Attached files
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EX-31.1 - EXHIBIT 31.1 - Gala Pharmaceutical Inc. | exhibit311.htm |
EX-32.1 - EXHIBIT 32.1 - Gala Pharmaceutical Inc. | exhibit321.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2016
o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _________ to _________
Commission File Number: 333-172744
GALA GLOBAL INC.
(Name of Small Business Issuer in its charter)
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Nevada | 42-1771014 |
(state or other jurisdiction of incorporation or organization) | (I.R.S. Employer I.D. No.) |
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Las Vegas, Nevada 89146
(Address of principal executive offices)
(775) 321-8238
Issuers telephone number
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 6, 2016 the registrant had 136,922,353 shares of common stock outstanding.
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GALA GLOBAL INC.
Condensed Consolidated Financial Statements
(unaudited)
For the Three Month Periods Ended February 29, 2016 and February 28, 2015
Condensed Consolidated Balance Sheets (unaudited) | 3 |
Condensed Consolidated Statements of Operations (unaudited) | 4 |
Condensed Statements of Changes in Stockholders Deficit (unaudited) | 5 |
Condensed Consolidated Statements of Cash Flows (unaudited) | 6 |
Notes to the Condensed Consolidated Financial Statements (unaudited) | 7 |
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GALA GLOBAL INC.
Condensed Consolidated Balance Sheets
(unaudited)
| February 29, 2016 $ | November 30, 2015 $ |
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ASSETS |
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Current assets |
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Cash | 13,877 | 1,804 |
Inventory | 2,241 | 2,701 |
Prepaid expenses related parties | 14,271 | 2,917 |
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Total assets | 30,389 | 7,422 |
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LIABILITIES AND STOCKHOLDERS DEFICIT |
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Current liabilities |
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Accounts payable and accrued liabilities | 12,645 | 28,050 |
Accounts payable and accrued liabilities related party | 61,334 | 130,061 |
Due to related parties | 249,335 | 255,295 |
Loan payable | 20,000 | |
Loans payable - related parties | 10,200 | 58,005 |
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Total liabilities | 353,514 | 471,411 |
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Going concern (Note 1) |
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Commitments (Note 7) |
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STOCKHOLDERS DEFICIT |
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Preferred stock Authorized: 10,000,000 shares with a par value of $0.001 per share |
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Issued and outstanding: 500,000 and nil shares, respectively. | 500 | |
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Common stock Authorized: 500,000,000 shares with a par value of $0.001 per share |
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Issued and outstanding: 136,922,353 and 130,047,353 shares, respectively. | 136,922 | 130,047 |
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Additional paid-in capital | 651,183 | 472,501 |
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Deficit | (1,111,730) | (1,066,537) |
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Total stockholders deficit | (323,125) | (463,989) |
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Total liabilities and stockholders deficit | 30,389 | 7,422 |
(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
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GALA GLOBAL INC.
Condensed Consolidated Statements of Operations
(unaudited)
| Three months ended February 29, 2016 $ | Three months ended February 28, 2015 $ |
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Operating expenses |
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Consulting fees | 17,500 | 227,450 |
Consulting fees related party | 6,458 | |
General and administrative | 11,919 | 21,879 |
General and administrative related party | 9,000 | |
Option expense on failed property acquisition - related party | | 10,500 |
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Total operating expenses | 44,877 | 259,829 |
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Loss before other income (expenses) | (44,877) | (259,829) |
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Other income (expense) |
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Interest income | | 116 |
Interest expense | (316) | |
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Total other income (expense) | (316) | 116 |
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Net loss | (45,193) | (259,713) |
Net loss per share, basic and diluted | (0.00)* | (0.00)* |
Weighted average common shares outstanding | 135,203,603 | 121,227,912 |
* denotes a loss of less than $(0.01).
(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
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GALA GLOBAL INC.
Consolidated Statements of Changes in Stockholders Deficit
(unaudited)
| Preferred stock | Common stock | Additional paid-in | |
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| Shares | Par value $ | Shares |
| Par value | capital | Deficit | Total | ||||||
| # | $ | # |
| $ | $ | $ | $ | ||||||
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Balance, November 30, 2015 | | | 130,047,353 |
| 130,047 | 472,501 | (1,066,537) | (463,989) | ||||||
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Shares issued for consulting services related party | | | 4,375,000 |
| 4,375 | 66,562 | | 70,937 | ||||||
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Shares issued for consulting services | | | 2,500,000 |
| 2,500 | 40,000 | | 42,500 | ||||||
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Shares issued for conversion of debt | 500,000 | 500 | |
| | 72,120 | | 72,620 | ||||||
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Net loss for the period | | | |
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Balance, February 29, 2016 | 500,000 | 500 | 136,922,353 |
| 136,922 | 651,183 | (1,111,730) | (323,125) | ||||||
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(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
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GALA GLOBAL INC.
Consolidated Statements of Cash Flows
(unaudited)
| For the Three Months Ended February 29, 2016 $ | For the Three Months Ended February 28, 2015 $ | ||
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Operating activities |
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Net loss | (45,193) | (259,713) | ||
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation | 17,500 | 227,450 | ||
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Changes in operating assets and liabilities: |
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Inventory | 460 | (116) | ||
Prepaid expenses | 6,458 | (3,750) | ||
Accounts payable and accrued liabilities | 9,595 | | ||
Accounts payable and accrued liabilities related party | 9,213 | (2,538) | ||
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Net cash used in operating activities | (1,967) | (38,667) | ||
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Investing activities |
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Advances under loan receivable | | (12,467) | ||
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Net cash used in investing activities | | (12,467) | ||
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Financing activities |
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Proceeds from related party debt | | 51,134 | ||
Repayments of related party debt | (5,960) | | ||
Proceeds from loan payable | 20,000 | | ||
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Net cash provided by financing activities | 14,040 | 51,134 | ||
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Increase in cash | 12,073 | | ||
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Cash, beginning of period | 1,804 | | ||
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Cash, end of period | 13,877 | | ||
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Non-cash investing and financing activities: |
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Common shares issued for consulting services | 17,500 | | ||
Preferred shares issued to settle related party payables | 24,167 | | ||
Preferred shares issued to settle related party debt | 48,453 | | ||
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Supplemental disclosures: |
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Interest paid | | | ||
Income tax paid | | | ||
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(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
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GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the three months ended February 29, 2016 and February 28, 2015
(unaudited)
1.
Organization and Nature of Operations
Gala Global Inc. (the Company) was incorporated in the State of Nevada on March 10, 2010. The Company was formed to provide garment tailoring and alteration services.
On May 19, 2014, a change in control of the Company occurred when IDG Ventures Ltd. sold all of its 3,547,000 common shares, representing 60.04% of our issued and outstanding common shares, in a private share purchase transaction to Messrs Haas, Lefevre and Naccarato.
On June 26, 2014, the Company had a change in management when Mr. Robert Frei resigned as President and Director of the Company and Mr. Lefevre was appointed as his successor. Concurrent with the change of management, the Company acquired two 100% owned subsidiary companies, Cannabis Ventures Inc (USA), incorporated on February 27, 2014 in the state of Nevada and Cannabis Ventures Inc. (Canada), incorporated on April 9, 2014 in Vancouver, British Columbia. Neither of these subsidiary companies had traded prior to their acquisition by the Company other than as described below.
The Company, since its change in management effective June 26, 2014, has expanded into the Hemp and Cannabidiol (CBD) industry. The expansion is focusing on the development, research, and commercialization of products derived from the Hemp and Cannabis plant. The Company currently is finalizing its marketing strategy for a new CBD flavored thin-film strip. The film strip delivery system uses a dissolving film strip that is absorbed in the mouth. The film-strip method is an advanced method of providing CBD for dietary supplement. The Company also is seeking acquisition candidates in this area of interest in the nutraceutical and pharmaceutical industries. The Company also plans to enter into the medical marijuana cultivation industry as approved in the United States and Canada to build legalized cultivation operations.
The Companys 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 February 29, 2016, the Company has a working capital deficit of $323,125 and an accumulated deficit of $1,111,730. 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 Companys future operations. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
The 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 Companys fiscal year end is November 30.
b)
Principles of Consolidation
These consolidated financial statements include the accounts of the Company and its three wholly owned subsidiaries, Cannabis Ventures Inc. (USA), Cannabis Ventures Inc. (Canada), CBD Life, Inc, from the date of their acquisition by the Company effective June 26, 2014. All inter-company transactions and balances have been eliminated on consolidation.
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2.
Summary of Significant Accounting Policies (continued)
c)
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and investments, 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 Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
d)
Interim Financial Statements
The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In managements opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the three months ended February 29, 2016 are not necessarily indicative of the results that may be expected for the year ended November 30, 2016. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended November 30, 2015 included in our Form 10-K filed with the SEC.
e)
Inventory
Inventory is comprised of Vape Mods purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future market conditions.
f)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As of February 28, 2016 and November 30, 2015, there were no cash equivalents.
g)
Financial Instruments
Companys financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, loan payable, 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.
h)
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
i)
Revenue Recognition
The Company earns revenue from the sale of Vape Mods, which are modified electronic cigarettes and vape pens. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services.
j)
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
k)
Basic and Diluted Net Loss per Share
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. No potentially dilutive debt or equity instruments were issued and outstanding during the three months ended February 28, 2016 and 2015.
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.
Related Party Transactions
a)
During the three months ended February 29, 2016, the Company issued 625,000 shares of common stock with a fair value of $10,625 to the Chief Executive Officer of the Company for services as a director of the Company. The Company incurred consulting services of $6,458 during the quarter ended February 29, 2016. As at February 29, 2016, the Company had a prepaid expense balance of $7,083 (2015 - $2,917) to the Chief Executive Officer of the Company related to these services.
b)
As at February 29, 2016, the Company issued 625,000 common shares with a fair value of $7,187 to the Chief Financial Officer for Chief Financial Officer consulting services to be provided from March 1, 2016 to August 31, 2016. The amount has been included in prepaid expense.
c)
As at February 29, 2016, the Company owed $249,335 (2015 - $255,295) to a company controlled by a significant shareholder of the Company to fund payment of operating expenditures. The amount owed is unsecured, non-interest bearing, and due on demand.
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3.
Related Party Transactions (continued)
d)
As at February 29, 2016, the Company owed $61,334 (2015 - $76,500) to a significant shareholder of the Company, which has been recorded in accounts payable and accrued liabilities. The amount is unsecured, non-interest bearing, and due on demand. During the three months ended February 29, 2016, the Company incurred legal fees of $9,000 (2015 - $nil) to this significant shareholder. On January 27, 2016, the Company issued 166,666 shares of preferred stock to settle outstanding debt owed to related parties of $24,167.
4.
Loan Payable
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%, and due 180 days from the date of issuance.
5.
Loan Payable - Related Parties
a)
As at February 29, 2016, the Company owed $10,000 (2015 - $10,000) to a company controlled by a significant shareholder of the Company. The amount due is unsecured, non-interest bearing, and due on demand.
b)
As at February 29, 2016, the Company owed $nil (2015 - $42,000) to a significant shareholder of the Company. The amount due is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance. As at February 29, 2016, accrued interest of $nil (2015 - $435) has been included in accounts payable and accrued liabilities. On January 27, 2016, the Company issued 333,334 shares of preferred stock to the loan holder as a part of settling all of the outstanding debt and accrued interest.
c)
As at February 29, 2016, the Company owed a $200 (2015 - $200) to the Chief Executive Officer of the Company. The amount due is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. As at February 29, 2016, accrued interest of $1 (2015 - $nil) has been included in accounts payable and accrued liabilities.
d)
As at February 29, 2016, the Company owed $nil (2015 - $5,000) to a significant shareholder of the Company. The amount due is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. As at February 29, 2016, accrued interest of $nil (2015 - $1) has been included in accounts payable and accrued liabilities. On January 27, 2016, the Company issued 333,334 shares of preferred stock to the loan holder as a part of settling all of the outstanding debt and accrued interest.
e)
As at February 29, 2016, the Company owed $nil (2015 - $805) to a significant shareholder of the Company. The amount due is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. On January 27, 2016, the Company issued 333,334 shares of preferred stock to the loan holder as a part of settling all of the outstanding debt and accrued interest.
6.
Stockholders Equity
(a)
On December 23, 2015, the Company issued 1,250,000 shares of common stock with a fair value of $25,000 to a consultant pursuant to a consulting agreement dated May 1, 2015.
(b)
On December 23, 2015, the Company issued 2,500,000 of shares of common stock with a fair value of $39,063 to the Chief Financial Officer and director of the Company pursuant to the agreement dated September 1, 2015. 1,250,000 shares were issued for the consultants services as a director, and 1,250,000 shares for services as the Companys Chief Financial Officer.
(c)
On December 23, 2015, the Company issued 1,250,000 of shares of common stock with a fair value of $21,250 to the Chief Executive Officer of the Company for the consultants services as a director pursuant to the consulting agreement dated September 1, 2015.
(d)
On December 23, 2015, the Company issued 625,000 of shares of common stock with a fair value of $10,625 to the Chief Executive Officer of the Company for services as the Companys Chief Executive Officer pursuant to the consulting agreement dated June 29, 2015.
(e)
On December 23, 2015, the Company issued 1,250,000 of shares of common stock with a fair value of $17,500 to a consultant pursuant to a consulting agreement dated December 14, 2015.
(f)
On January 27, 2016, the Company issued 500,000 shares of preferred stock to significant shareholders to settle debt of $72,620. Each preferred share is entitled to receive dividends when and if declared by the Companys board of directors, has 500 to 1 voting power and liquidation rights in the amount of the shares; par value in accordance with the Companys 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 5 for a total of $48,453 in outstanding principal and accrued interest.
7.
Commitments
a)
On June 29, 2015, the Company entered into a consulting agreement with the Chief Executive Officer of the Company for consulting services relating to the cannabis industry. Pursuant to the agreement, the Company is to issue 625,000 shares of common stock to the consultant upon execution of the agreement (issued) and every six months thereafter as compensation. Either party may terminate the agreement by providing written thirty days notice.
b)
On September 1, 2015, the Company entered into an agreement with the Chief Executive Officer of the Company for assuming the role as Chief Executive Officer. Pursuant to the agreement, the Company is to issue 1,250,000 shares of common stock to the Chief Executive Officer upon execution and every twelve months thereafter. The agreement shall be terminated upon mutual agreement with the Company and the Chief Executive Officer.
c)
On September 1, 2015, the Company entered into an agreement with the Chief Financial Officer of the Company. Pursuant to the agreement, the Company is to issue 1,250,000 shares of common stock to the Chief Financial Officer upon execution and every twelve months as compensation for being the Chief Financial Officer. The Company shall also issue an additional 625,000 shares of common stock to the Chief Financial Officer upon execution and every six months as compensation for being a director. The agreement shall be terminated upon mutual agreement with the Company and the Chief Financial Officer.
d)
On December 14, 2015, the Company entered into a consulting agreement for marketing and promotion services. Pursuant to the agreement, the consultant is to be compensated by being issued 1,250,000 shares of common stock on an annual basis until the agreement is cancelled or terminated. Either party may terminate the agreement by providing written thirty days notice.
8.
Subsequent Events
We have evaluated subsequent events through to the date of issuance of the financial statements, and did not have any material recognizable subsequent events after February 29, 2016.
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ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement
This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are forward-looking statements for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.
RESULTS OF OPERATIONS
Working Capital
| February 29, 2016 $ | November 30, 2015 $ |
Current Assets | 30,389 | 7,422 |
Current Liabilities | 353,514 | 471,411 |
Working Capital (Deficit) | (323,125) | (463,989) |
Cash Flows
| Three months ended February 29, 2016 $ | Three months ended February 28 2015 $ |
Cash Flows from (used in) Operating Activities | (1,967) | (38,667) |
Cash Flows from (used in) Investing Activities | - | (12,467) |
Cash Flows from (used in) Financing Activities | 14,040 | 51,134 |
Net Increase (decrease) in Cash During Period | 12,073 | - |
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Three Months Ended February 29, 2016 and February 28, 2015
Operating Expenses
During the three months ended February 29, 2016, the Company incurred operating expenses of $44,877 compared with $259,829 during the three months ended February 28, 2015. The decrease in the current period is partially due to a decrease of $203,492 in consulting expense to third parties and related parties relating to business development and marketing services to the Company in exchange for the issuance of common shares. This is because the Company did not obtain services from as many consultants as it did in the prior year. The decrease is also due to a decrease of $9,960 of general and administrative expenses to various third parties and related parties for various professional fees and administrative costs. The decrease is also contributed by the decrease of $10,500 in option payments for a property acquisition in British Columbia, Canada as the Company terminated the agreement in the prior year and stopped making further payments.
Net Loss
During the three months ended February 29, 2016, the Company incurred a net loss of $45,193 and a net loss per share of $0.00 compared with a net loss of $259,713 and a net loss per share of $0.00 for the three months ended February 28, 2015 due to the factors discussed above.
Liquidity and Capital Resources
As of February 29, 2016, the Company has a working capital deficit of $323,125, and an accumulated deficit of $1,111,730. 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 Companys future operations. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Cash flow from Operating Activities
During the three months ended February 29, 2016, the Company used $1,967 of cash in operating activities compared to the use of $38,667 of cash for operating activities during the three months ended February 28, 2015 for a decrease of $36,840 in cash used in operating activities. The decrease in cash used for operating activities is due to a decrease in the overall operating activity of the Company compared to prior year.
Cash flow from Investing Activities
During the three months ended February 29, 2016, the Company used $nil of cash for investing activities compared with $12,467 during the three months ended February 28, 2015. The decrease in the use of cash is due to the fact that the Company had advanced $12,467 to an unrelated party during the period ended February 28, 2015. The Company did not have similar activities during the current year.
Cash flow from Financing Activities
During the three months ended February 29, 2016, the Company received $14,040 of cash from financing activities compared with $51,134 during the three months ended February 28, 2015. During the current period, the Company received $20,000 as a loan from an unrelated party, offset by $6,100 paid to a related party for amounts owing. During the prior period, the Company received $51,134 from a related party to fund operating expenditures.
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.
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.
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Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note (1) of the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for the reporting period. Significant areas requiring the use of management estimates relate to the valuation of its mineral leases and claims and our ability to obtain final government permission to complete the project.
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
Recently Issued Accounting Pronouncements
The Company has reviewed all the recently issued, but not yet effective, accounting pronouncements and does not believe that the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations as reported in its financial statements.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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ITEM 4. CONTROLS AND PROCEDURES
Management's Report on Internal Control over Financial Reporting.
Our Internal control over financial reporting is a process that, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, was designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that our controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As management, it is our responsibility to establish and maintain adequate internal control over financial reporting. As of March 31, 2016, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting using criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation, we concluded that the Company maintained effective internal control over financial reporting as of March 31, 2016, based on criteria established in the Internal Control Integrated Framework issued by the COSO.
This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this quarterly report.
Evaluation of disclosure controls and procedures.
As of February 29, 2016, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the date of filing this annual report applicable for the period covered by this report.
Changes in internal controls.
During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of February 29, 2016 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
For the three months ended February 29, 2016, 6,875,000 shares of common stock for consulting services, and 500,000 shares of preferred stock were issued for conversion of debt. No unregistered sales of equity securities were completed during the three months ended February 29, 2016.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No senior securities were issued or outstanding during the three months ended February 29, 2016 or February 28, 2015.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None noted.
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ITEM 6. EXHIBITS
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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 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.
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| GALA GLOBAL INC. | |
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| (REGISTRANT) |
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Date: May 10, 2016 | /s/ Calvin Frye | |
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| Calvin Frye |
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| Chief Executive Officer, Chief Financial Officer and Director |
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| (Authorized Officer for Registrant) |
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