative voting power of our common stock on the date the share exchange was consummated.

 

Mr. John Bentivoglio, our sole director and chief executive officer is one of three trustees of The John Bentivoglio Family Trust, the beneficiaries of which are members of his family.

 

On October 24, 2014, through a wholly owned subsidiary, we entered into a license agreement (the “License Agreement”) with Life Medical Technologies, Inc. (“Life Medical”) under which we were granted the exclusive right to distribute Life Medical’s “BreastCare DTS™” in the United States and certain other territories. The BreastCare DTS™ product is a patented, non-invasive and FDA-cleared as an adjunct to mammography and other established procedures for the detection of breast disease, including breast cancer.

 

GENERAL

 

The Exchange Agreement is accounted for a reverse merger, in which ECG is deemed to be the acquiring entity for accounting purposes. The discussion and analysis of our financial condition and results of operations is based upon the financial statements of ECG which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of the Financial Statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, the Company estimates on historical experience and on various other assumptions that, it believes to be reasonable under the circumstances, the results of which form the Company’s basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

The Company cannot predict what future laws and regulations might be passed that could have a material effect on its results of operations. The Company assesses the impact of significant changes in laws and regulations on a regular basis and updates the assumptions and estimates used to prepare its financial statements when it deems necessary.

 

The Company’s primary sources of funding to date have been capital contributions by its stockholders and cash provided by borrowings from affiliates. The Company’s primary uses of funds have been for capital expenditures, general and administrative expenses and research and development expenditures.

 

BASIS OF PRESENTATION

 

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of November 30, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended November 30, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future period. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the form 10-K filed with the SEC on December 14, 2015.

 

These financial statements contain the accounts of the Company and the accounts of the Company’s subsidiaries 2340960 Ontario Inc. and EFIL Sub of ECG Inc. as at November 30, 2015 and August 31, 2015. Any inter-company accounts and transactions are eliminated.

 

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and are presented in United States Dollars.

 

RESULTS OF OPERATIONS

 

We have been in the developmental stage since inception. Since inception, our efforts have been principally devoted to designing and developing a wireless cordless cardio monitor. From inception to November 30, 2015, the Company has sustained losses and has an accumulated deficit of $3,510,402.

 

Our loss from operations for the three months ended November 30, 2015 was $467,743 compared to a loss from operations of $257,452 for the three months ended November 30, 2014. General and administrative expenses were $387,533 for the three months ended November 30, 2015, compared to $112,639 for the three months ended November 30, 2014, an increase of $274,894. This increase is predominately due to increased expenses related to efforts to commence our operations, including the accrual of salary due our President, expenditures related to our efforts to raise funds and introduce our products to prospective distributors and licensees, and obtain regulatory approval from Health Canada.

 

Also, we incurred research and development expenses of $80,210 during the three months ended November 30, 2015 as compared to $144,813 during the comparable period ended November 30, 2014, related to the development of our cardiac monitoring device. The expenses incurred both in this current quarter and the previous quarter were a mix of costs on the cardiac device and the BreastCare device.

 

Total comprehensive loss for the three months ended November 30, 2015 was $471,331 as compared to $301,905 for the three months ended November 30, 2015. The increase in our loss primarily resulted from the increase in general and administrative expenses described above.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Period ended November 30, 2015 and August 31, 2015.

 

As of November 30, 2015, our total assets were $1,213,317, total liabilities were $1,776,156 and stockholders’ equity was a deficit of $562,839 compared to a deficit of $478,508 as of August 31, 2015. Current assets at November 30, 2015 were $652,391 consisting of cash of $19,214, prepaid expenses of $561,754 and accrued financing costs, net, of $71,423. In comparison, current assets at August 31, 2015 was $706,963. The increase in our stockholders deficit reflects our loss during the quarter as described above, partially offset by sales of stock and warrants for an aggregate of $205,000 and the issuance of shares valued at an aggregate of $225,000 for services rendered or to be rendered by various consultants.

 

As of November 30, 2015, our total liabilities of $1,776,156 principally consisted of loans in the amount of $546,320 from related parties, a convertible note held by a third party in the amount of $525,000 and accounts payable of $663,552, and debts to related parties of $41,284 all of which were current liabilities other than the convertible note. The $546,320 outstanding as of November 30, 2015 amount relate to notes payable from two related parties (2399371 Ontario Inc. and 9058583 Canada Inc.) owned by affiliates. In comparison, our liabilities as of August 31, 2015 were $1,729,201, principally consisting of loans from related parties in the amount of $549,502, a convertible note held by a third party in the amount of $525,000 and accounts payable of $598,835, and debts to related parties of $55,864 all of which were current liabilities other than the convertible note. The increase in our total liabilities as of November 30, 2015, reflects the continued accrual of liabilities not paid as we seek to preserve our limited cash.

 

The net cash used in our operating activities in the three months ended November 30, 2015 was $133,934, a decrease from the amount of cash used in the comparable quarter of the prior year. The decrease in our use of cash reflects our efforts to develop our business while maintaining as much of our cash as possible. As our cash is effectively exhausted, we will be unable to commence substantial activities absent a substantial investment in our equity or debt.

 

Net cash used in investment activities in the three months ended November 30, 2015 was $100,000, as compared to $0 in the comparable period ended November 30, 2014. The increase reflects a deposit of $100,000 paid to the company which is to develop a manufacturing line for BreastCare. Development of the manufacturing line has been suspended until we obtain additional financing. Net cash from financing activities in the three months ended November 30, 2015 was $165,642, representing net proceeds of $180,000 from the issuance of equity securities, partially offset by a payment to a related party ii the amount of $14,358.

 

ECG has been in the developmental stage since inception. Since inception, ECG’s efforts have been principally devoted to designing and developing a wireless cordless cardio monitor. From inception to November 30, 2015, the Company has sustained losses and has an accumulated deficit of $3,510,402. The Company has funded its activities to date primarily through contributions from its stockholders, loans from affiliates and the issuance of a convertible promissory note to a group in Australia.

 

On April 27, 2015, ECG issued its 8% convertible notes due January 31, 2018 in the total principal amount of $525,000 to Medpac Asia Pacific Pty Ltd. (“Medpac”). The notes are convertible into shares of ECG common stock at an initial conversion price of $0.15 per share. ECG may prepay the notes at any time; however, if the volume weighted average price of ECG’s common stock for the ten trading days preceding the prepayment date is less than $0.15 per share, then Medpac is entitled to receive a number of warrants sufficient to purchase up to 1% of the then outstanding number of shares of ECG common stock as to $500,000 principal amount of the notes and as to 0.0005% of the outstanding shares as to the remaining $25,000 principal amount of the notes. The warrants, when issued, would be exercisable for a period of three years at an exercise price of $0.15 per share, but may be exercised on a cashless basis. At the time of the issuance of such notes we entered into an agreement with Medpac wherein we agreed to enter into license agreements for the distribution of our cardiac monitoring device and BreastCare. On November 24, 2015, Medpac delivered a notice of default to ECG in respect of the notes alleging that certain representations and warranties of ECG contained in the subscription agreement for the notes were not true or correct in a material respect when made, and demanding payment of the principal amount of the notes, together with accrued interest thereon, and threatening to commence legal proceedings for the payment of such amount if not received by December 30, 2015. The notice of default was later rescinded by Medpac after discussions with management of ECG.

 

In May 2014, ECG entered into a loan agreement (the “May Loan Agreement”) with an affiliated company, pursuant to which the lender loaned the Company CAD $583,000. This loan bears interest at the rate of 12% per annum, compounded monthly, and matures on June 1, 2016. ECG’s shareholders guaranteed ECG’s obligations under the May Loan Agreement with recourse exclusively to the shares they owned of ECG. As a result of the Share Exchange, we have agreed to guaranty ECG’s obligations under the May Loan Agreement and pledge the shares of ECG that we acquired in the Share Exchange to the lender as security for our guaranty. Our guaranty is secured by a lien on all of our assets. In addition, our Controlling Stockholders guaranteed ECG’s obligations under the May Loan Agreement with recourse exclusively to the shares of our common stock that they acquired in the Share Exchange. Under the terms of the May Loan Agreement, 50% of the net proceeds we realize from the sale of our capital stock or from borrowings must be used to repay the amounts owned under this Loan. As of August 31, 2015, US$440,898 is outstanding under the May Loan Agreement.

 

On August 19, 2015, the Company and the party which loaned it the CAD $583,000 referred to above, confirmed their agreement to extend the maturity date of the CAD $583,000 Note to June 1, 2016 and the Company borrowed from the lender an additional CAD $64,500. Interest on the promissory note of the Company in the principal amount of CAD $64,500 evidencing its obligation to repay the additional loan accrues at the rate of 12% per annum compounded monthly until paid in full. The maturity date of the new loan is also June 1, 2016.

 

We are required to pay Life Medical royalties of 5% on net sales, as defined in the License Agreement related to BreastCare, and minimum annual royalties of $100,000 in 2015 and $200,000 each year thereafter. In addition, we entered into release agreements (the “Releases”) with certain creditors (the “Life Medical Creditors”) of Life Medical which held judgments against Life Medical in the aggregate amount of approximately $501,000. Pursuant to the Release Agreements, we paid the Life Medical Creditors an aggregate of $501,000, of which $125,000 was paid in cash and the balance was satisfied by the issuance of shares of our common stock valued at $376,064, with the number of shares of common stock to be determined by dividing 376,064 by the volume weighted average price (“VWAP”) of our common stock for the five (5) consecutive trading days ending on the day before the 15th calendar day after consummation of the Share Exchange. We are currently in the process of reaching an agreement with this party as to the number of additional shares to be issued and anticipate that we will issue it approximately 700,000 shares. The License Agreement recognizes that in order to protect our interests, we may have to spend monies dealing with creditors of and other claimants against Life Medical. Although we have no obligation to consummate arrangements with such creditors, we may reduce any amounts we pay to Life Medical’s creditors from future amounts payable to Life Medical. We are currently in dispute with Life Medical as to our obligations to make certain payments aggregating approximately $770,000 as a result of the alleged failure to make sufficient payments in connection with the sale of BreastCare in certain territories where we had engaged a sub-licensee. Pending the resolution of this dispute, it is not likely that we will utilize any significant funds to complete the manufacturing line necessary to manufacture BreastCare. If the funds to complete the manufacturing line were available, we would nevertheless seek to resolve our differences with Life Medical before moving forward with the manufacturing line.

 

In connection with the License Agreement with Life Medical, in October 2014 we borrowed CAD $79,106 (the “October Loan”) from an Ontario corporation owned in equal thirds by John Bentivoglio, Nicholas Bozza and Frank Sgro (the “Lender”), all of whom are affiliates of the Company. This loan bears interest at the rate of 12% per annum, compounded monthly and matures on June 1, 2016. Our obligations under this Loan are secured by a lien on all of our assets as well as pledge of the stock we own in our wholly owned subsidiary which entered into the License Agreement.

 

As of November 30, 2015, we owed related parties approximately CAD$726,606.

 

We do not have substantial commitments for capital expenditures. We have made significant progress towards receiving clearance from HealthCare Canada with respect to our Now Cardio device. Nevertheless, we will require financing to complete final testing of the device before commencing manufacture and distribution. We also need significant funds to arrange for the development of manufacturing facilities or arrangements for both of our products and the working capital to support distribution efforts when our products are ready for sale. If we fail to arrange for such financing in the future, we will not be able to complete the development of our cardiac monitor or execute our business plan, which we may not be successful in accomplishing. We may not be able to obtain financing in sufficient amounts or on acceptable terms when needed, which will adversely affect our prospects. We will need to raise the financing necessary to meet our anticipated cash requirements for the foreseeable future.

 

OFF BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements, financings, or other relationships with consolidated entities or other persons, also known as “special purpose entities”.

 

CRITICAL ACCOUNTING POLICIES

 

Our significant accounting policies are more fully described in Note 2 to the Financial Statements provided in Part I, Item 1 of this report. 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 reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, this item is not applicable to us.

 

ITEM 4. CONTROLS AND PROCEDURES

 

a) Disclosure Controls and Procedures

 

We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

At the end of the period covered by this report we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, John Bentivoglio, of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation included an evaluation of our financial controls. Since our Chief Executive Officer also serves as our Chief Financial Officer and we do not have financial and accounting personnel thoroughly familiar with U.S. GAAP and U.S. securities laws and regulations, we have a deficiency in our financial controls. This deficiency in our financial controls and procedures constitutes a deficiency in our disclosure controls and procedures in that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. This deficiency will not be considered remediated until we hire accounting personnel with the requisite knowledge and experience concerning U.S. GAAP and the U.S. securities laws.

 

b) Changes in Internal Control over Financial Reporting

 

There were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter ended November 30, 2015, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, we may be involved in various legal proceedings in the ordinary course of business. We do not believe that any settlement or judgment regarding current or potential future legal proceedings will have a material effect on our financial position.

 

ITEM 1A. RISK FACTORS

 

Our business is subject to numerous risks and uncertainties including but not limited to those discussed in "Risk Factors" in our Annual Report on Form 10-K for fiscal year ended August 31 2015 filed on December 14, 2015, which are incorporated by reference into this report.

   

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

 

During the quarter ended November 30, 2015, we issued the following unregistered equity securities not previously disclosed in our reports filed under the Exchange Act:

 

On November 3, 2015, we issued 750,000 shares of common stock to Tactical Growth Partners LLC in exchange for a service agreement for a fair value of $75,000, based on the market price of $0.10 per share as of the measurement date.

 

On November 3, 2015, we issued 125,000 shares of common stock to Karin Henenberger in exchange for a service agreement for a fair value of $12,500, based on the market price of $0.10 per share as of the measurement date.

 

The securities issued in the foregoing transactions were exempt from registration under Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder as transactions by an issuer not involving a public offering. The Company placed legends on the certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale. No general advertising or solicitation was used in selling the securities. No commissions or underwriting fees were paid to any placement agents in connection with the sale or issuances of the securities

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

  

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

  

Exhibits		Description
31.1		Certification pursuant to Rule 13a-14(A) under the Exchange Act
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     

SIGNATURES

 

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

 

	Event Cardio Group Inc.
Dated: January 14 , 2016	By:	/s/ John Bentivoglio
	Name: Title:	John Bentivoglio Chief Executive Officer acting Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer) Director