10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended April 30, 2016
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _________________ to _________________

Commission File No.: 000-55581

TRANS-PACIFIC AEROSPACE COMPANY, INC.

(Exact name of registrant as specified in its charter)

Nevada	36-4613360
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2975 Huntington Drive, Suite 107 San Marino, CA 91108 (Address of principal executive offices)

Issuer’s telephone number: (626) 796-7804

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) 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 ☒          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 ☒          No ☐

Indicate by check mark whether the registrant is a large 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 ☒

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

As of June 1, 2016, 3,487,402,694 shares of our common stock were outstanding.

TRANS-PACIFIC AEROSPACE COMPANY, INC.

FORM 10-Q

April 30, 2016

TABLE OF CONTENTS

		Page
PART I-- FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of April 30, 2016 and October 31, 2015	3
	Unaudited Condensed Consolidated Statements of Operations for three and six months ended April 30, 2016 and 2015	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended April 30, 2016 and 2015	5
	Unaudited Consolidated Statement of Stockholders' Equity (Deficit) for the six months ended April 30, 2016	6
	Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4	Control and Procedures	26
PART II-- OTHER INFORMATION
Item 1	Legal Proceedings	27
Item 1A	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
SIGNATURES		29

2

ITEM 1 –FINANCIAL INFORMATION

TRANS-PACIFIC AEROSPACE COMPANY, INC.

Consolidated Balance Sheets

	April 30,			October 31,
	2016			2015
	(Unaudited)
ASSETS
Current assets
Cash	$	3,418		$	6,833
Accounts receivable	$	109,140		$	–
Prepaid expenses		–			1,584
Total current assets		112,558			8,417
Non-Current assets
Office equipment, net of accumulated depreciation of $5,304 and $4,702, respectively		3,102			3,704
Security deposit		1,584			1,584
Total non-current assets		4,686			5,288
Total assets	$	117,244		$	13,705
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable and accrued expenses	$	479,021		$	60,021
Income taxes payable		1,951			1,951
Accrued salary and payroll taxes		20,433			20,433
Accrued interest payable		–			500
Other payables - related parties		307,772			58,975
Convertible note payable, net of discount		–			8,333
Convertible note payable, currently in default		260,000			260,000
Total current liabilities		1,069,177			410,213
Total liabilities		1,069,177			410,213
Stockholders' (deficit)
Preferred stock, par value $0.001, 5,000,000 shares authorized. 3,981 and 2,945 shares issued and outstanding at April 30, 2016 and October 31, 2015, respectively		4			3
Common stock, par value $0.001, 4,500,000,000 shares authorized. 3,487,402,694 and 3,829,346,478 shares issued and outstanding at  April 30, 2016 and October 31, 2015, respectively		3,487,402			3,829,346
Additional paid-in capital		19,139,791			17,142,748
Preferred stock to be issued		47,000			–
Common stock to be issued		64,093			86,093
Accumulated Deficit		(22,996,903	)		(20,814,980	)
Total Trans-Pacific Aerospace Company Inc. stockholders' equity		(258,613	)		243,210
Non-controlling interest in subsidiary		(693,320	)		(639,718	)
Total stockholders' (deficit)		(951,933	)		(396,508	)
Total liabilities and stockholders' (deficit)	$	117,244		$	13,705

See accompanying notes to consolidated financial statements

3

TRANS-PACIFIC AEROSPACE COMPANY, INC.

Unaudited Consolidated Statements of Operations

	For the Three Months Ended April 30,						For the Six Months Ended April 30,
	2016			2015			2016			2015
Sales	$	109,140		$	–		$	109,140		$	–
Cost of sales		–			–			–			–
Gross profit		109,140			–			109,140			–
Operating expenses
Professional fees		20,240			10,745			23,115			76,510
Consulting		1,847,000			72,000			2,067,600			99,000
Other general and administrative		94,455			1,154,112			176,497			2,650,293
Total operating expenses		1,961,695			1,236,857			2,267,212			2,825,803
Operating loss from continuing operations		(1,852,555	)		(1,236,857	)		(2,158,072	)		(2,825,803	)
Interest expense, net		(46,403	)		(137,032	)		(77,453	)		(194,756	)
Change in fair value of derivative liabilities		–			61,762			–			431,298
Derivative expenses		–			(142,623	)		–			(486,360	)
Net loss from continuing operations	$	(1,898,958	)	$	(1,454,750	)	$	(2,235,525	)	$	(3,075,621	)
Discontinued operations
Net gain (loss) from discontinued operations		–			–			–			–
Loss before income taxes		(1,898,958	)		(1,454,750	)		(2,235,525	)		(3,075,621	)
Income taxes		–			–			–			–
Net Loss		(1,898,958	)		(1,454,750	)		(2,235,525	)		(3,075,621	)
Less: Loss attributable to non-controlling interest	$	(29,852	)	$	(36,637	)	$	(53,602	)	$	(79,181	)
Net Loss attributable to the Company	$	(1,869,106	)	$	(1,418,113	)	$	(2,181,923	)	$	(2,996,440	)
Basic and dilutive net loss from operations per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted average number of common shares outstanding, basic and diluted		3,095,436,027			635,333,259			3,303,428,943			406,603,216

See accompanying notes to consolidated financial statements

4

TRANS-PACIFIC AEROSPACE COMPANY, INC.

 Consolidated Statement of Stockholders' Equity (Deficit)

	Preferred Stock					Common Stock						Additional Paid-In			Common Stock To Be			Preferred Stock To Be		Non Controlling			Accumulated
	Shares			Amount		Shares			Amount			Capital			Issued			Issued		Interest			Deficit			Total
Balances, October 31, 2014		–		$	–		179,447,431		$	179,447		$	15,461,785		$	64,093			–	$	(489,407	)	$	(16,064,350	)	$	(848,432	)
Common stock converted to preferred stock		767			1		(759,817,144	)		(759,817	)		759,817			–			–		–			–			1
Preferred stock issued for services & compensation		1,203			1								644,999			–			–		–			–			645,000
		–
Common stock issued for cash		–			–		228,000,000			228,000			(18,000	)		–			–		–			–			210,000
Preferred stock issued for cash		250			–								300,000			22,000			–					–			322,000
Stocks issued in lieu of finders fees		725			1		57,019,761			57,020			(57,021	)		–			–		–			–			–
Common stock issued for services & compensation		–			–		387,000,000			387,000			38,000			–			–		–			–			425,000
Common stock issued upon conversion of notes payable		–			–		3,737,696,430			3,737,696			(3,355,618	)		–			–		–			–			382,078
Conversion of derivative liability to common stock		–			–		–						540,586			–			–		–			–			540,586
Amortization of stock options		–			–		–						2,760,000			–			–		–			–			2,760,000
Imputed interest		–			–		–						18,200			–			–		–			–			18,200
Note discount		–			–		–						50,000			–			–		–			–			50,000
Loss on Minority interest		–			–		–			–			–			–			–		(150,311	)		–			(150,311	)
Net loss from continuing operations for the year ended October 31, 2015		–			–		–			–			–			–			–		–			(4,750,630	)		(4,750,630	)
Balances, October 31, 2015		2,945		$	3		3,829,346,478		$	3,829,346		$	17,142,748	#	$	86,093		$	–	$	(639,718	)	$	(20,814,980	)	$	(396,508	)
Common stock converted to preferred stock		694			1		(692,943,784	)		(692,944	)		692,943			–			–		–			–			–
Preferred stock converted to common stock		(194	)		–		194,000,000			194,000			(194,000	)		–			–		–			–			–
Preferred stock issued for services & compensation		324			–		–			–			752,800			–					–			–			752,800
Preferred stock issued for cash		220			–		–			–			22,000			(22,000	)		47,000		–			–			47,000
Common stock issued for services & compensation		–			–		358,000,000			358,000			513,200			–			–		–			–			871,200
Common stock retired		–			–		(201,000,000	)		(201,000	)		201,000			–			–		–			–			–
Preferred stock retired		(8	)		–		–						–			–			–					–			–
Imputed interest							–						9,100			–			–					–			9,100
Loss on Minority interest							–						–			–			–		(53,602	)		–			(53,602	)
Net loss from continuing operations for the  six months ended April 30, 2016		–			–		–			–			–			–			–		–			(2,181,923	)		(2,181,923	)
Balances, April 30, 2016 (Unaudited)		3,981		$	4		3,487,402,694		$	3,487,402		$	19,139,791		$	64,093		$	47,000	$	(693,320	)	$	(22,996,903	)	$	(951,933	)

See accompanying notes to consolidated financial statements

5

TRANS-PACIFIC AEROSPACE COMPANY, INC.

Unaudited Consolidated Statements of Cash Flows

	For the Six Months Ended April 30,
	2016			2015
Cash flows from operating activities:
Net Loss	$	(2,235,525	)	$	(3,075,621	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation		1,624,000			2,427,500
Amortization of debt discount		41,667			174,933
Imputed interest expense		9,100			9,100
Change in fair value of derivative liabilities		–			(431,298	)
Derivative expense		–			486,360
Interest converted to common stock		–			9,892
Interest paid by shareholder		27,186			–
Depreciation expense		602			602
Change in operating assets and liabilities:
Accounts receivable		(109,140	)		–
Prepaid and deferred expenses		1,584			–
Accounts payable and accrued expenses		419,000			2,236
Accrued interest payable		(500	)		831
Net cash used in operating activities		(222,026	)		(395,465	)
Cash flows from financing activities:
Common stock issued for cash		–			210,000
Preferred stock sold for cash		47,000			–
Convertible note issued for cash		–			160,500
Other payables - related parties		171,611			(1,725	)
Net cash provided by financing activities		218,611			368,775
Net decrease in cash		(3,415	)		(26,690	)
Cash, beginning of the period		6,833			50,089
Cash, end of the period	$	3,418		$	23,399
Supplemental cash flow disclosure:
Interest paid	$	–		$	–
Income taxes paid	$	–		$	–
Supplemental disclosure of non-cash transactions:
Common stock issued for payment on outstanding liabilities	$	–		$	49,892
Common stock issued for conversion of notes payable	$	–		$	214,098
Conversion of derivative liability to common stock	$	–		$	322,990
Retirement of common shares	$	201,000		$	–
Note and interest paid by shareholder	$	77,186		$	–
Derivative liabilities	$	–		$	204,963

See accompanying notes to consolidated financial statements

6

Trans-Pacific Aerospace Company, Inc.

Notes to Unaudited Consolidated Financial Statements

April 30, 2016

NOTE 1 – BACKGROUND AND ORGANIZATION

Organization

The Company was incorporated in the State of Nevada on June 5, 2007, as Gas Salvage Corp. for the purpose of engaging in the exploration and development of oil and gas. In July 2008, the Company changed its name to Pinnacle Energy Corp. On February 1, 2010, the Company completed the acquisition of the aircraft component part design, engineering and manufacturing assets of Harbin Aerospace Company, LLC (“HAC”). The transaction was structured as a business combination. Following completion of the HAC acquisition, the Company’s Board of Directors decided to dispose of the oil and gas business interests and focus on the aircraft component market. On February 10, 2010, the Company completed the sale of all of its oil and gas business interests in exchange for cancellation of all obligations under an outstanding promissory note having a principal amount of $1,000,000. Pursuant to FASB standards, the Company has retro-actively presented its oil and gas business as discontinued operations.

In March 2010, the Company changed its name to Trans-Pacific Aerospace Company, Inc.

On July 27, 2008, the Company completed a three-for-one stock split of the Company’s common stock. The share and per-share information disclosed within this Form 10-Q reflect the completion of this stock split.

On April 5, 2013, the Company entered into Securities Purchase Agreements to purchase additional capital stock of Godfrey (China) Limited (“Godfrey”), the Company’s 25%-owned Hong Kong subsidiary engaged in the development of the production facility in Guangzhou, China. On June 21, 2013, upon closing of the transactions under the Securities Purchase Agreements, the Company increased its ownership of Godfrey from 25% to 55%.

Business Overview

The Company’s aircraft component business commenced on February 1, 2010. To date, its operations have focused on product design and engineering. The Company has recently commenced commercial manufacture or sales of its products.

The Company designs, manufactures and sells aerospace quality component parts for commercial and military aircraft, space vehicles, power plants and surface and undersea vessels. These parts have applications in both newly constructed platforms and as spares for existing platforms. The Company’s initial products are self-lubricating spherical bearings that help with several flight-critical tasks, including aircraft flight controls and landing gear.

Going Concern

The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company incurred a net loss from operations of $2,235,525 during the six months ended April 30, 2016, and an accumulated deficit of $22,996,903 at April 30, 2016. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

7

Management’s plans to continue as a going concern include raising additional capital through sales of common stock and/or a debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The Company anticipates that losses will continue until such time, if ever, that the Company is able to generate sufficient revenues to support its operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and reflect all adjustments, consisting of normal recurring adjustments and other adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company, for the respective periods presented. The results of operations for an interim period are not necessarily indicative of the results that may be expected for any other interim period or the year as a whole. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended October 31, 2015, filed with the SEC on February 16, 2016.

Consolidation

Accounting policies used by the Company and the Company’s subsidiaries conform to US GAAP. Significant policies are discussed below. The Company’s consolidated accounts include the Company’s accounts and the accounts of the Company’s subsidiaries of which we own a 50% interest or greater.

These consolidated financial statements include the accounts of the parent company Trans-Pacific Aerospace Company, Inc., and the majority owned subsidiary: Godfrey. All intercompany transactions have been eliminated.

Non-controlling interests

The Company accounts for changes in our controlling interests of subsidiaries according to Accounting Codification Standards 810 – Consolidations (“ASC 810”). ASC 810 requires that the Company record such changes as equity transactions, recording no gain or loss on such a sale.

The Company’s non-controlling interest arises from the purchase of equity in Godfrey. It represents the portion of Godfrey that is not owned. ASC 810 requires that the Company account for the equity and income or loss on that operation separately from the Company’s other activities. In the equity section of the Consolidated Balance Sheet, the Company presents the portion of the negative equity attributable to non-controlling interests in Godfrey. In the Consolidated Statement of Operations, the Company presents the portion of current period net loss in Godfrey attributable to non-controlling interests.

8

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at April 30, 2016 and October 31, 2015.

Concentration of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits.

Impairment of Long-Lived Assets

The Company has adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant and Equipment FASB ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Indefinite-lived Intangible Assets

The Company has an indefinite-lived intangible asset (goodwill) relating to purchased blueprints, formulas, designs and processes for manufacturing and production of self-lubricated spherical bearings, bushings and rod-end bearings. The indefinite-lived intangible asset is not amortized; rather, it is tested for impairment at least annually by comparing the carrying amount of the asset with the fair value. An impairment loss is recognized if the carrying amount is greater than fair value.

9

Fair Value of Financial Instruments

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts payable, other payables, and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities:

			Fair Value Measurements at
			April 30, 2016
	Carrying
	Value
	April 30,
	2016		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

10

			Fair Value Measurements at
			October 31, 2015
	Carrying
	Value
	October 31,
	2015		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable, net	$	8,333	$	–	$	–	$	8,333
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

The Company believes that the market rate of interest as of April 30, 2016 and October 31, 2015 was not materially different to the rate of interest at which the convertible notes payable were issued. Accordingly, the Company believes that the fair value of the convertible notes payable approximated their carrying value at April 30, 2016 and October 31, 2015 due to short term maturity.

Revenue Recognition

We received the initial order for our spherical bearings in December 2015. We manufactured and delivered these bearings in March 2016. The Company recognizes revenue on sales of products when the goods are delivered and title to the goods passes to the customer provided that: (i) there are no uncertainties regarding customer acceptance; (ii) persuasive evidence of an arrangement exists; (iii) the sales price is fixed and determinable; and (iv) collectability is reasonably assured.

Income Taxes

The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or 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. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes a tax benefit from an uncertain tax position in the consolidated financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s widely understood administrative practices and precedents.

11

Equipment

Equipment is recorded at cost and depreciated using straight line methods over the estimated useful lives of the related assets. The Company reviews the carrying value of long-term assets to be held and used when events and circumstances warrant such a review. If the carrying value of a long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair market value. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. The cost of normal maintenance and repairs is charged to operations as incurred. Major overhaul that extends the useful life of existing assets is capitalized. When equipment is retired or disposed, the costs and related accumulated depreciation are eliminated and the resulting profit or loss is recognized in income. As of April 30, 2016, the useful lives of the office equipment ranged from five years to seven years.

Issuance of Shares for Non-Cash Consideration to Non-Employees

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services received or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Stock-Based Compensation

Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit.

Net Loss Per Share

The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. There were convertible notes, 3,981 shares of convertible preferred stock, 2,000,000 Series A Warrants, 2,000,000 Series B Warrants and options for 140,666,667 shares outstanding as of April 30, 2016 that are not included in the calculation of Diluted EPS as their impact would be anti-dilutive.

12

	For the Six Months Ended April 30,
	2016			2015
Net loss attributable to the Company	$	(2,181,923	)		(2,996,440	)
Basic and diluted net loss from operations per share	$	(0.00	)		(0.01	)
Weighted average number of common shares outstanding, basic and diluted		3,303,428,943			406,603,216

Recently Adopted and Recently Enacted Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended May 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.

In August 2014, the FASB issued the FASB Accounting Standards Update No. 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”).

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that 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 (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

13

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

a.	Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)
b.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

a.	Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern
b.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this Update defer the effective date of ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

14

NOTE 3 – ACCOUNTS RECEIVABLE

All accounts receivable are due 90 days from the date billed based on the Company’s collection policy and agreed by the customer. As of April 30, 2016 and October 31, 2015, the Company had accounts receivable balance of $109,140 and $0, respectively.

NOTE 4 – PROPERTY AND EQUIPMENT

As of April 30, 2016 and October 31, 2015, the Company had office equipment of $3,102 and 3,704, net of accumulated depreciation of $5,304 and $4,702, respectively. For the six months ended April 30, 2016 and 2015, the Company recorded depreciation expense of $602 and $602, respectively.

NOTE 5 - RELATED PARTY TRANSACTIONS

Due to lack of sufficient funding to maintain the Company’s operations, the Company’s officers and directors loaned money to the Company for short term cash flow needs. As of April 30, 2016 and October 31, 2015, Mr. Peter Liu had payables due to him from Godfrey of $60,000 and $60,000; respectively; The Company had receivables due from HAC amounted to $938 and $1,025 at April 30, 2016 and October 31, 2015, respectively.

During the six months ended April 30, 2016, the Company borrowed $171,524 from various shareholders under oral agreements. This amount bears no interest and is due on demand. In addition, a shareholder made repayment of $77,186 on behalf of the Company to pay off the Apollo Note as described in Note 6 below. The amount is recorded under related party payable and the amount bears no interest and is due on demand. As of April 30, 2016, the outstanding balance was $248,710.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

As part of the acquisition of HAC, the Company assumed $260,000 of obligations under a convertible note. The convertible note assumed by the Company does not bear interest and became payable on March 12, 2011. The note is convertible into shares of the Company’s common stock at an initial conversion price of $0.25 per share. The conversion price is subject to adjustment for stock splits and combinations; certain dividends and distributions; reclassification, exchange or substitution; reorganization, merger, consolidation or sales of assets. As the convertible note does not bear interest, the Company recorded the present value of the convertible note obligation at $239,667 and accordingly recorded a convertible note payable for $260,000 and a corresponding debt discount of $20,333. Under the effective interest method, the Company accretes the note obligation to the face amount of the convertible note over the remaining term of the note. The discount was fully amortized at March 12, 2011. Debt discount expense totaled $7,452 and $12,880 for the years ended October 31, 2011 and 2010 respectively. The Company performed an evaluation and determined that the anti-dilution clause did not require derivative treatment. On September 16, 2011, the Company entered into an agreement with the note holder to extend the maturity date of the note. Pursuant to the agreement, the entire outstanding amount became fully due and payable on December 31, 2011. The note is now currently in default. For the six months ended April 30, 2016 and 2015, the Company recorded imputed interest of $9,100 and $9,100, respectively.

During the year ended October 31, 2014, we entered into Securities Purchase Agreements with various accredited and sophisticated investors, pursuant to which we sold Convertible Promissory Notes with interest rates ranging from 8% to 12%, in the original principal amount of $325,000 (the “Notes”). The Notes have maturity date of six months or one year from the issuance date and are convertible into our common stock, at any time after 180 days, at a price for each share of common stock equal to 50% to 60% of the lowest closing bid price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on formulas specified in the agreements.

15

The issuances of the Notes were exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchasers were accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Notes issued. During the year ended October 31, 2014, the Company repaid $112,500 of the principal amount of the Notes.

During the six months ended April 30, 2015, six of the above convertible notes with total principal amount of $212,500 reached the 180 days and the conversion options became derivative liabilities. Using the Black-Scholes Model, the Company calculated the fair value of the conversion options and recorded derivative liabilities on the 180 day and April 30, 2015. The change in fair value was recorded as derivative expenses.

On June 13, 2014, we entered into Securities Purchase Agreements with Tangiers Investment Group LLC, pursuant to which we sold a 10% Convertible Promissory Note, in the original principal amount of $55,000 (the “Tangiers Note”). The Tangiers Note has a maturity date of June 13, 2015 and is convertible into our common stock, at any time at a price for each share of common stock equal to 60% of the lowest closing bid price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

On November 25, 2014, we entered into Securities Purchase Agreements with Tangiers Investment Group LLC, pursuant to which we sold a 10% Convertible Promissory Note, in the original principal amount of $27,500 (the “Tangiers Note 2”). The Tangiers Note 2 has a maturity date of November 25, 2015 and is convertible into our common stock, at any time at a price for each share of common stock equal to 60% of the lowest closing bid price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

The issuance of the Tangiers Note 2 was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Tangiers Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Tangiers Notes issued. The Company then calculated the fair value of the conversion option and recorded derivative liability on the issuance date and the subsequent period end dates.

On November 10, 2014, we entered into Securities Purchase Agreements with Auctus Private Equity Funds, LLC, pursuant to which we sold an 8% Convertible Promissory Note, in the original principal amount of $40,000 (the “Auctus Note”). The Auctus Note has a maturity date of November 10, 2015 and is convertible into our common stock, at any time at a price for each share of common stock equal to 55% of the average of the lowest three (3) trading prices of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

16

The issuance of the Auctus Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Auctus Note for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Auctus Note issued. The Company then calculated the fair value of the conversion option and recorded derivative liability on the issuance date and the subsequent period end dates.

On February 23, 2015, we entered into Securities Purchase Agreements with KBM Worldwide, Inc., pursuant to which we sold an 8% Convertible Promissory Note, in the original principal amount of $48,000 (the “KBM Note”). The KBM Note has a maturity date of October 9, 2015 and is convertible into our common stock, at any time after 180 days, at a price for each share of common stock equal to 55% of the average of the lowest three (3) trading prices during the ten trading days prior to the conversion date of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

The issuance of the KBM Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the KBM Note for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Notes issued.

In March and April 2015, we entered into Securities Purchase Agreements with various accredited and sophisticated investors, pursuant to which we sold 8% Convertible Promissory Notes, in the original principal amount of $45,000 (the “New Note”). The New Notes have maturity dates of June 12 and October 24, 2015 and are convertible into our common stock, at any time at a price for each share of common stock equal to 55% or 60% of the lowest closing price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreements.

The issuances of the New Notes were exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchasers were accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the New Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the New Notes issued. The Company then calculated the fair value of the conversion option and recorded derivative liability on the issuance date and the subsequent period end dates.

17

In September 2015, the Company entered into a Securities Purchase Agreement with Apollo Capital Corp, pursuant to which we sold a 12% Convertible Promissory Note, in the original principal amount of $50,000 (the “Apollo Note”). The Apollo Note has maturity date of March 29, 2016 and are convertible into our common stock, at any time after 180 days, at a price for each share of common stock equal to 40% of the lowest closing price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreements.

The issuance of the Apollo Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Apollo Note for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Notes issued. On February 12, 2016, a shareholder made repayment of $77,186 on behalf of the Company to pay off the Apollo Note.

During the years ended October 31, 2015, $382,077 of the convertible notes was converted to 3,737,696,430 shares of the Company’s common stock.

For the six months ended April 30, 2016 and 2015, the Company recorded derivative expense of $0 and ($55,062), respectively. As of April 30, 2016 and October 31, 2015, the derivative liability was fully converted or paid off.

As of April, 2016 and October 31, 2015, the outstanding amount of the convertible notes were $0 and $8,333, net of discount of $0 and $41,667, respectively.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Consulting Agreements

The Company has entered into consulting agreements for services to be provided to the Company in the ordinary course of business. These agreements call for expense reimbursement and various payments upon performance of services.

On February 1, 2016, the Company entered into a consulting service agreement with Mr. Nicholas Nguyen for a period of 24 months. Upon execution of this agreement, the Company shall issue total of 100 shares of its convertible preferred stock as compensation for Mr. Nguyen’s services. As of April 30, 2016, the shares had not been issued and the Company recorded accrued expense of $75,000.

On February 22, 2016, the Company entered into an agreement with Ms. Lixin Chen to perform marketing and operation consulting services for the year ended December 31, 2016. Upon execution of this agreement, the Company shall issue total of 300 shares of its convertible preferred stock as compensation for Ms. Chen’s services. As of April 30, 2016, the shares had not been issued and the Company recorded accrued expense of $344,000.

18

Employment Agreements

On February 1, 2010, the Company entered into an Employment Agreement with William McKay. Under the agreement, Mr. McKay will receive a base salary of $180,000, plus an initial bonus of 1,200,000 shares of the Company’s common stock (to be issued in 300,000 share blocks on a quarterly basis). The shares were valued based on the closing stock price on the date of the agreement. The initial term of the Employment Agreement expired on January 31, 2011 and automatically renewed for an additional one-year term. The agreement ended January 31, 2013 and Mr. McKay agreed to continue serve as the Company’s CEO without base salary. As of April 30, 2016 and October 31, 2015, the total accrued salaries owed to Mr. McKay were $0.

Lease Agreement

In October 2010, the Company entered into a lease of its administrative offices. The lease expired November 30, 2012 and currently calls for monthly rental payments of $970 pursuant to a month to an annual agreement.

NOTE 8 – CAPITAL STOCK TRANSACTIONS

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of its $0.001 preferred stock.

In June 2015, the Company designated 20,000 of the authorized preferred stock as convertible preferred stock with the following characteristics:

i. Each share of Preferred Stock would be convertible into 1,000,000 shares of Common Stock at the Preferred Stock holders’ option, subject to restrictions regarding timing, volume and common share availability.

ii. In shareholder votes, each share of Preferred Stock would have voting power equal to 1,000,000 shares of Common Stock.

During the year ended October 31, 2015, 759,817,144 shares of common stock were retired and converted to 767 shares of convertible preferred stock. In addition, the Company issued 1,203 shares of convertible preferred stock to its employee and consultants for services rendered. These shares were value at $645,000 based on closing price of the underlying common stock if converted.

In June 2015, the company entered into various purchase agreements with accredited investors for the sale of 220 shares of its convertible preferred stock at a price of $100 per share. Total cash proceeds from the sale of stock were $22,000 which was recorded as stock to be issued.

During the year ended October 31, 2015, the company entered into various purchase agreements with an accredited investor for the sale of 478,000,000 shares of its common stock at a price ranged from $0.00035 to $0.0012 per share. Total cash proceeds from the sale of stock during the year ended October 31, 2015, was $510,000. As of October 31, 2015, the Company issued 228,000,000 shares of common stock and 250 shares of preferred stock in lieu of 250,000,000 shares of common stock. In connection with these stock purchase agreements, the Company issued 57,019,761 shares of common stock and 725 shares of preferred stock in lieu of finders’ fees, which represents stock offering costs. Finders’ fees are treated as a reduction in paid in capital per current accounting guidance.

19

During the six months ended April 30, 2016, 692,943,784 shares of common stock were retired and converted to 694 shares of convertible preferred stock and 194 shares of preferred stock were converted to 194,000,000 shares of common stock In addition, the Company issued 324 shares of convertible preferred stock to its employee and consultants for services rendered. These shares were value at $752,800 based on closing price of the underlying common stock if converted.

During the six months ended April 30, 2016, 8 shares of preferred stock were retired and cancelled.

In February 2016, the Company issued 220 shares of preferred stock to an accredited investor in lieu of 220,000,000 shares of common stock sold in June 2015.

In April 2016, the Company sold 60 shares of its preferred stock for $47,000. As of April 30, 2016, these shares had not been issued and were recorded as preferred stock to be issued.

At April 30, 2016 and October 31, 2015, there were 3,981 and 2,945 shares issued and outstanding, respectively.

Common Stock

The Company is authorized to issue up to 4,500,000,000 shares of its $0.001 common stock.

At April 30, 2016 and October 31, 2015, there were 3,487,402,694 and 3,829,346,478 shares issued and outstanding, respectively.

Fiscal year 2015:

During the year ended October 31, 2015, the Company issued 387,000,000 shares of common stock for legal and consulting services rendered. The shares were valued at $425,000 based on service invoice and the closing stock prices on the dates of the stock grants.

During the year ended October 31, 2015, the company entered into various purchase agreements with an accredited investor for the sale of 478,000,000 shares of its common stock at a price ranged from $0.00035 to $0.0012 per share. Total cash proceeds from the sale of stock during the year ended October 31, 2015, was $510,000. As of October 31, 2015, the Company issued 228,000,000 shares of common stock and 250 shares of preferred stock in lieu of 250,000,000 shares of common stock. In connection with these stock purchase agreements, the Company issued 57,019,761 shares of common stock and 725 shares of preferred stock in lieu of finders’ fees, which represents stock offering costs. Finders’ fees are treated as a reduction in paid in capital per current accounting guidance.

During the year ended October 31, 2015, the Company also issued 3,737,696,430 shares upon conversion of convertible notes amounted to $382,077.

During the year ended October 31, 2015, 759,817,144 shares of common stock were retired and converted to 767 shares of convertible preferred stock.

Fiscal year 2016:

During the six months ended April 30, 2016, 692,943,784 shares of common stock were retired and converted to 694 shares of convertible preferred stock and 194 shares of preferred stock were converted to 194,000,000 shares of common stock. In addition, 201,000,000 shares owned by two shareholders were retired and cancelled.

20

During the six months ended April 30, 2016, the Company issued 358,000,000 shares of common stock for consulting services rendered. The shares were valued at $871,200 based on the closing stock prices on the dates of the stock grants.

Options and Warrants

A summary of option activity during the six months ended April 30, 2016 and the year ended October 31, 2015 are presented below:

April 30, 2016

October 31, 2015

Weighted

Weighted

Weighted

Weighted

average

average

average

average

Number of

exercise

life

Number of

exercise

life

shares

price

(years)

shares

price

(years)

Outstanding at beginning of year

140,666,667

$

0.0146

9.27

52,666,667

$

0.08

6.24

Granted

–

–

–

138,000,000

0.0146

10.00

Exercised

–

–

–

–

–

–

Forfeited

–

–

–

50,000,000

0.08

6.24

Cancelled

–

–

–

–

–

–

Expired

–

–

–

–

–

–

Outstanding at end of period

140,666,667

$

0.0146

8.77

140,666,667

$

0.0146

9.27

Options exercisable at end of period

140,666,667

$

0.0146

8.77

140,666,667

$

0.0146

9.27

A summary of warrant activity during the six months ended April 30, 2016 and the year ended October 31, 2015 are presented below:

April 30, 2016

October 31, 2015

Weighted

Weighted

Weighted

Weighted

average

average

average

average

exercise

remaining

exercise

remaining

Number

price

contractual

Number

price

contractual

Outstanding

per share

life (years)

Outstanding

per share

life (years)

Outstanding at beginning of year

4,000,000

$

0.75

5.39

4,000,000

$

0.75

6.39

Granted

–

–

–

Exercised

–

–

–

–

–

–

Forfeited

–

–

–

–

–

–

Cancelled

–

–

–

–

–

–

Expired

–

–

–

–

–

–

Outstanding at end of period

4,000,000

$

0.75

4.89

4,000,000

$

0.75

5.39

Warrants exercisable at end of period

–

$

–

–

–

$

–

–

21

In November 2014, the Company granted options to all board members to purchase a total of 138,000,000 shares at an exercise price of $0.0146 per share of its common stock for service rendered and to replace the old options. These options vests in 4 equal amounts on the grant date, 2/9/2015, 5/9/2015, and 8/9/2015 and are exercisable within 10 years from the dates of vesting. The total estimated value using the Black-Scholes Model, based on the following variables, was $2,760,000.

Market Price: $0.020

Exercise Price: $0.015

Term: 10 years

Volatility: 321%

Dividend Yield: 0

Risk Free Interest Rate: 2.25%

For the year ended October 31, 2015, $2,760,000 was fully amortized as stock based compensation.

NOTE 9 – SUBSEQUENT EVENTS

1. In May 2016, the Company issued 315 shares of convertible preferred stock as compensation to consultants for services rendered.

2. In May 2016, the Company entered into a Service Level Agreement with a Hong Kong entity pursuant to which it agreed to assist such Hong Kong entity to develop a market for medical, aerospace and other machined products in China and elsewhere. The Company will assist such entity with the manufacture of these products to service these markets. The Company agreed to grants such entity a license to market these products under the TPAC name. This agreement has a term of 10-years. The Company shall be paid according to the sum of $ 1 million annually for time actually spent performing its duties under this Agreement. Further, the Hong Kong entity agreed to purchase from the Company all raw materials, tooling, machinery and equipment, blueprints, engineering, marketing, operations and management and all other services and supplies. The Company agreed not to solicit any employee or consultant of the Hong Kong entity for a period of 3-years following termination of the Agreement.

3. In May 2016, the Company entered into a Licensing and Consulting Services Agreement with an Australian entity pursuant to which it agreed to assist such Australian entity to develop a market for medical, aerospace and other machined products in China and elsewhere. The Company will assist such entity with the manufacture of these products to service these markets. The Company agreed to grants such entity a license to market these products under the TPAC name. This agreement has a term of 10-years. The Company shall be paid according to the sum of $ 1 million annually for time actually spent performing its duties under this Agreement. Further, the Hong Kong entity agreed to purchase from the Company all raw materials, tooling, machinery and equipment, blueprints, engineering, marketing, operations and management and all other services and supplies. The Company agreed not to solicit any employee or consultant of the Hong Kong entity for a period of 3-years following termination of the Agreement.

22

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. This discussion should be read in conjunction with our financial statements and accompanying notes included elsewhere in this report.

Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include our expectations, beliefs, intentions and strategies regarding the future. Such forward-looking statements relate to, among other things, Godfrey’s commencement of manufacturing operations; our distribution of Godfrey’s products; our working capital requirements; and the further approvals of regulatory authorities. There are several important factors that could cause our future results to differ materially from our forward-looking statement. Some of these important factors, but not necessarily all important factors, include our ability to acquire additional capital as and when needed; production and/or quality control problems; the denial, suspension or revocation of privileged operating licenses by regulatory authorities; overall industry environment; competitive pressures and general economic conditions; and those other risks discussed more fully in the “Risk Factors” section of in our annual report on Form 10-K for the year ended October 31, 2015 filed with the Securities and Exchange Commission on February 16, 2016. We caution readers not to place undue reliance on any forward-looking statements. We do not undertake, and specifically disclaim any obligation, to update or revise such statements to reflect new circumstances or unanticipated events as they occur, and we urge readers to review and consider disclosures we make in this and other reports that discuss factors germane to our business. See in particular our reports on Forms 10-K, 10-Q and 8-K subsequently filed from time to time with the Securities and Exchange Commission.

Overview

We are engaged in the business of designing, manufacturing and selling aerospace quality component parts for commercial and military aircraft, space vehicles, power plants and surface and undersea vessels. Our initial products will be self-lubricating spherical bearings for commercial aircraft. These bearings are integral to the operation of commercial aircraft and help with several flight-critical tasks, including aircraft flight controls and landing gear. As of the date of this report, we have not had significant commercial manufacture and sale of our products.

In the second quarter of 2013, we agreed to issue 4,800,000 shares of our common stock to three shareholders of our subsidiary, Godfrey (China) Limited (“Godfrey”), in exchange for their transfer to us of a total of 30% of the outstanding capital stock of Godfrey. One of the parties was Harbin Aerospace Company, LLC, our largest shareholder which is controlled by the wife of our chief executive officer, William R. McKay. Harbin transferred to us five percent of the capital stock of Godfrey in exchange for our issuance of 800,000 common shares. Upon the closing of the transactions, we increased our ownership of Godfrey from 25% to 55%.

We commenced our aircraft component business in February 1, 2010. To date, our operations have primarily focused on the development of our production facility in China and the design and engineering of our initial product line of spherical bearings. Naval Air Systems Command (“NAVAIR”) of the United States Navy has completed the qualification testing of our initial line of bearings. However, we expect that we will need to raise at least $1 million of capital, or to develop a strategic partnership, through which the partner will contribute working capital, in order to better develop international marketing and production.

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In December 2015, we received our first purchase order for spherical bearings and such order was manufactured and delivered in March 2016. In addition, in May 2016, we entered into licensing and services agreements for the development and market of aerospace products in China, Australia, Asia and Africa.

Results of Operations

Three Months Ended April 30, 2016 and 2015

We received the initial order for our spherical bearings in December 2015. We manufactured and delivered these bearings in March 2016. During the three months ended April 30, 2016, we recognized sales revenue of $109,140 from the sale of our spherical bearings. Also we incurred $1,961,695 of operating expenses compared to $1,236,857 during the three months ended April 30, 2015. Our operating expenses consist primarily of professional fees, consulting fees, and other general and administrative expenses. The increase in operating expenses for the three months ended April 30, 2016 compared to the same period in fiscal 2015 was primarily attributable to our significant increase in consulting expenses during the 2016 period which was offset by the significant decrease in general and administrative expenses during the period. However, we expect our operating expenses will significantly increase at such time as we commence the distribution of our spherical bearings.

During the three months ended April 30, 2016 and 2015, we incurred a net loss from operations of $1,898,958 and $1,454,750, respectively. The increase was primarily attributable to on the significant increase in our consulting expenses during the 2016 period, which was offset by the significant decrease in general and administrative expenses as well as deceases in interest expense, changes in fair value of derivative liabilities and derivative expenses during the 2016 period.  

Our net loss was $1,898,958 and $1,454,750 for the three months ended April 30, 2016 and 2015, respectively. Our loss attributable to our non-controlling interest in our Godfrey subsidiary for the three months ended April 30, 2016 and 2015 was $29,852 and $36,637, respectively. Accordingly, the net loss attributable to us for the three months ended April 30, 2016 and 2015 was $1,869,106, and $1,418,113, respectively.

Six Months Ended April 30, 2016 and 2015

We received the initial order for our spherical bearings in December 2015. We manufactured and delivered these bearings in March 2016. During the six months ended April 30, 2016, we recognized sales revenue of $109,140 from the sale of our spherical bearings. Also we incurred $2,267,212 of operating expenses compared to $2,825,803 during the six months ended April 30, 2015.  Our operating expenses consist primarily of professional fees, consulting fees, and other general and administrative expenses. The decrease in operating expenses for the six months ended April 30, 2016 compared to the same period in fiscal 2015 was primarily resulted from issuance of options for common stock to board of directors in 2015. We had no such issuance in the six months ended April 30, 2016. However, we expect our operating expenses will significantly increase at such time as we commence the distribution of our spherical bearings.

During the six months ended April 30, 2016 and 2015, we incurred a net loss from operations of $2,235,525 and $3,075,621, respectively. The decrease primarily resulted from issuance of common stock options to board of directors in 2015. We had no such issuance in the six months ended April 30, 2016.  

Our net loss was $2,235,525 and $3,075,621 for the six months ended April 30, 2016 and 2015, respectively. Our loss attributable to our non-controlling interest in our Godfrey subsidiary for the six months ended April 30, 2016 and 2015 was $53,602 and $79,181, respectively. Accordingly, the net loss attributable to us for the six months ended April 30, 2016 and 2015 was $2,181,923, and $2,996,440, respectively.

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Financial Condition

Liquidity and Capital Resources

As of April 30, 2016, we had cash of $3,418 and a working capital deficit of $956,619.  At October 31, 2015, we had cash of $6,833 and a working capital deficit of $401.796.

Our net cash used in operating activities for the six months ended April 30, 2016 was $222,026, consisting primarily of our net loss of $2,235,525 an increases in accounts receivable of $109,140 and a decrease in accrued interest payable of $500, which amounts were offset by stock based compensation of $1,604,000, amortization of debt discount of $41,667, imputed interest expense of $9,100, depreciation expense of $602 and prepaid debt, deferred expenses of $1,584 and accrued expenses of $419,000. Our net cash used in operating activities for the six months ended April 30, 2015 was $395,465, consisting primarily of our net loss of $3,075,621 and a change in fair value of derivative liabilities of $431,298 which amounts were offset by stock based compensation of $2,427,500, amortization of debt discount of $174,933, imputed debt discount of $9,100, derivative expense of $486,360, interest converted to common stock of $9,892, depreciation expense of $602, changes in accounts payable and accrued expenses of $2,236 and an increase in accrued interest payable of $831.

We did not have any cash flows from investing activities during the six months ended April 30, 2016 or 2015.

Our net cash provided by financing activities in the six months ended April 30, 2016 was $218,611 consisting of $47,000 from the sale of preferred stock and $171,611 in other payables from related parties. Our net cash provided by financing activities in the six months ended April 30, 2015 was $368,775 consisting of $210,000 from the sale of common stock plus $160,500 for the issuance of a convertible note which amounts was offset by payments of $1,725 to related parties for other payables.

Since April 30, 2016, our working capital has decreased as a result of continuing losses from operations.  We estimate that we require approximately $1 million of additional working capital over the next 12 months in order to fund our expected marketing and distribution of the initial line of aircraft component products to be manufactured at our Guangzhou facility and to fund our expected operating losses as we endeavor to build revenue and achieve a profitable level of operations. However, there are no commitments or understandings at this time with any third parties for their provision of capital to us.

We will endeavor to raise the additional required funds through various financing sources, including the sale of our equity and debt securities and, subject to our commencement of significant revenue producing operations, the procurement of commercial debt financing. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to expand or continue our business as desired and operating results may be adversely affected. In addition, any financing arrangement may have potentially adverse effects on us or our stockholders. Debt financing (if available and undertaken) will increase expenses, must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing stockholders will be reduced and the new equity securities may have rights, preferences or privileges senior to those of the holders of our common stock.

The report of our independent registered public accounting firm for the fiscal year ended October 31, 2015 states that due to our losses from operations and lack of working capital there is substantial doubt about our ability to continue as a going concern.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures” refers to the controls and procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s 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 disclosures.

Based upon the above-described evaluation, our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were not effective as of April 30, 2016 due to certain material weakness in our internal control over financial reporting. An internal control material weakness is a significant deficiency, or aggregation of deficiencies, that does not reduce to a relatively low level the risk that material misstatements in financial statements will be prevented or detected on a timely basis by employees in the normal course of their work. Our management assessed the effectiveness of our internal control over financial reporting as of April 30, 2016, and this assessment identified the following material weaknesses in our internal control over financial reporting:

1. Due to our small size, we do not maintain effective internal controls to assure segregation of duties as we have only one employee who is responsible for initiating and approving of transactions, thereby creating the segregation of duties weakness;

2. Our board of directors does not have an audit committee or a financial expert to maintain effective oversight of our financial reporting process; and

3. Lack of formal policies or procedures to provide assurance that relevant information is identified, captured, processed, and reported in an appropriate and timely fashion.

Based on that evaluation, management concluded that our internal control over financial reporting was not effective as of April 30, 2016.

Changes in internal control over financial reporting

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended April 30, 2016, that materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II: OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

None.

ITEM 1A – RISK FACTORS

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

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

1. During the six months ended April 30, 2016, we issued 694 shares of our preferred stock in consideration of the cancellation and retirement of 692,943,784 shares of our common stock. The issuances were exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

2. In February 2016, we issued 220 shares of our preferred stock to an accredited investor in satisfaction of 220,000,000 shares of common stock sold to such investor in June 2015 which shares had never been issued. The issuance was exempt under Rule 506 and/or Section 4(a)(2) of the Securities Act of 1933, as amended.

3. On February 1, 2016, we entered into a consulting service agreement with a third-party consultant pursuant to which we agreed to issue the consultant 100 shares of our convertible preferred stock in consideration of the consultant’s services. The shares had not been issued. We will rely on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended, for the issuance of these shares.

4. On February 22, 2016, we entered into a consulting service agreement with a third-party consultant pursuant to which we agreed to issue the consultant 300 shares of our convertible preferred stock in consideration of the consultant’s services. The shares were issued in May 2016. We will rely on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended, for the issuance of these shares.

5. During the six months ended April 30, 2016, we issued 194,000,000 shares of common stock upon conversion of 194 shares of our preferred stock. The issuance was exempt in reliance upon the exemption provided by Rule 3(a)(9) and/or Section 4(a)(2) of the Securities Act of 1933, as amended.

6. In April 2016, we sold 60 shares of our preferred stock in consideration of $47,000. These shares have not yet been issued. The issuance will be exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

7. During the six months ended April 30, 2016, we issued 324 shares of convertible preferred stock to our employees and consultants in consideration of services rendered. The shares were valued at $732,800 based on the closing prices of the underlying common stock. The issuances were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

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8. During the six months ended April 30, 2016, we issued 358,000,000 shares of common stock to consultants in consideration of services rendered. The shares were valued at $871,200 based on the closing stock prices on the dates of the stock grants. The issuances were exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

9. In May 2016, we issued 315 shares of convertible preferred stock to consultants in consideration of services rendered. The shares were valued at $1.29 million based on the closing prices of the underlying common stock. The issuances were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

ITEM 3 – DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

1. In May 2016, we entered into a Service Level Agreement with a Hong Kong entity pursuant to which we agreed to assist such Hong Kong entity to develop a market for medical, aerospace and other machined products in China and elsewhere. We will assist such entity with the manufacture of these products to service these markets. We agreed to grant such entity a license to market these products under the TPAC name. This agreement has a term of 10-years. We will be paid according to the sum of $1 million annually for time actually spent performing our duties under this Agreement. Further, the Hong Kong entity agreed to purchase from us all raw materials, tooling, machinery and equipment, blueprints, engineering, marketing, operations and management and all other services and supplies. We agreed not to solicit any employee or consultant of the Hong Kong entity for a period of 3-years following termination of the Agreement.

2. In May 2016, we entered into a Licensing and Consulting Services Agreement with an Australian entity pursuant to which we agreed to assist such Australian entity to develop a market for aerospace bearings in Australia, Southern Asia (except China), Asia and Africa. We will assist such entity with the manufacture of these products to service these markets. We agreed to grant such entity a license to market these products under the name of TPAC Australia. This agreement has a term of 1-year, and will be automatically renewable in annual periods unless earlier terminated. We will be paid the sum of $1 million annually for time actually spent performing our duties under this Agreement. We agreed not to solicit any employee or consultant of the Australian entity for a period of 3-years following termination of the Agreement.

ITEM 6 - EXHIBITS

Item No.	Description
3.1	Certificate of Designation for Series A Convertible Preferred Stock
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema Linkbase Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Definition Linkbase Document
101.LAB	XBRL Taxonomy Labels Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

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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 thereunto duly authorized.

		TRANS-PACIFIC AEROSPACE COMPANY, INC. (Registrant)
Dated:	June 20, 2016	By:	/s/ William Reed McKay.
			William Reed McKay
			President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive and Financial and Accounting Officer

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EX-3.1

Exhibit 3.1

BARBARA K. CEGAVSKE

Secretary of State

204 North Carson Street, Suite 4

Carson City, Nevada 89701-4520

(775) 684-5706

	Filed in the office of	Document Number 20160117364-11
Articles of Designation	/s/ Barbara K. Cegavske	Filing Date and Time
(PURSUANT TO NRS 78.1955)	Barbara K. Cegavske	03/15/2016  12:25PM
	Secretary of State	Entity Number
	State of Nevada	E0414912007-0

Certificate of Designation For

Nevada Profit Corporations

(Pursuant to NRS 78.1955)

1. Name of Corporation:

Trans-Pacific Aerospace Company, Inc.

2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.

Pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Articles of Incorporation of the Corporation, as amended, and pursuant to the provisions of Section 78.1955 of the General Corporation Law of Nevada, said Board of Directors, effective as of June 12, 2015, adopted a resolution establishing the, rights, preferences, privilege and restrictions of, and the number of shares comprising, the Corporation's Series A Convertible Preferred Stock, which are set forth in Exhibit A attached hereto.

3. Effective date of filing: (optional)
	(must not be later than 90 days after the certificate is filed)

4. Signature: (required)

Signature of Officer

EXHIBIT A

CERTIFICATE OF DESIGNATIONS OF PREFERENCES AND RIGHTS OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
TRANS-PACIFIC AEROSPACE COMPANY, INC.
A NEVADA CORPORATION

______________________

The undersigned, William R. McKay, certifies that:

He is the duly acting President and Secretary of Trans-Pacific Aerospace Company, Inc., a corporation organized and existing under the General Corporation Law of Nevada of the State of Nevada (the “Corporation”).

Pursuant to authority conferred upon the Board of Directors by the Amended and Restated Articles of Incorporation of the Corporation, as amended, and pursuant to the provisions of Section 78.1955 of the General Corporation Law of Nevada, said Board of Directors, effective as of June 12, 2015, adopted a resolution establishing the rights, preferences, privileges and restrictions of, and the number of shares comprising, the Corporation's Series A Convertible Preferred Stock, which resolution is as follows:

RESOLVED, that a series of Preferred Stock in the Corporation, having the rights, preferences, privileges and restrictions, and the number of shares constituting such series and the designation of such series, set forth below be, and it hereby is, authorized by the Board of Directors of the Corporation pursuant to authority given by the Corporation's Articles of Incorporation.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and determines the Determinations of, the number of shares constituting, and the rights, preferences, privileges and restrictions relating to, a new series of Preferred Stock as follows:

SERIES A CONVERTIBLE PREFERRED STOCK

1.     Designation, Amount and Par Value. The series of preferred stock shall be designated as the Corporation's Series A Convertible Preferred Stock (the “Series A Preferred Stock”), and the number of shares so designated shall be 20,000, Each share of Series A Preferred Stock shall have a stated value equal to $400 (the “Stated Value”).

2.     Definitions. In addition to the terms defined elsewhere in this Certificate of Designations, (a) the terms set forth in Exhibit A hereto have the meanings indicated therein, and (b) the following terms have the meanings indicated:

“Common Stock” means the $0.001 par value common stock of the Corporation.

“Conversion Price” means the Initial Conversion Price, as adjusted pursuant to this Certificate of Designations.

“Initial Conversion Price” means $0.0004.

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“Holder” means any holder of Series A Preferred Stock.

“Junior Securities” means the (i) Common Stock and all other equity or equity equivalent securities of the Corporation outstanding as of the date hereof and (ii) all equity or equity equivalent securities issued by the Corporation after the Closing Date.

3.      Voting Rights. Except as otherwise required by law or hereunder, the Series A Preferred Stock shall vote together, and not separately as a class, with the Common Stock and all other shares of stock of the Corporation having general voting power. The holder of each share of Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such share of Series A Preferred Stock could be converted at the record date for determination of the stockholders entitled to vote on such matters, or, if no record date is established, at the date such vote is taken or the effective date of any written consent. Fractional votes of the holders of Series A Preferred Stock shall not, however, be permitted and fractional voting rights shall be (after aggregating all shares into which shares of Series A Preferred Stock held by each Holder could be converted) rounded to the nearest whole number (with one-half being rounded upward). Holders of Series A Preferred Stock shall be entitled to notice of any stockholders meetings in accordance with the Bylaws of the Corporation, as if such Holders owned shares of Common Stock.

Unless the consent or approval of a greater number of shares shall then be required by law, the affirmative vote of the holders of more than 50% of the outstanding shares of the Series A Preferred Stock shall be necessary to (1) authorize, adopt or approve any amendment to the Articles of Incorporation, the Bylaws or this Certificate of Designations that would increase or decrease the par value of the shares of the Series A Preferred Stock, alter or change the powers, preferences or rights of the shares of Series A Preferred Stock or alter or change the powers, preferences or rights of any other capital stock of the Corporation if after such alteration or change such capital stock would be senior to or pari passu with Series A Preferred Stock, or (2) amend, alter or repeal the Articles of Incorporation, the Bylaws or this Certificate of Designations so as to affect the shares of Series A Preferred Stock adversely.

4.      Dividends. In the event of any dividends on the Common Stock, Holders of the Series A Preferred Stock shall be entitled to share in any dividends with the Common Stock on an as-converted basis. Except as set forth in this Section 4, the Holders of the Series A Preferred Stock shall not be entitled to dividends thereon.

5.      Registration of Series A Preferred Stock. The Corporation shall register shares of the Series A Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series A Preferred Stock Register”), in the name of the record Holders thereof from time to time. The Corporation may deem and treat the registered Holder of shares of Series A Preferred Stock as the absolute owner thereof for the purpose of any conversion hereof or any distribution to such Holder, and for all other purposes, absent actual notice to the contrary.

6.      Registration of Transfers. The Corporation shall register the transfer of any shares of Series A Preferred Stock in the Series A Preferred Stock Register, upon surrender of certificates evidencing such Shares to the Corporation at its address specified herein. Upon any such registration or transfer, a new certificate evidencing the shares of Series A Preferred Stock so transferred shall be issued to the transferee and a new certificate evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring Holder.

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7.      Liquidation.

(a) In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary (a “Liquidation Event”), the Holders of Series A Preferred Stock shall be entitled to share in any distributions with the Common Stock on an as-converted basis.

(b) The Corporation shall provide written notice of any Liquidation Event to each record Holder not less than 30 days prior to the payment date or effective date thereof, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holders.

8.      Conversion. At the option of any Holder, and subject to the availability of a sufficient number of authorized shares of Common Stock, any Series A Preferred Stock held by such Holder may be converted into Common Stock based on the Conversion Price then in effect for such Series A Preferred Stock. A Holder may convert Series A Preferred Stock into Common Stock pursuant to this paragraph at any time and from time to time after the Original Issue Date, by delivering to the Corporation a Conversion Notice, in the form attached hereto, appropriately completed and duly signed, and the date any such Conversion Notice is delivered to the Corporation (as determined in accordance with the notice provisions hereof) is a “Conversion Date.”

9.      Mechanics of Conversion.

(a) The number of shares of Common Stock (“Underlying Shares”) issuable upon any conversion of a share of Series A Preferred Stock hereunder shall equal (i) the Stated Value of such share of Series A Preferred Stock to be converted, divided by the Conversion Price on the Conversion Date, plus (ii) the amount of any accrued but unpaid dividends on such share of Series A Preferred Stock through the Conversion Date, divided by the Conversion Price on the Conversion Date.

(b) Upon conversion of any share of Series A Preferred Stock, the Corporation shall promptly issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate a certificate for the Underlying Shares issuable upon such conversion. The Holder, or any Person so designated by the Holder to receive Underlying Shares, shall be deemed to have become holder of record of such Underlying Shares as of the Conversion Date.

(c) A Holder shall not be required to deliver the original certificate(s) evidencing the Series A Preferred Stock being converted in order to effect a conversion of such Series A Preferred Stock. Execution and delivery of the Conversion Notice shall have the same effect as cancellation of the original certificate(s) and issuance of a new certificate evidencing the remaining shares of Series A Preferred Stock, Upon surrender of a certificate following one or more partial conversions, the Corporation shall promptly deliver to the Holder a new certificate representing the remaining shares of Series A Preferred Stock.

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10.      Charges, Taxes and Expenses. Issuance of certificates for shares of Series A Preferred Stock and for Underlying Shares issued on conversion of (or otherwise in respect of) the Series A Preferred Stock shall be made without charge to the Holders for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Corporation; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for Common Stock or Series A Preferred Stock in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring the Series A Preferred Stock or receiving Underlying Shares in respect of the Series A Preferred Stock.

11.      Replacement Certificates. If any certificate evidencing Series A Preferred Stock or Underlying Shares is mutilated, lost, stolen or destroyed, the Corporation shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for such certificate, a new certificate, but only upon receipt of evidence reasonably satisfactory to the Corporation of such loss, theft or destruction and customary and reasonable indemnity, if requested. Applicants for a new certificate under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Corporation may prescribe.

12.      Reservation of Underlying Shares. The Corporation covenants that it shall use its commercially reasonable efforts to at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Underlying Shares as required hereunder, the number of Underlying Shares which are then issuable and deliverable upon the conversion of (and otherwise in respect of) all outstanding Series A Preferred Stock (taking into account the adjustments of Section 13), free from preemptive rights or any other contingent purchase rights of persons other than the Holder. The Corporation covenants that all Underlying Shares so issuable and deliverable shall, upon issuance in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Corporation covenants that it shall use its best efforts to satisfy each of the Equity Conditions.

13.      Certain Adjustments. The Conversion Price is subject to adjustment from time to time as set forth in this Section 13.

(a) Stock Dividends and Splits. If the Corporation, at any time while Series A Preferred Stock is outstanding, (1) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock (other than regular dividends on the Series A Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

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(b) Pro Rata Distributions. If the Corporation, at any time while Series A Preferred Stock is outstanding, distributes to all holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than, a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, “Distributed Property”), then in each such case upon any conversion of Series A Preferred Stock that occurs after such record date, such Holder shall be entitled to receive, in addition to the Underlying Shares otherwise issuable upon such conversion, the Distributed Property that such Holder would have been entitled to receive in respect of such number of Underlying Shares had the Holder been the record holder of such Underlying Shares immediately prior to such record date.

(c) Fundamental Transactions. If, at any time while Series A Preferred Stock is outstanding, (i) the Corporation effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 13(a) above) (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of Series A Preferred Stock, each Holder shall have the right to receive, for each Underlying Share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then each Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of Series A Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall issue to the Holder a new series of preferred stock consistent with the foregoing provisions and evidencing the Holders' right to convert such preferred stock into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that the Series A Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

5

(d) Calculations. All calculations under this Section 13 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(e) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 13, the Corporation at its expense will promptly compute such adjustment in accordance with the terms hereof and prepare a certificate describing in reasonable detail such adjustment and the transactions giving rise thereto, including all facts upon which such adjustment is based. Upon written request, the Corporation will promptly deliver a copy of each such certificate to each Holder and to the Corporation's Transfer Agent.

(f) Notice of Corporate Events. If the Corporation (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Corporation or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Corporation, then the Corporation shall deliver to each Holder a notice describing the material terms and conditions of such transaction, at least 20 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Corporation will take all steps reasonably necessary in order to insure that each Holder is given the practical opportunity to convert its Series A Preferred Stock prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

14.      Fractional Shares. The Corporation shall not be required to issue or cause to be issued fractional Underlying Shares on conversion of Series A Preferred Stock. If any fraction of an Underlying Share would, except for the provisions of this Section, be issuable upon conversion of Series A Preferred Stock, the number of Underlying Shares to be issued will be rounded up to the nearest whole share.

15.      Miscellaneous.

(a) The headings herein are for convenience only, do not constitute a part of this Certificate of Designations and shall not be deemed to limit or affect any of the provisions hereof.

(b) No provision of this Certificate of Designations may be amended, except in a written instrument signed by the Company and Holders of at least 60% of the shares of Series A Preferred Stock then outstanding.

6

(c) The Series A Preferred Stock is (i) senior to all equity interests in the Company outstanding as of the Closing Date in right of payment, whether with respect to dividends or upon liquidation or dissolution, or otherwise and (ii) will be senior to all other equity or equity equivalent securities issued by the Corporation after the Closing Date.

(d) Any of the rights of the Holders of Series A Preferred Stock set forth herein, including any Equity Conditions, Triggering Events or any other similar conditions for the Holders' benefit, may be waived by the affirmative vote of Holders of at least 60% of the shares of Series A Preferred Stock then outstanding. No waiver of any default with respect to any provision, condition or requirement of this Certificate of Designation shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

7

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be duly executed as of this 12th day of June, 2015.

TRANS-PACIFIC AEROSPACE COMPANY, INC.

a Nevada corporation

By:

William R. McKay

Chief Executive Officer

8

EXHIBIT A

FORM OF CONVERSION NOTICE

(To be executed by the registered Holder

in order to convert shares of Series A Preferred Stock)

The undersigned hereby elects to convert the number of shares of Series A Convertible Preferred Stock indicated below into shares of common stock, $0.001 par value (the “Common Stock”), of Trans-Pacific Aerospace Company, Inc., a Nevada corporation (the “Corporation”), according to the conditions hereof, as of the date written below.

Date to Effect Conversion

Number of shares of Series A Preferred Stock owned prior to Conversion

Number of shares of Series A Preferred Stock to be Converted

Stated Value of shares of Series A Preferred Stock to be Converted

Number of shares of Common Stock to be Issued

Applicable Conversion Price

Number of shares of Series A Preferred Stock subsequent to Conversion

Name of Holder

By: ____________________________________

Name: __________________________________

Title: ___________________________________

9

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William Reed McKay, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Trans-Pacific Aerospace Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 20, 2016

/s/ William Reed McKay

William Reed McKay

President, Chief Executive Officer, Chief Financial Officer and Director

(Principal Executive and Financial and Accounting Officer)

EX-32.1

Exhibit 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

I, William Reed McKay, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Trans-Pacific Aerospace Company, Inc. on Form 10-Q for the period ended April 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Trans-Pacific Aerospace, Inc.

Date: June 20, 2016

By:	/s/ William Reed McKay
Name:	William Reed McKay
Title:	President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive and Financial and Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Apr. 30, 2016	Jun. 01, 2016
Document And Entity Information
Entity Registrant Name	Trans-Pacific Aerospace Company, Inc.
Entity Central Index Key	0001422295
Document Type	10-Q
Document Period End Date	Apr. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,487,402,694
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Apr. 30, 2016	Oct. 31, 2015
Current assets
Cash	$ 3,418	$ 6,833
Accounts receivable	109,140	0
Prepaid expenses	0	1,584
Total current assets	112,558	8,417
Non-Current assets
Office equipment, net of accumulated depreciation of $5,304 and $4,702, respectively	3,102	3,704
Security deposit	1,584	1,584
Total non-current assets	4,686	5,288
Total assets	117,244	13,705
Current liabilities
Accounts payable and accrued expenses	479,021	60,021
Income taxes payable	1,951	1,951
Accrued salary and payroll taxes	20,433	20,433
Accrued interest payable	0	500
Other payables - related parties	307,772	58,975
Convertible note payable, net of discount	0	8,333
Convertible note payable, currently in default	260,000	260,000
Total current liabilities	1,069,177	410,213
Total liabilities	1,069,177	410,213
Stockholders' (deficit)
Preferred stock, par value $0.001, 5,000,000 shares authorized. 3,981 and 2,945 shares issued and outstanding at April 30, 2016 and October 31, 2015, respectively	4	3
Common stock, par value $0.001, 4,500,000,000 shares authorized. 3,487,402,694 and 3,829,346,478 shares issued and outstanding at April 30, 2016 and October 31, 2015, respectively	3,487,402	3,829,346
Additional paid-in capital	$ 19,139,791	$ 17,142,748
Preferred stock to be issued	47,000	0
Common stock to be issued	$ 64,093	$ 86,093
Accumulated deficit	(22,996,903)	(20,814,980)
Total Trans-Pacific Aerospace Company Inc. stockholders' equity	(258,613)	243,210
Non-controlling interest in subsidiary	(693,320)	(639,718)
Total stockholders' (deficit)	(951,933)	(396,508)
Total liabilities and stockholders' (deficit)	$ 117,244	$ 13,705

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Apr. 30, 2016	Oct. 31, 2015
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 5,304	$ 4,702
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	3,981	2,945
Preferred stock, shares outstanding	3,981	2,945
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	4,500,000,000	4,500,000,000
Common stock, shares issued	3,487,402,694	3,829,346,478
Common stock, shares outstanding	3,487,402,694	3,829,346,478

XML

Unaudited Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2016	Apr. 30, 2015	Apr. 30, 2016	Apr. 30, 2015
Income Statement [Abstract]
Sales	$ 109,140	$ 0	$ 109,140	$ 0
Cost of sales	0	0	0	0
Gross profit	109,140	0	109,140	0
Operating expenses
Professional fees	20,240	10,745	23,115	76,510
Consulting	1,847,000	72,000	2,067,600	99,000
Other general and administrative	94,455	1,154,112	176,497	2,650,293
Total operating expenses	1,961,695	1,236,857	2,267,212	2,825,803
Operating loss from continuing operations	(1,852,555)	(1,236,857)	(2,158,072)	(2,825,803)
Interest expense, net	(46,403)	(137,032)	(77,453)	(194,756)
Change in fair value of derivative liabilities	0	61,762	0	431,298
Derivative expenses	0	(142,623)	0	(486,360)
Net loss from continuing operations	(1,898,958)	(1,454,750)	(2,235,525)	(3,075,621)
Discontinued operations
Net gain (loss) from discontinued operations	0	0	0	0
Loss before income taxes	(1,898,958)	(1,454,750)	(2,235,525)	(3,075,621)
Income taxes	0	0	0	0
Net Loss	(1,898,958)	(1,454,750)	(2,235,525)	(3,075,621)
Less: Loss attributable to non-controlling interest	(29,852)	(36,637)	(53,602)	(79,181)
Net Loss attributable to the Company	$ (1,869,106)	$ (1,418,113)	$ (2,181,923)	$ (2,996,440)
Basic and dilutive net loss from operations per share	$ 0.00	$ 0.00	$ 0.00	$ (.01)
Weighted average number of common shares outstanding, basic and diluted	3,095,436,027	635,333,259	3,303,428,943	406,603,216

XML

Consolidated Statement of Stockholders' Equity (Deficit) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Common Stock To Be Issued [Member]	Preferred Stock To Be Issued [Member]	Noncontrolling Interest [Member]	Accumulated Deficit [Member]	Total
Beginning balance, shares at Oct. 31, 2014	0	179,447,431
Beginning balance, value at Oct. 31, 2014	$ 0	$ 179,447	$ 15,461,785	$ 64,093		$ (489,407)	$ (16,064,350)	$ (848,432)
Common stock converted to preferred stock, shares converted		(759,817,144)
Common stock converted to preferred stock, value of stock converted		$ (759,817)	759,817
Common stock converted to preferred stock, preferred shares issued	767
Common stock converted to preferred stock, value of preferred shares issued	$ 1							1
Preferred stock issued for services & compensation, shares	1,203
Preferred stock issued for services & compensation, value	$ 1		644,999					645,000
Common stock issued for cash, shares		228,000,000
Common stock issued for cash, value		$ 228,000	(18,000)					210,000
Preferred stock issued for cash, shares	250
Preferred stock issued for cash, value			300,000	22,000				322,000
Stocks issued in lieu of finders fees, shares	725	57,019,761
Stocks issued in lieu of finders fees	$ 1	$ 57,020	(57,021)
Stock issued for services and compensation, shares		387,000,000
Stock issued for services and compensation		$ 387,000	38,000					425,000
Common stock issued upon conversion of notes payable, shares		3,737,696,430
Common stock issued upon conversion of notes payable		$ 3,737,696	(3,355,618)					382,078
Conversion of derivative liability to common stock			540,586					540,586
Amortization of stock options			2,760,000					2,760,000
Imputed interest			18,200					18,200
Note discount			50,000					50,000
Loss on Minority interest						(150,311)		(150,311)
Net loss							(4,750,630)	(4,750,630)
Ending balance, shares at Oct. 31, 2015	2,945	3,829,346,478
Ending balance, value at Oct. 31, 2015	$ 3	$ 3,829,346	17,142,748	86,093		(639,718)	(20,814,980)	(396,508)
Common stock converted to preferred stock, shares converted		(692,943,784)
Common stock converted to preferred stock, value of stock converted		$ (692,944)	$ 692,943
Common stock converted to preferred stock, preferred shares issued	694
Common stock converted to preferred stock, value of preferred shares issued	$ 1
Preferred stock converted to common stock, preferred shares converted	(194)		(194,000)
Preferred stock converted to common stock, preferred shares converted value
Preferred stock converted to common stock, common stock issued		194,000,000
Preferred stock converted to common stock, common stock issued value		$ 194,000
Preferred stock issued for services & compensation, shares	324
Preferred stock issued for services & compensation, value			$ 752,800					752,800
Preferred stock issued for cash, shares	220
Preferred stock issued for cash, value			22,000	(22,000)	$ 47,000			47,000
Stock issued for services and compensation, shares		358,000,000
Stock issued for services and compensation		$ 358,000	513,200					871,200
Common stock, shares retired		(201,000,000)
Common stock retired, value		$ (201,000)	201,000
Preferred stock retired and cancelled, shares	(8)
Imputed interest			9,100					9,100
Loss on Minority interest						(53,602)		(53,602)
Net loss							(2,181,923)	(2,181,923)
Ending balance, shares at Apr. 30, 2016	3,981	3,487,402,694
Ending balance, value at Apr. 30, 2016	$ 4	$ 3,487,402	$ 19,139,791	$ 64,093	$ 47,000	$ (693,320)	$ (22,996,903)	$ (951,933)

XML

Unaudited Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Cash flows from operating activities:
Net loss	$ (2,235,525)	$ (3,075,621)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation	1,624,000	2,427,500
Amortization of debt discount	41,667	174,933
Imputed interest expense	9,100	9,100
Change in fair value of derivative liabilities	0	(431,298)
Derivative expense	0	486,360
Interest converted to common stock	0	9,892
Interest paid by shareholder	27,186	0
Depreciation expense	602	602
Change in operating assets and liabilities:
Accounts receivable	(109,140)	0
Prepaid and deferred expenses	1,584	0
Accounts payable and accrued expenses	419,000	2,236
Accrued interest payable	(500)	831
Net cash used in operating activities	(222,026)	(395,465)
Cash flows from financing activities:
Common stock issued for cash	0	210,000
Preferred stock sold for cash	47,000	0
Convertible note issued for cash	0	160,500
Other payables - related parties	171,611	(1,725)
Net cash provided by financing activities	218,611	368,775
Net decrease in cash	(3,415)	(26,690)
Cash, beginning of the period	6,833	50,089
Cash, end of the period	3,418	23,399
Supplemental cash flow disclosure:
Interest paid	0	0
Income taxes paid	0	0
Supplemental disclosure of non-cash transactions:
Common stock issued for payment on outstanding liabilities	0	48,892
Common stock issued for conversion on notes payable	0	214,098
Conversion of derivative liability to common stock		322,990
Retirement of common shares	201,000	0
Note and interest paid by shareholder	77,186	0
Derivative liabilities	$ 0	$ 204,963

XML

1. BACKGROUND AND ORGANIZATION

6 Months Ended

Apr. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND AND ORGANIZATION

Organization

The Company was incorporated in the State of Nevada on June 5, 2007, as Gas Salvage Corp. for the purpose of engaging in the exploration and development of oil and gas. In July 2008, the Company changed its name to Pinnacle Energy Corp. On February 1, 2010, the Company completed the acquisition of the aircraft component part design, engineering and manufacturing assets of Harbin Aerospace Company, LLC (“HAC”). The transaction was structured as a business combination. Following completion of the HAC acquisition, the Company’s Board of Directors decided to dispose of the oil and gas business interests and focus on the aircraft component market. On February 10, 2010, the Company completed the sale of all of its oil and gas business interests in exchange for cancellation of all obligations under an outstanding promissory note having a principal amount of $1,000,000. Pursuant to FASB standards, the Company has retro-actively presented its oil and gas business as discontinued operations.

In March 2010, the Company changed its name to Trans-Pacific Aerospace Company, Inc.

On July 27, 2008, the Company completed a three-for-one stock split of the Company’s common stock. The share and per-share information disclosed within this Form 10-Q reflect the completion of this stock split.

On April 5, 2013, the Company entered into Securities Purchase Agreements to purchase additional capital stock of Godfrey (China) Limited (“Godfrey”), the Company’s 25%-owned Hong Kong subsidiary engaged in the development of the production facility in Guangzhou, China. On June 21, 2013, upon closing of the transactions under the Securities Purchase Agreements, the Company increased its ownership of Godfrey from 25% to 55%.

Business Overview

The Company’s aircraft component business commenced on February 1, 2010. To date, its operations have focused on product design and engineering.  The Company has recently commenced commercial manufacture or sales of its products.

The Company designs, manufactures and sells aerospace quality component parts for commercial and military aircraft, space vehicles, power plants and surface and undersea vessels.  These parts have applications in both newly constructed platforms and as spares for existing platforms. The Company’s initial products are self-lubricating spherical bearings that help with several flight-critical tasks, including aircraft flight controls and landing gear.   

Going Concern

The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company incurred a net loss from operations of $2,235,525 during the six months ended April 30, 2016, and an accumulated deficit of $22,996,903 at April 30, 2016. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

Management’s plans to continue as a going concern include raising additional capital through sales of common stock and/or a debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The Company anticipates that losses will continue until such time, if ever, that the Company is able to generate sufficient revenues to support its operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

XML

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Apr. 30, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and reflect all adjustments, consisting of normal recurring adjustments and other adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company, for the respective periods presented. The results of operations for an interim period are not necessarily indicative of the results that may be expected for any other interim period or the year as a whole. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended October 31, 2015, filed with the SEC on February 16, 2016.

Consolidation

Accounting policies used by the Company and the Company’s subsidiaries conform to US GAAP. Significant policies are discussed below. The Company’s consolidated accounts include the Company’s accounts and the accounts of the Company’s subsidiaries of which we own a 50% interest or greater.

These consolidated financial statements include the accounts of the parent company Trans-Pacific Aerospace Company, Inc., and the majority owned subsidiary: Godfrey. All intercompany transactions have been eliminated.

Non-controlling interests

The Company accounts for changes in our controlling interests of subsidiaries according to Accounting Codification Standards 810 – Consolidations (“ASC 810”). ASC 810 requires that the Company record such changes as equity transactions, recording no gain or loss on such a sale.

The Company’s non-controlling interest arises from the purchase of equity in Godfrey. It represents the portion of Godfrey that is not owned. ASC 810 requires that the Company account for the equity and income or loss on that operation separately from the Company’s other activities. In the equity section of the Consolidated Balance Sheet, the Company presents the portion of the negative equity attributable to non-controlling interests in Godfrey. In the Consolidated Statement of Operations, the Company presents the portion of current period net loss in Godfrey attributable to non-controlling interests.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at April 30, 2016 and October 31, 2015.

Concentration of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits.

Impairment of Long-Lived Assets

The Company has adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant and Equipment FASB ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Indefinite-lived Intangible Assets

The Company has an indefinite-lived intangible asset (goodwill) relating to purchased blueprints, formulas, designs and processes for manufacturing and production of self-lubricated spherical bearings, bushings and rod-end bearings. The indefinite-lived intangible asset is not amortized; rather, it is tested for impairment at least annually by comparing the carrying amount of the asset with the fair value. An impairment loss is recognized if the carrying amount is greater than fair value.

Fair Value of Financial Instruments

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts payable, other payables, and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities:

			Fair Value Measurements at
			April 30, 2016
	Carrying
	Value
	April 30,
	2016		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

			Fair Value Measurements at
			October 31, 2015
	Carrying
	Value
	October 31,
	2015		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable, net	$	8,333	$	–	$	–	$	8,333
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

The Company believes that the market rate of interest as of April 30, 2016 and October 31, 2015 was not materially different to the rate of interest at which the convertible notes payable were issued. Accordingly, the Company believes that the fair value of the convertible notes payable approximated their carrying value at April 30, 2016 and October 31, 2015 due to short term maturity.

Revenue Recognition

We received the initial order for our spherical bearings in December 2015. We manufactured and delivered these bearings in March 2016. The Company recognizes revenue on sales of products when the goods are delivered and title to the goods passes to the customer provided that: (i) there are no uncertainties regarding customer acceptance; (ii) persuasive evidence of an arrangement exists; (iii) the sales price is fixed and determinable; and (iv) collectability is reasonably assured.

Income Taxes

The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or 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. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes a tax benefit from an uncertain tax position in the consolidated financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s widely understood administrative practices and precedents.

Equipment

Equipment is recorded at cost and depreciated using straight line methods over the estimated useful lives of the related assets. The Company reviews the carrying value of long-term assets to be held and used when events and circumstances warrant such a review. If the carrying value of a long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair market value. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. The cost of normal maintenance and repairs is charged to operations as incurred. Major overhaul that extends the useful life of existing assets is capitalized. When equipment is retired or disposed, the costs and related accumulated depreciation are eliminated and the resulting profit or loss is recognized in income. As of April 30, 2016, the useful lives of the office equipment ranged from five years to seven years.

Issuance of Shares for Non-Cash Consideration to Non-Employees

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services received or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Stock-Based Compensation

Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit.

Net Loss Per Share

The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. There were convertible notes, 3,981 shares of convertible preferred stock, 2,000,000 Series A Warrants, 2,000,000 Series B Warrants and options for 140,666,667 shares outstanding as of April 30, 2016 that are not included in the calculation of Diluted EPS as their impact would be anti-dilutive.

	For the Six Months Ended April 30,
	2016			2015
Net loss attributable to the Company	$	(2,181,923	)		(2,996,440	)
Basic and diluted net loss from operations per share	$	(0.00	)		(0.01	)
Weighted average number of common shares outstanding, basic and diluted		3,303,428,943			406,603,216

Recently Adopted and Recently Enacted Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended May 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.

In August 2014, the FASB issued the FASB Accounting Standards Update No. 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”).

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that 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 (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

a.	Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)
b.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

a.	Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern
b.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this Update defer the effective date of ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

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3. ACCOUNTS RECEIVABLE

6 Months Ended

Apr. 30, 2016

Receivables [Abstract]

Accounts Receivable

All accounts receivable are due 90 days from the date billed based on the Company’s collection policy and agreed by the customer. As of April 30, 2016 and October 31, 2015, the Company had accounts receivable balance of $109,140 and $0, respectively.

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4. PROPERTY AND EQUIPMENT

6 Months Ended

Apr. 30, 2016

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

As of April 30, 2016 and October 31, 2015, the Company had office equipment of $3,102 and 3,704, net of accumulated depreciation of $5,304 and $4,702, respectively. For the six months ended April 30, 2016 and 2015, the Company recorded depreciation expense of $602 and $602, respectively.

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5. RELATED PARTY TRANSACTIONS

6 Months Ended

Apr. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

Due to lack of sufficient funding to maintain the Company’s operations, the Company’s officers and directors loaned money to the Company for short term cash flow needs. As of April 30, 2016 and October 31, 2015, Mr. Peter Liu had payables due to him from Godfrey of $60,000 and $60,000; respectively; The Company had receivables due from HAC amounted to $938 and $1,025 at April 30, 2016 and October 31, 2015, respectively.

During the six months ended April 30, 2016, the Company borrowed $171,524 from various shareholders under oral agreements. This amount bears no interest and is due on demand. In addition, a shareholder made repayment of $77,186 on behalf of the Company to pay off the Apollo Note as described in Note 6 below. The amount is recorded under related party payable and the amount bears no interest and is due on demand. As of April 30, 2016, the outstanding balance was $248,710.

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6. CONVERTIBLE NOTES PAYABLE

6 Months Ended

Apr. 30, 2016

Debt Disclosure [Abstract]

CONVERTIBLE NOTES PAYABLE

As part of the acquisition of HAC, the Company assumed $260,000 of obligations under a convertible note. The convertible note assumed by the Company does not bear interest and became payable on March 12, 2011. The note is convertible into shares of the Company’s common stock at an initial conversion price of $0.25 per share. The conversion price is subject to adjustment for stock splits and combinations; certain dividends and distributions; reclassification, exchange or substitution; reorganization, merger, consolidation or sales of assets. As the convertible note does not bear interest, the Company recorded the present value of the convertible note obligation at $239,667 and accordingly recorded a convertible note payable for $260,000 and a corresponding debt discount of $20,333. Under the effective interest method, the Company accretes the note obligation to the face amount of the convertible note over the remaining term of the note. The discount was fully amortized at March 12, 2011. Debt discount expense totaled $7,452 and $12,880 for the years ended October 31, 2011 and 2010 respectively. The Company performed an evaluation and determined that the anti-dilution clause did not require derivative treatment. On September 16, 2011, the Company entered into an agreement with the note holder to extend the maturity date of the note. Pursuant to the agreement, the entire outstanding amount became fully due and payable on December 31, 2011. The note is now currently in default. For the six months ended April 30, 2016 and 2015, the Company recorded imputed interest of $9,100 and $9,100, respectively.

During the year ended October 31, 2014, we entered into Securities Purchase Agreements with various accredited and sophisticated investors, pursuant to which we sold Convertible Promissory Notes with interest rates ranging from 8% to 12%, in the original principal amount of $325,000 (the “Notes”). The Notes have maturity date of six months or one year from the issuance date and are convertible into our common stock, at any time after 180 days, at a price for each share of common stock equal to 50% to 60% of the lowest closing bid price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on formulas specified in the agreements.

The issuances of the Notes were exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchasers were accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Notes issued. During the year ended October 31, 2014, the Company repaid $112,500 of the principal amount of the Notes.

During the six months ended April 30, 2015, six of the above convertible notes with total principal amount of $212,500 reached the 180 days and the conversion options became derivative liabilities. Using the Black-Scholes Model, the Company calculated the fair value of the conversion options and recorded derivative liabilities on the 180 day and April 30, 2015. The change in fair value was recorded as derivative expenses.

On June 13, 2014, we entered into Securities Purchase Agreements with Tangiers Investment Group LLC, pursuant to which we sold a 10% Convertible Promissory Note, in the original principal amount of $55,000 (the “Tangiers Note”). The Tangiers Note has a maturity date of June 13, 2015 and is convertible into our common stock, at any time at a price for each share of common stock equal to 60% of the lowest closing bid price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

On November 25, 2014, we entered into Securities Purchase Agreements with Tangiers Investment Group LLC, pursuant to which we sold a 10% Convertible Promissory Note, in the original principal amount of $27,500 (the “Tangiers Note 2”). The Tangiers Note 2 has a maturity date of November 25, 2015 and is convertible into our common stock, at any time at a price for each share of common stock equal to 60% of the lowest closing bid price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

The issuance of the Tangiers Note 2 was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Tangiers Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Tangiers Notes issued. The Company then calculated the fair value of the conversion option and recorded derivative liability on the issuance date and the subsequent period end dates.

On November 10, 2014, we entered into Securities Purchase Agreements with Auctus Private Equity Funds, LLC, pursuant to which we sold an 8% Convertible Promissory Note, in the original principal amount of $40,000 (the “Auctus Note”). The Auctus Note has a maturity date of November 10, 2015 and is convertible into our common stock, at any time at a price for each share of common stock equal to 55% of the average of the lowest three (3) trading prices of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

The issuance of the Auctus Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Auctus Note for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Auctus Note issued. The Company then calculated the fair value of the conversion option and recorded derivative liability on the issuance date and the subsequent period end dates.

On February 23, 2015, we entered into Securities Purchase Agreements with KBM Worldwide, Inc., pursuant to which we sold an 8% Convertible Promissory Note, in the original principal amount of $48,000 (the “KBM Note”). The KBM Note has a maturity date of October 9, 2015 and is convertible into our common stock, at any time after 180 days, at a price for each share of common stock equal to 55% of the average of the lowest three (3) trading prices during the ten trading days prior to the conversion date of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreement.

The issuance of the KBM Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the KBM Note for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Notes issued.

In March and April 2015, we entered into Securities Purchase Agreements with various accredited and sophisticated investors, pursuant to which we sold 8% Convertible Promissory Notes, in the original principal amount of $45,000 (the “New Note”). The New Notes have maturity dates of June 12 and October 24, 2015 and are convertible into our common stock, at any time at a price for each share of common stock equal to 55% or 60% of the lowest closing price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreements.

The issuances of the New Notes were exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchasers were accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the New Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the New Notes issued. The Company then calculated the fair value of the conversion option and recorded derivative liability on the issuance date and the subsequent period end dates.

In September 2015, the Company entered into a Securities Purchase Agreement with Apollo Capital Corp, pursuant to which we sold a 12% Convertible Promissory Note, in the original principal amount of $50,000 (the “Apollo Note”). The Apollo Note has maturity date of March 29, 2016 and are convertible into our common stock, at any time after 180 days, at a price for each share of common stock equal to 40% of the lowest closing price of the common stock as reported on the National Quotation Bureau OTCQB exchange, based on a formula specified in the agreements.

The issuance of the Apollo Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

The Company analyzed the conversion option of the Apollo Note for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the Notes issued. On February 12, 2016, a shareholder made repayment of $77,186 on behalf of the Company to pay off the Apollo Note.

During the years ended October 31, 2015, $382,077 of the convertible notes was converted to 3,737,696,430 shares of the Company’s common stock.

For the six months ended April 30, 2016 and 2015, the Company recorded derivative expense of $0 and ($55,062), respectively. As of April 30, 2016 and October 31, 2015, the derivative liability was fully converted or paid off.

As of April, 2016 and October 31, 2015, the outstanding amount of the convertible notes were $0 and $8,333, net of discount of $0 and $41,667, respectively.

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7. COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Consulting Agreements

The Company has entered into consulting agreements for services to be provided to the Company in the ordinary course of business. These agreements call for expense reimbursement and various payments upon performance of services.

On February 1, 2016, the Company entered into a consulting service agreement with Mr. Nicholas Nguyen for a period of 24 months. Upon execution of this agreement, the Company shall issue total of 100 shares of its convertible preferred stock as compensation for Mr. Nguyen’s services. As of April 30, 2016, the shares had not been issued and the Company recorded accrued expense of $75,000.

On February 22, 2016, the Company entered into an agreement with Ms. Lixin Chen to perform marketing and operation consulting services for the year ended December 31, 2016. Upon execution of this agreement, the Company shall issue total of 300 shares of its convertible preferred stock as compensation for Ms. Chen’s services. As of April 30, 2016, the shares had not been issued and the Company recorded accrued expense of $344,000.

Employment Agreements

On February 1, 2010, the Company entered into an Employment Agreement with William McKay. Under the agreement, Mr. McKay will receive a base salary of $180,000, plus an initial bonus of 1,200,000 shares of the Company’s common stock (to be issued in 300,000 share blocks on a quarterly basis). The shares were valued based on the closing stock price on the date of the agreement. The initial term of the Employment Agreement expired on January 31, 2011 and automatically renewed for an additional one-year term. The agreement ended January 31, 2013 and Mr. McKay agreed to continue serve as the Company’s CEO without base salary. As of April 30, 2016 and October 31, 2015, the total accrued salaries owed to Mr. McKay were $0.

Lease Agreement

In October 2010, the Company entered into a lease of its administrative offices. The lease expired November 30, 2012 and currently calls for monthly rental payments of $970 pursuant to a month to an annual agreement.

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8. CAPITAL STOCK TRANSACTIONS

6 Months Ended

Apr. 30, 2016

Equity [Abstract]

CAPITAL STOCK TRANSACTIONS

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of its $0.001 preferred stock.

In June 2015, the Company designated 20,000 of the authorized preferred stock as convertible preferred stock with the following characteristics:

i. Each share of Preferred Stock would be convertible into 1,000,000 shares of Common Stock at the Preferred Stock holders’ option, subject to restrictions regarding timing, volume and common share availability.

ii. In shareholder votes, each share of Preferred Stock would have voting power equal to 1,000,000 shares of Common Stock.

During the year ended October 31, 2015, 759,817,144 shares of common stock were retired and converted to 767 shares of convertible preferred stock. In addition, the Company issued 1,203 shares of convertible preferred stock to its employee and consultants for services rendered. These shares were value at $645,000 based on closing price of the underlying common stock if converted.

In June 2015, the company entered into various purchase agreements with accredited investors for the sale of 220 shares of its convertible preferred stock at a price of $100 per share. Total cash proceeds from the sale of stock were $22,000 which was recorded as stock to be issued.

During the year ended October 31, 2015, the company entered into various purchase agreements with an accredited investor for the sale of 478,000,000 shares of its common stock at a price ranged from $0.00035 to $0.0012 per share. Total cash proceeds from the sale of stock during the year ended October 31, 2015, was $510,000. As of October 31, 2015, the Company issued 228,000,000 shares of common stock and 250 shares of preferred stock in lieu of 250,000,000 shares of common stock. In connection with these stock purchase agreements, the Company issued 57,019,761 shares of common stock and 725 shares of preferred stock in lieu of finders’ fees, which represents stock offering costs. Finders’ fees are treated as a reduction in paid in capital per current accounting guidance.

During the six months ended April 30, 2016, 692,943,784 shares of common stock were retired and converted to 694 shares of convertible preferred stock and 194 shares of preferred stock were converted to 194,000,000 shares of common stock In addition, the Company issued 324 shares of convertible preferred stock to its employee and consultants for services rendered. These shares were value at $752,800 based on closing price of the underlying common stock if converted.

During the six months ended April 30, 2016, 8 shares of preferred stock were retired and cancelled.

In February 2016, the Company issued 220 shares of preferred stock to an accredited investor in lieu of 220,000,000 shares of common stock sold in June 2015.

In April 2016, the Company sold 60 shares of its preferred stock for $47,000. As of April 30, 2016, these shares had not been issued and were recorded as preferred stock to be issued.

At April 30, 2016 and October 31, 2015, there were 3,981 and 2,945 shares issued and outstanding, respectively.

Common Stock

The Company is authorized to issue up to 4,500,000,000 shares of its $0.001 common stock.

At April 30, 2016 and October 31, 2015, there were 3,487,402,694 and 3,829,346,478 shares issued and outstanding, respectively.

Fiscal year 2015:

During the year ended October 31, 2015, the Company issued 387,000,000 shares of common stock for legal and consulting services rendered. The shares were valued at $425,000 based on service invoice and the closing stock prices on the dates of the stock grants.

During the year ended October 31, 2015, the company entered into various purchase agreements with an accredited investor for the sale of 478,000,000 shares of its common stock at a price ranged from $0.00035 to $0.0012 per share. Total cash proceeds from the sale of stock during the year ended October 31, 2015, was $510,000. As of October 31, 2015, the Company issued 228,000,000 shares of common stock and 250 shares of preferred stock in lieu of 250,000,000 shares of common stock. In connection with these stock purchase agreements, the Company issued 57,019,761 shares of common stock and 725 shares of preferred stock in lieu of finders’ fees, which represents stock offering costs. Finders’ fees are treated as a reduction in paid in capital per current accounting guidance.

During the year ended October 31, 2015, the Company also issued 3,737,696,430 shares upon conversion of convertible notes amounted to $382,077.

During the year ended October 31, 2015, 759,817,144 shares of common stock were retired and converted to 767 shares of convertible preferred stock.

Fiscal year 2016:

During the six months ended April 30, 2016, 692,943,784 shares of common stock were retired and converted to 694 shares of convertible preferred stock and 194 shares of preferred stock were converted to 194,000,000 shares of common stock. In addition, 201,000,000 shares owned by two shareholders were retired and cancelled.

During the six months ended April 30, 2016, the Company issued 358,000,000 shares of common stock for consulting services rendered. The shares were valued at $871,200 based on the closing stock prices on the dates of the stock grants.

Options and Warrants

A summary of option activity during the six months ended April 30, 2016 and the year ended October 31, 2015 are presented below:

April 30, 2016

October 31, 2015

Weighted

Weighted

Weighted

Weighted

average

average

average

average

Number of

exercise

life

Number of

exercise

life

shares

price

(years)

shares

price

(years)

Outstanding at beginning of year

140,666,667

$

0.0146

9.27

52,666,667

$

0.08

6.24

Granted

–

–

–

138,000,000

0.0146

10.00

Exercised

–

–

–

–

–

–

Forfeited

–

–

–

50,000,000

0.08

6.24

Cancelled

–

–

–

–

–

–

Expired

–

–

–

–

–

–

Outstanding at end of period

140,666,667

$

0.0146

8.77

140,666,667

$

0.0146

9.27

Options exercisable at end of period

140,666,667

$

0.0146

8.77

140,666,667

$

0.0146

9.27

A summary of warrant activity during the six months ended April 30, 2016 and the year ended October 31, 2015 are presented below:

April 30, 2016

October 31, 2015

Weighted

Weighted

Weighted

Weighted

average

average

average

average

exercise

remaining

exercise

remaining

Number

price

contractual

Number

price

contractual

Outstanding

per share

life (years)

Outstanding

per share

life (years)

Outstanding at beginning of year

4,000,000

$

0.75

5.39

4,000,000

$

0.75

6.39

Granted

–

–

–

Exercised

–

–

–

–

–

–

Forfeited

–

–

–

–

–

–

Cancelled

–

–

–

–

–

–

Expired

–

–

–

–

–

–

Outstanding at end of period

4,000,000

$

0.75

4.89

4,000,000

$

0.75

5.39

Warrants exercisable at end of period

–

$

–

–

–

$

–

–

In November 2014, the Company granted options to all board members to purchase a total of 138,000,000 shares at an exercise price of $0.0146 per share of its common stock for service rendered and to replace the old options. These options vests in 4 equal amounts on the grant date, 2/9/2015, 5/9/2015, and 8/9/2015 and are exercisable within 10 years from the dates of vesting. The total estimated value using the Black-Scholes Model, based on the following variables, was $2,760,000.

Market Price: $0.020

Exercise Price: $0.015

Term: 10 years

Volatility: 321%

Dividend Yield: 0

Risk Free Interest Rate: 2.25%

For the year ended October 31, 2015, $2,760,000 was fully amortized as stock based compensation.

XML

9. SUBSEQUENT EVENTS

6 Months Ended

Apr. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

1. In May 2016, the Company issued 315 shares of convertible preferred stock as compensation to consultants for services rendered.

2. In May 2016, the Company entered into a Service Level Agreement with a Hong Kong entity pursuant to which it agreed to assist such Hong Kong entity to develop a market for medical, aerospace and other machined products in China and elsewhere. The Company will assist such entity with the manufacture of these products to service these markets. The Company agreed to grants such entity a license to market these products under the TPAC name. This agreement has a term of 10-years. The Company shall be paid according to the sum of $ 1 million annually for time actually spent performing its duties under this Agreement. Further, the Hong Kong entity agreed to purchase from the Company all raw materials, tooling, machinery and equipment, blueprints, engineering, marketing, operations and management and all other services and supplies. The Company agreed not to solicit any employee or consultant of the Hong Kong entity for a period of 3-years following termination of the Agreement.

3. In May 2016, the Company entered into a Licensing and Consulting Services Agreement with an Australian entity pursuant to which it agreed to assist such Australian entity to develop a market for medical, aerospace and other machined products in China and elsewhere. The Company will assist such entity with the manufacture of these products to service these markets. The Company agreed to grants such entity a license to market these products under the TPAC name. This agreement has a term of 10-years. The Company shall be paid according to the sum of $ 1 million annually for time actually spent performing its duties under this Agreement. Further, the Hong Kong entity agreed to purchase from the Company all raw materials, tooling, machinery and equipment, blueprints, engineering, marketing, operations and management and all other services and supplies. The Company agreed not to solicit any employee or consultant of the Hong Kong entity for a period of 3-years following termination of the Agreement.

XML

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Apr. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and reflect all adjustments, consisting of normal recurring adjustments and other adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company, for the respective periods presented. The results of operations for an interim period are not necessarily indicative of the results that may be expected for any other interim period or the year as a whole. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended October 31, 2015, filed with the SEC on February 16, 2016.

Consolidation

Consolidation

Accounting policies used by the Company and the Company’s subsidiaries conform to US GAAP. Significant policies are discussed below. The Company’s consolidated accounts include the Company’s accounts and the accounts of the Company’s subsidiaries of which we own a 50% interest or greater.

These consolidated financial statements include the accounts of the parent company Trans-Pacific Aerospace Company, Inc., and the majority owned subsidiary: Godfrey. All intercompany transactions have been eliminated.

Non-controlling interests

Non-controlling interests

The Company accounts for changes in our controlling interests of subsidiaries according to Accounting Codification Standards 810 – Consolidations (“ASC 810”). ASC 810 requires that the Company record such changes as equity transactions, recording no gain or loss on such a sale.

The Company’s non-controlling interest arises from the purchase of equity in Godfrey. It represents the portion of Godfrey that is not owned. ASC 810 requires that the Company account for the equity and income or loss on that operation separately from the Company’s other activities. In the equity section of the Consolidated Balance Sheet, the Company presents the portion of the negative equity attributable to non-controlling interests in Godfrey. In the Consolidated Statement of Operations, the Company presents the portion of current period net loss in Godfrey attributable to non-controlling interests.

Use of Estimates

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at April 30, 2016 and October 31, 2015.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company has adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant and Equipment FASB ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Indefinite-lived Intangible Assets

Indefinite-lived Intangible Assets

The Company has an indefinite-lived intangible asset (goodwill) relating to purchased blueprints, formulas, designs and processes for manufacturing and production of self-lubricated spherical bearings, bushings and rod-end bearings. The indefinite-lived intangible asset is not amortized; rather, it is tested for impairment at least annually by comparing the carrying amount of the asset with the fair value. An impairment loss is recognized if the carrying amount is greater than fair value.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts payable, other payables, and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities:

			Fair Value Measurements at
			April 30, 2016
	Carrying
	Value
	April 30,
	2016		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

			Fair Value Measurements at
			October 31, 2015
	Carrying
	Value
	October 31,
	2015		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable, net	$	8,333	$	–	$	–	$	8,333
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

The Company believes that the market rate of interest as of April 30, 2016 and October 31, 2015 was not materially different to the rate of interest at which the convertible notes payable were issued. Accordingly, the Company believes that the fair value of the convertible notes payable approximated their carrying value at April 30, 2016 and October 31, 2015 due to short term maturity.

Revenue Recognition

Revenue Recognition

We received the initial order for our spherical bearings in December 2015. We manufactured and delivered these bearings in March 2016. The Company recognizes revenue on sales of products when the goods are delivered and title to the goods passes to the customer provided that: (i) there are no uncertainties regarding customer acceptance; (ii) persuasive evidence of an arrangement exists; (iii) the sales price is fixed and determinable; and (iv) collectability is reasonably assured.

Income Taxes

Income Taxes

The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or 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. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes a tax benefit from an uncertain tax position in the consolidated financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s widely understood administrative practices and precedents.

Equipment

Equipment

Equipment is recorded at cost and depreciated using straight line methods over the estimated useful lives of the related assets. The Company reviews the carrying value of long-term assets to be held and used when events and circumstances warrant such a review. If the carrying value of a long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair market value. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. The cost of normal maintenance and repairs is charged to operations as incurred. Major overhaul that extends the useful life of existing assets is capitalized. When equipment is retired or disposed, the costs and related accumulated depreciation are eliminated and the resulting profit or loss is recognized in income. As of April 30, 2016, the useful lives of the office equipment ranged from five years to seven years.

Issuance of Shares for Non-Cash Consideration to Non-Employees

Issuance of Shares for Non-Cash Consideration to Non-Employees

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services received or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit.

Net Loss Per Share

Net Loss Per Share

The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. There were convertible notes, 3,981 shares of convertible preferred stock, 2,000,000 Series A Warrants, 2,000,000 Series B Warrants and options for 140,666,667 shares outstanding as of April 30, 2016 that are not included in the calculation of Diluted EPS as their impact would be anti-dilutive.

	For the Six Months Ended April 30,
	2016			2015
Net loss attributable to the Company	$	(2,181,923	)		(2,996,440	)
Basic and diluted net loss from operations per share	$	(0.00	)		(0.01	)
Weighted average number of common shares outstanding, basic and diluted		3,303,428,943			406,603,216

Recently Adopted and Recently Enacted Accounting Pronouncements

Recently Adopted and Recently Enacted Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended May 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.

In August 2014, the FASB issued the FASB Accounting Standards Update No. 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”).

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that 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 (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

a.	Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)
b.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

a.	Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern
b.	Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this Update defer the effective date of ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

XML

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Schedule of fair values of assets and liabilities

The following tables provide a summary of the fair values of assets and liabilities:

			Fair Value Measurements at
			April 30, 2016
	Carrying
	Value
	April 30,
	2016		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

			Fair Value Measurements at
			October 31, 2015
	Carrying
	Value
	October 31,
	2015		Level 1		Level 2		Level 3
Liabilities:
Convertible notes payable, net	$	8,333	$	–	$	–	$	8,333
Convertible notes payable – currently in default	$	260,000	$	–	$	–	$	260,000

Schedule of Earnings Per Share Basic and Diluted

	For the Six Months Ended April 30,
	2016			2015
Net loss attributable to the Company	$	(2,181,923	)		(2,996,440	)
Basic and diluted net loss from operations per share	$	(0.00	)		(0.01	)
Weighted average number of common shares outstanding, basic and diluted		3,303,428,943			406,603,216

XML

8. CAPITAL STOCK TRANSACTIONS (Tables)

6 Months Ended

Apr. 30, 2016

Capital Stock Transactions Tables

Summary of option activity

April 30, 2016

October 31, 2015

Weighted

Weighted

Weighted

Weighted

average

average

average

average

Number of

exercise

life

Number of

exercise

life

shares

price

(years)

shares

price

(years)

Outstanding at beginning of year

140,666,667

$

0.0146

9.27

52,666,667

$

0.08

6.24

Granted

–

–

–

138,000,000

0.0146

10.00

Exercised

–

–

–

–

–

–

Forfeited

–

–

–

50,000,000

0.08

6.24

Cancelled

–

–

–

–

–

–

Expired

–

–

–

–

–

–

Outstanding at end of period

140,666,667

$

0.0146

8.77

140,666,667

$

0.0146

9.27

Options exercisable at end of period

140,666,667

$

0.0146

8.77

140,666,667

$

0.0146

9.27

Summary of warrant activity

April 30, 2016

October 31, 2015

Weighted

Weighted

Weighted

Weighted

average

average

average

average

exercise

remaining

exercise

remaining

Number

price

contractual

Number

price

contractual

Outstanding

per share

life (years)

Outstanding

per share

life (years)

Outstanding at beginning of year

4,000,000

$

0.75

5.39

4,000,000

$

0.75

6.39

Granted

–

–

–

Exercised

–

–

–

–

–

–

Forfeited

–

–

–

–

–

–

Cancelled

–

–

–

–

–

–

Expired

–

–

–

–

–

–

Outstanding at end of period

4,000,000

$

0.75

4.89

4,000,000

$

0.75

5.39

Warrants exercisable at end of period

–

$

–

–

–

$

–

–

Assumptions

Market Price: $0.020

Exercise Price: $0.015

Term: 10 years

Volatility: 321%

Dividend Yield: 0

Risk Free Interest Rate: 2.25%

XML

1. BACKGROUND AND ORGANIZATION (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2016	Apr. 30, 2015	Apr. 30, 2016	Apr. 30, 2015	Oct. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss from operations	$ (1,898,958)	$ (1,454,750)	$ (2,235,525)	$ (3,075,621)
Accumulated deficit	$ (22,996,903)		$ (22,996,903)		$ (20,814,980)

XML

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Fair Value Assets and Liabilities) - Fair Value, Measurements, Recurring [Member] - USD ($)	Apr. 30, 2016	Oct. 31, 2015
Convertible note payable		$ 8,333
Convertible notes payable - currently in default	$ 260,000	260,000
Level 1 [Member]
Convertible note payable		0
Convertible notes payable - currently in default	0	0
Level 2 [Member]
Convertible note payable		0
Convertible notes payable - currently in default	0	0
Level 3 [Member]
Convertible note payable		8,333
Convertible notes payable - currently in default	$ 260,000	$ 260,000

XML

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Net Loss Per Share) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2016	Apr. 30, 2015	Apr. 30, 2016	Apr. 30, 2015	Oct. 31, 2015
Accounting Policies [Abstract]
Net loss attributable to the Company	$ (1,869,106)	$ (1,418,113)	$ (2,181,923)	$ (2,996,440)	$ (4,750,630)
Basic and diluted net loss from operations per share	$ 0.00	$ 0.00	$ 0.00	$ (.01)
Weighted average number of common shares outstanding, basic and diluted	3,095,436,027	635,333,259	3,303,428,943	406,603,216

XML

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Apr. 30, 2016	Oct. 31, 2015
Cash equivalents	$ 0	$ 0
Useful lives of the office equipment		5 to 7 years
Convertible preferred stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share	3,981
Series A Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share	2,000,000
Series B Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share	2,000,000
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share	140,666,667

XML

3. ACCOUNTS RECEIVABLE (Details Narrative) - USD ($)	Apr. 30, 2016	Oct. 31, 2015
Receivables [Abstract]
Accounts receivable	$ 109,140	$ 0

XML

4. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	6 Months Ended
	Apr. 30, 2016	Apr. 30, 2015	Oct. 31, 2015
Property, Plant and Equipment [Abstract]
Office equipment, net	$ 3,102		$ 3,704
Accumulated depreciation	5,304		$ 4,702
Depreciation expense	$ 602	$ 602

XML

5. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	6 Months Ended
	Apr. 30, 2016	Oct. 31, 2015
Other payables - related parties	$ 307,772	$ 58,975
Apollo Capital Corp. [Member]
Proceeds from related parties	77,186
Harbin Aerospace Company [Member]
Other receviables - related parties	938	1,025
Various Shareholders [Member]
Other payables - related parties	248,710
Proceeds from related parties	171,524
Godfrey [Member] | Peter Liu [Member]
Other payables - related parties	$ 60,000	$ 60,000

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6. CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2016	Apr. 30, 2015	Apr. 30, 2016	Apr. 30, 2015	Oct. 31, 2015	Oct. 31, 2014
Imputed interest			$ 9,100	$ 9,100
Derivative expenses	$ 0	$ 142,623	0	486,360
Derivative liability	0		0		$ 0
Convertible note balances, net	0		0		8,333
Discount on convertible notes	$ 0		0		$ 41,667
HAC convertible note [Member]
Imputed interest			9,100	9,100
Convertible Notes Payable [Member]
Common stock issued upon conversion of notes payable, shares					3,737,696,430
Debt converted, amount converted					$ 382,077
Notes [Member]
Original convertible note amount						$ 325,000
Interest rates						8% to 12%
Repayments of convertible notes						$ 112,500
Derivative expenses			$ 0	$ 55,062
Tangiers Note [Member]
Original convertible note amount						$ 55,000
Interest rates						10%
Maturity date						Jun. 13, 2015
Tangiers Note 2 [Member]
Original convertible note amount					$ 27,500
Interest rates					10%
Maturity date					Nov. 25, 2015
Auctus Note [Member]
Original convertible note amount					$ 40,000
Interest rates					8%
Maturity date					Nov. 10, 2015
KBM Note [Member]
Original convertible note amount					$ 48,000
Interest rates					8%
Maturity date					Oct. 09, 2015
New Note [Member]
Original convertible note amount					$ 45,000
Interest rates					8%
Maturity date					Oct. 24, 2015
Apollo Capital Corp. [Member]
Original convertible note amount					$ 50,000
Interest rates					12%
Maturity date					Mar. 29, 2016

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7. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	Apr. 30, 2016	Oct. 31, 2015
McKay [Member]
Accrued salaries	$ 0	$ 0
Nicholas Nguyen [Member]
Consulting accrued expense	$ 75,000
Convertible preferred stock, shares to be issued	100
Lixin Chen [Member]
Consulting accrued expense	$ 344,000
Convertible preferred stock, shares to be issued	300

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8. CAPITAL STOCK TRANSACTIONS (Details - Option activity) - Stock Options [Member] - $ / shares	6 Months Ended	12 Months Ended
	Apr. 30, 2016	Oct. 31, 2015
Number of Options Outstanding, Beginning	140,666,667	52,666,667
Number of Options Granted		138,000,000
Number of Options Exercised
Number of Options Forfeited		50,000,000
Number of Options Cancelled
Number of Options Expired
Number of Options Outstanding, Ending	140,666,667	140,666,667
Number of Options Exercisable	140,666,667	140,666,667
Weighted Average Exercise Price Outstanding, Beginning	$ .0146	$ .08
Weighted Average Exercise Price Granted		$ .0146
Weighted Average Exercise Price Exercised
Weighted Average Exercise Price Forfeited		$ .08
Weighted Average Exercise Price Canceled
Weighted Average Exercise Price Expired
Weighted Average Exercise Price Outstanding, Ending	.0146	$ .0146
Weighted Average Exercise Price Exercisable	$ .0146	$ .0146
Weighted Average Remaining Contractual Life (in years) Outstanding, Beginning	9 years 3 months 7 days	6 years 2 months 26 days
Weighted Average Remaining Contractual Life (in years) granted		10 years
Weighted Average Remaining Contractual Life (in years) forfeited		6 years 2 months 26 days
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending	8 years 9 months 7 days	9 years 3 months 7 days
Weighted Average Remaining Contractual Life (in years) Exercisable	8 years 9 months 7 days	9 years 3 months 7 days

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8. CAPITAL STOCK TRANSACTIONS (Details - Warrants outstanding) - Warrant [Member] - $ / shares	6 Months Ended	12 Months Ended
	Apr. 30, 2016	Oct. 31, 2015
Warrants outstanding, beginning balance	4,000,000	4,000,000
Warrants outstanding, ending balance	4,000,000	4,000,000
Warrants exercisable		0
Weighted average exercise price, beginning	$ .75	$ 0.75
Weighted average exercise price, ending	$ 0.75	$ .75
Weighted average remaining contractual life, beginning	5 years 4 months 20 days	6 years 4 months 20 days
Weighted average remaining contractual life, ending	4 years 10 months 20 days	5 years 4 months 20 days

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8. CAPITAL STOCK TRANSACTIONS (Details - Assumptions)	6 Months Ended
	Apr. 30, 2016 $ / shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Market Price:	$ 0.20
Exercise Price:	$ .015
Term:	10 years
Volatility:	321.00%
Dividend Yield:	0.00%
Risk Free Interest Rate:	2.25%

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8. CAPITAL STOCK TRANSACTIONS (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Apr. 30, 2016	Apr. 30, 2015	Oct. 31, 2015
Proceeds from sale of preferred stock	$ 47,000	$ 0
Preferred stock to be issued	60		0
Stock based compensation	$ 1,624,000	$ 2,427,500
Stock issued for services, shares issued	358,000,000
Stock issued for services, value	$ 871,200
Common stock, shares issued	3,487,402,694		3,829,346,478
Preferred stock, shares issued	3,981		2,945
Common stock issued upon conversion of notes payable			$ 382,078
Estimated fair value of option award			$ 2,760,000
Convertible Notes Payable [Member]
Common stock issued upon conversion of notes payable, shares			3,737,696,430
Common stock issued upon conversion of notes payable			$ 382,077
Accredited Investors [Member]
Proceeds from sale of preferred stock			$ 22,000
Preferred stock to be issued			220
Stock issued for cash, shares issued			478,000,000
Stock issued for cash, proceeds			$ 510,000
Common stock, shares issued			228,000,000
Preferred stock, shares issued			250
Stock issued for finders fees, shares issued			57,019,761
Preferred stock issued in lieu of finders fees. shares issued			725
Consultants [Member]
Stock issued for services, shares issued			387,000,000
Stock issued for services, value			$ 425,000
An Accredited Investor [Member]
Preferred stock, shares issued	220
Employee and Consultants [Member]
Stock issued for services, shares issued	324		1,203
Stock issued for services, value	$ 752,800		$ 645,000
Preferred Stock [Member]
Common stock retired and converted, common shares retired	194		759,817,144
Common stock retired and converted, preferred shares issued	694
Preferred stock retired and cancelled, shares	8
Common Stock [Member]
Common stock retired and converted, common shares retired	692,943,784
Common stock retired and converted, preferred shares issued	194,000,000		767
Common shares retired, shares retired	201,000,000