UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2017
o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _________ to _________
Commission File Number: 333-172744
GALA GLOBAL INC.
(Name of Small Business Issuer in its charter)
| Nevada | 42-1771014 |
| (state or other jurisdiction of incorporation or organization) | (I.R.S. Employer I.D. No.) |
2780 South Jones Blvd. #3725
Las Vegas, Nevada 89146
(Address of principal executive offices)
(775) 321-8238
Issuer’s telephone number
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
| Large accelerated filer o | Accelerated filer o | |
| Non-accelerated filer o | Smaller reporting company x | |
| Emerging growth company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
APPLICABLE ONLY TO CORPORATE ISSUERS
As of July 25, 2017 the registrant had 38,301,561 shares of common stock outstanding.
GALA GLOBAL INC.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
GALA GLOBAL INC.
Condensed Consolidated Financial Statements
(unaudited)
For the Three and Six Month Periods Ended May 31, 2017 and 2016
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GALA GLOBAL INC.
Condensed Consolidated Balance Sheets
(unaudited)
| May 31, 2017 $ | November 30, 2016 $ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | 251,553 | 10,841 | ||||||
| Loan receivable – related party | 5,000 | – | ||||||
| Prepaid deposits – related party | 100,000 | – | ||||||
| Inventory | 2,241 | 2,241 | ||||||
| Total assets | 358,794 | 13,082 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 17,516 | 20,052 | ||||||
| Accounts payable and accrued liabilities – related party | 16,459 | 94,039 | ||||||
| Due to related parties | 31,367 | 249,835 | ||||||
| Loans payable | 75,200 | 75,200 | ||||||
| Loans payable - related parties | 30,564 | 22,064 | ||||||
| Convertible note, net of unamortized discount of $268,248 and $nil, respectively | 11,752 | – | ||||||
| Derivative liabilities | 315,989 | – | ||||||
| Total liabilities | 498,847 | 461,190 | ||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock | ||||||||
| Authorized: 10,000,000 shares with a par value of $0.001 per share issued and outstanding: 500,000 shares | 500 | 500 | ||||||
| Common stock | ||||||||
| Authorized: 500,000,000 shares with a par value of $0.001 per share issued and outstanding: 32,747,936 and 1,369,224 shares, respectively | 32,748 | 1,369 | ||||||
| Additional paid-in capital | 1,877,255 | 786,736 | ||||||
| Deferred compensation | (409,370 | ) | – | |||||
| Deficit | (1,641,186 | ) | (1,236,713 | ) | ||||
| Total stockholders’ equity (deficit) | (140,053 | ) | (448,108 | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | 358,794 | 13,082 | ||||||
(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
| 4 |
GALA GLOBAL INC.
Condensed Consolidated Statements of Operations
(unaudited)
| Three months ended May 31, 2017 $ | Three months ended May 31, 2016 $ | Six months ended May 31, 2017 $ | Six months ended May 31, 2016 $ | |||||||||||||
| Operating expenses | ||||||||||||||||
| Consulting fees | – | – | – | 17,500 | ||||||||||||
| Consulting fees – related party | 46,109 | 8,907 | 46,109 | 15,365 | ||||||||||||
| General and administrative | 14,601 | 17,568 | 25,253 | 29,487 | ||||||||||||
| General and administrative – related party | 37,521 | 9,000 | 56,521 | 18,000 | ||||||||||||
| Rent | 1,400 | 15,000 | 2,450 | 15,000 | ||||||||||||
| Total operating expense | 99,631 | 50,475 | 130,333 | 95,352 | ||||||||||||
| Loss before other expense | (99,631 | ) | (50,475 | ) | (130,333 | ) | (95,352 | ) | ||||||||
| Other expense | ||||||||||||||||
| Change in fair value of derivative liability | (10,032 | ) | – | (10,032 | ) | – | ||||||||||
| Interest expense | (175,101 | ) | (237 | ) | (175,774 | ) | (553 | ) | ||||||||
| Loss on settlement of related party debt | (88,334 | ) | – | (88,334 | ) | – | ||||||||||
| Total other expense | (273,467 | ) | (237 | ) | (274,140 | ) | (553 | ) | ||||||||
| Net loss | (373,098 | ) | (50,712 | ) | (404,473 | ) | (95,905 | ) | ||||||||
| Net loss per share, basic and diluted | (0.02 | ) | (0.04 | ) | (0.04 | ) | (0.07 | ) | ||||||||
| Weighted average common shares outstanding | 19,267,388 | 1,369,224 | 10,367,208 | 1,360,630 | ||||||||||||
(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
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GALA GLOBAL INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
| Six months ended May 31, 2017 $ | Six months ended May 31, 2016 $ | |||||||
| Operating activities | ||||||||
| Net loss for the period | (404,473 | ) | (95,905 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of discount on convertible note | 9,340 | – | ||||||
| Amortization of debt issuance costs | 2,412 | – | ||||||
| Change in fair value of derivative liability | 10,032 | – | ||||||
| Common shares issued for consulting services and compensation – related party | 80,630 | 17,500 | ||||||
| Derivative expense | 161,353 | – | ||||||
| Loss on settlement of related party debt | 88,334 | – | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | – | 460 | ||||||
| Inventory deposits | – | (4,800 | ) | |||||
| Prepaid expenses – related party | – | 15,364 | ||||||
| Accounts payable and accrued liabilities | 1,904 | 10,396 | ||||||
| Accounts payable and accrued liabilities – related party | 10,813 | 18,214 | ||||||
| Net cash used in operating activities | (39,655 | ) | (38,771 | ) | ||||
| Investing activities | ||||||||
| Loan issued to related party | (5,000 | ) | – | |||||
| Net cash used in investing activities | (5,000 | ) | – | |||||
| Financing activities | ||||||||
| Proceeds from related party advances | 26,867 | – | ||||||
| Repayments of related party debt | – | (5,960 | ) | |||||
| Proceeds from note payable - related party | 8,500 | 45,000 | ||||||
| Proceeds from convertible note | 250,000 | – | ||||||
| Net cash provided by financing activities | 285,367 | 39,040 | ||||||
| Increase in cash | 240,712 | 269 | ||||||
| Cash, beginning of period | 10,841 | 1,804 | ||||||
| Cash, end of period | 251,553 | 2,073 | ||||||
| Non-cash investing and financing activities: | ||||||||
| Common shares issued for consulting services – related party | 80,630 | 17,500 | ||||||
| Common shares issued for deferred compensation | 409,370 | – | ||||||
| Common shares issued for settlement of related party debt | 426,501 | – | ||||||
| Common shares issued for deposit on intangible assets | 100,000 | – | ||||||
| Common shares issued for payment of outstanding payables | – | 25,000 | ||||||
| Expenses paid with related party advances | 4,500 | – | ||||||
| Preferred shares issued to settle related party payables | – | 24,603 | ||||||
| Preferred shares issued to settle related party loans payable | – | 47,805 | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | – | – | ||||||
| Income tax paid | – | – | ||||||
(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
| 6 |
GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 1. | Organization and Nature of Operations |
Gala Global Inc. (the “Company”) was incorporated in the State of Nevada on March 10, 2010. The Company was formed to provide garment tailoring and alteration services.
The Company has has expanded into the Hemp and Cannabidiol (“CBD”) industry. The expansion is focusing on the development, research, and commercialization of products derived from the Hemp and Cannabis plant. The Company currently is finalizing its marketing strategy for a new CBD flavored thin-film strip. The film strip delivery system uses a dissolving film strip that is absorbed in the mouth. The film-strip method is an advanced method of providing CBD for dietary supplement. The Company also is seeking acquisition candidates in this area of interest in the nutraceutical and pharmaceutical industries. The Company also plans to enter into the medical marijuana cultivation industry as approved in the United States and Canada to build legalized cultivation operations.
The Company’s services include the development of cannabinoid based health and wellness products; the development of medical grade compounds; the licensing of proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal herb industry.
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at May 31, 2017, the Company has generated no revenues and has an accumulated deficit of $1,641,186. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| 2. | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation |
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is November 30.
| (b) | Principles of Consolidation |
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Cannabis Ventures Inc. (USA), Cannabis Ventures Inc. (Canada), from the date of their acquisition by the Company effective June 26, 2014 and CBD Life, Inc. from June 26, 2014 (date of acquisition) to December 30, 2016 (date of dissolution). All inter-company transactions and balances have been eliminated on consolidation.
| (c) | Interim Financial Statements |
The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management’s opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the six months ended May 31, 2017 are not necessarily indicative of the results that may be expected for the year ended November 30, 2017. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended November 30, 2016 included in our Form 10-K filed with the SEC.
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GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 2. | Summary of Significant Accounting Policies (continued) |
| (d) | Use of Estimates |
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of derivative liability and share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
| (e) | Inventory |
Inventory is comprised of Vape Mods purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future market conditions.
| (f) | Financial Instruments |
Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, loans payable, and amounts due to related parties. The recorded values of all these financial instruments approximate their current fair values because of the short term nature of these financial instruments.
| (g) | Revenue Recognition |
The Company earns revenue from the sale of Vape Mods, which are modified electronic cigarettes and vape pens. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services. There were no sales during any of the periods presented.
| (h) | Stock-based Compensation |
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
| (i) | Basic and Diluted Net Loss per Share |
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At May 31, 2017, the Company had 486,873 (November 30, 2016 – nil) potentially dilutive shares outstanding.
| 8 |
GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 2. | Summary of Significant Accounting Policies (continued) |
| (j) | Derivative Liability |
From time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise provision. The derivative liability is records at is fair value calculated by using an option pricing model such as a multi-nominal lattice model. The fair value of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in the consolidated statement of operations.
| (k) | Beneficial Conversion Features |
From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
| (l) | Recent Accounting Pronouncements |
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| 3. | Deferred Compensation |
Deferred compensation is comprised of common shares issued to officers and directors of the Company for compensation services. During the six months ended May 31, 2017, the Company issued 24,500,000 common shares with a fair value of $490,000 for compensation of which $80,630 was expensed during the period and the remaining $409,370 was recorded as deferred compensation within shareholders’ equity.
| 4. | Convertible Debenture |
On May 15, 2017, the Company entered into a $280,000 promissory note agreement with a non-related party for proceeds of $250,000, which is net of an original issuance discount and legal fees of $30,000 which were capitalized and amortized over the period of the convertible debenture. The promissory note is unsecured, bears interest at 10% per annum, and is due on November 30, 2017. The promissory note is convertible into common shares at the lesser of: (a) $0.35; or (b) 65% of the average of the three lowest volume weighted average price of the Company’s common shares in the 20 days preceding the notice of conversion limited by a conversion floor price of $0.05 per share.
The embedded conversion option qualifies for derivative accounting under ASC 815-15, Derivatives and Hedging. The fair value of the derivative liability resulted in a full discount of the $250,000 based on the net proceeds received from promissory note. The carrying value of the convertible debenture will be accreted over the term of the convertible debenture up to the face value of $280,000. As at May 31, 2017, the carrying value of the convertible debenture was $11,752 and the unamortized discount on the convertible debenture was $268,248, which includes $135,264 of unamortized discount on the convertible note and $132,984 of unamortized debt issuance costs incurred.
| 9 |
GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 5. | Derivative Liability |
The Company records the fair value of the conversion price of the convertible debentures, as disclosed in Note 3, in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative liability is revalued on each balance sheet date or upon conversion of the underlying convertible debenture into equity with corresponding gains and losses recorded in the consolidated statement of operations. The fair value of the derivative as of May 15, 2017 was $305,957 calculated using the binomial option pricing model. $144,604 was applied against the net proceeds received from promissory note as a conversion discount and the remaining $161,353 was included in interest expense. During the three and six months ended May 31, 2017, the Company recorded a loss on the change in fair value of derivative liability of $10,032 (2016 - $nil). As at May 31, 2017, the Company recorded a derivative liability of $315,989 (November 30, 2016 - $nil).
The following inputs and assumptions were used to value the convertible debentures outstanding during the period ended May 31, 2017:
| Expected Volatility |
Risk-free Interest Rate |
Expected Dividend Yield |
Expected Life (in years) | |
| May 15, 2017 convertible debenture: | ||||
| As at May 15, 2017 (date of issuance) | 288% | 1.02% | 0% | 0.5 |
| As at May 31, 2017 (mark-to-market) | 267% | 1.08% | 0% | 0.5 |
| 6. | Related Party Transactions |
| (a) | As at May 31, 2017, the Company owed $30,567 (November 30, 2016 - $249,835) to a company controlled by a significant shareholder of the Company to fund payment of operating expenditures. During the period ended May 31, 2017, the Company settled $249,835 of related party debt with the issuance of 1,387,979 common shares. Refer to Note 7(b). The amount owed is unsecured, non-interest bearing, and due on demand. |
| (b) | As at May 31, 2017, the Company owed $10,000 (November 30, 2016 - $10,000) to a company controlled by a significant shareholder of the Company. The amount owed in unsecured, non-interest bearing, and due on demand. |
| (c) | As at May 31, 2017, the Company owed $2,064 (November 30, 2016 - $2,064) to a significant shareholder of the Company. The amount is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance. As at May 31, 2017, accrued interest of $51 (November 30, 2016 - $15) has been included in accounts payable and accrued liabilities. |
| (d) | As at May 31, 2017, the Company owed $2,500 (November 30, 2016 - $nil) to a significant shareholder of the Company. The amount is unsecured, bears interest at 2% per annum, and due 180 days from the date of issuance. As at May 31, 2017, accrued interest of $49 (November 30, 2016 - $nil) has been included in accounts payable and accrued liabilities. |
| (e) | As at May 31, 2017, the Company owed $6,000 (November 30, 2016 - $nil) to a significant shareholder of the Company. The amount is unsecured, bears interest at 2% per annum, and due 180 days from the date of issuance. As at May 31, 2017, accrued interest of $109 (November 30, 2016 - $nil) has been included in accounts payable and accrued liabilities. |
| (f) | As at May 31, 2017, the Company owed $10,000 (November 30, 2016 - $10,000) to the former spouse of a significant shareholder of the Company for a note issued on September 21, 2016. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance. As at May 31, 2017, accrued interest of $210 (November 30, 2016 - $58) has been included in accounts payable and accrued liabilities - related party. |
| (g) | As at May 31, 2017, the Company owed $10,500 (November 30, 2016 - $79,333) to a significant shareholder of the Company, which has been recorded in accounts payable and accrued liabilities - related parties. The amount owed is unsecured, non-interest bearing, and due on demand. During the three and six months ended May 31, 2017, the Company settled $88,333 of related party debt with the issuance of 490,742 common shares. Refer to Note 7(b). |
| 10 |
GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 6. | Related Party Transactions (continued) |
| (h) | On May 8, 2017, the Company entered into an agreement whereby the Company agreed to acquire 80% of the issued and outstanding common stock of Controlled Environment Genomics Inc ("CEG Inc"), in exchange for a new series of the Company’s preferred shares, and issue 5,000,000 restricted common shares in exchange for CEG's intellectual property. In the event that CEG, Inc. becomes its own public entity, the executive shall receive 51% ownership of the new entity, and the Company will retain the remaining 49%. As at May 31, 2017, the Company issued 5,000,000 common shares with a fair value of $100,000 to the Chief Executive Officer of the Company as a deposit for the proposed acquisition of intangible assets. As at May 31, 2017, the agreement to acquire the common stock of CEG Inc. and the intangible assets has not been finalized. Refer to Note 7(i). |
| (i) | During the six months ended May 31, 2017, the Company issued 23,000,000 common shares with a fair value of $460,000 to officers and directors of the Company as compensation for services for a period of one year. On May 8, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to the Chief Executive Officer of the Company for compensation of services for a period of one year. As at May 31, 2017, the Company recorded compensation expense of $80,630 and the remaining fair value of $409,370 has been recorded as deferred compensation within shareholders’ equity. |
| (j) | During the six months ended May 31, 2017, the Company loaned $5,000 (November 30, 2016 - $nil) to a company controlled by an officer of the Company for day-to-day expenses. The amount owing is unsecured, non-interest bearing, and due on demand. |
| 7. | Common Shares |
| (a) | On January 30, 2017, the Company effected a share consolidation on a 100 old shares for 1 new share basis. The share consolidation has been applied retroactively to the earliest period presented. |
| (b) | On March 22, 2017, the Company issued 490,742 common shares with a fair value of $176,667 to settle outstanding debt of $88,333 owed to a director of the Company for legal services performed. The transaction resulted in a loss on settlement of debt of $88,334, which was recorded in the consolidated statement of operations. |
| (c) | On March 22, 2017, the Company issued 1,387,970 common shares to settle outstanding debt of $249,835 owed to a company controlled by a director of the Company. |
| (d) | On March 30, 2017, the Company issued 10,000,000 common shares with a fair value of $200,000 to a director of the Company for compensation services for a period of twelve months from the date of issuance. The common shares were valued based on the fair value of the services to be provided. As at May 31, 2017, deferred compensation of $165,479 has been recorded in prepaid expense. |
| (e) | On March 30, 2017, the Company issued 10,000,000 common shares with a fair value of $200,000 to a director of the Company for compensation services for a period of twelve months from the date of issuance. The common shares were valued based on the fair value of the services to be provided. As at May 31, 2017, deferred compensation of $165,479 has been recorded in deferred compensation. |
| (f) | On March 30, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to the Chief Financial Officer of the Company for compensation services for a period of twelve months from the date of issuance. The common shares were valued based on the fair value of the services to be provided. As at May 31, 2017, deferred compensation of $24,822 has been recorded in deferred compensation. |
| (g) | On March 30, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to an officer of the Company for compensation services for a period of twelve months from the date of issuance. The common shares were valued based on the fair value of the services to be provided. As at May 31, 2017, deferred compensation of $24,822 has been recorded in deferred compensation. |
| (h) | On May 17, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to the Chief Executive Officer of the Company for compensation services for a period of twelve months from the date of issuance. The common shares were valued based on the fair value of the services to be provided. As at May 31, 2017, deferred compensation of $28,767 has been recorded in deferred compensation. |
| 11 |
GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 7. | Common Shares (continued) |
| (i) | On May 17, 2017, the Company issued 5,000,000 common shares with a fair value of $100,000 to a company controlled by the Chief Executive Officer of the Company for the purchase of intangible assets. |
| 8. | Share Purchase Warrants |
On May 15, 2017, the Company issued 486,783 share purchase warrants with an exercise price of $0.09 per share for a period of five years. The fair value of the share purchase warrants was $105,396, calculated using the binomial option pricing model assuming no expected dividends, volatility of 199%, expected life of 5 years, and a risk free rate of 1.05%. The fair value of the share purchase warrants were recorded in the consolidated statement of operations as interest expense.
|
Number of warrants |
Weighted $ | |
| Balance, November 30, 2016 | – | – |
| Issued | 486,783 | 0.09 |
| Balance, May 31, 2017 | 486,783 | 0.09 |
| 9. | Commitments |
(a) On March 30, 2017, the Company entered into the following consulting and management agreements:
| · | With a director of the Company for management and legal services for a period of four years, subject to termination upon providing 10 days written notice. The Company is to provide compensation of 10,000,000 common shares of the Company per annum and 1% of the issued and outstanding common shares of the Company on September 30th of each fiscal year of this agreement; |
| · | With a significant shareholder of the Company for consulting services for a period of four years, subject to termination upon providing 10 days written notice. The Company is to provide compensation of 10,000,000 common shares of the Company per annum and 1% of the issued and outstanding common shares of the Company on September 30th of each fiscal year of this agreement; |
| · | With the Chief Financial Officer of the Company for management and consulting services for a period of four years, subject to termination upon providing 10 days written notice. The Company is to provide compensation of 1,500,000 common shares of the Company per annum and 1% of the issued and outstanding common shares of the Company on September 30th of each fiscal year of this agreement; and |
| · | With a consultant of the Company for consulting services for consulting services for a period of four years, subject to termination upon providing 10 days written notice. The Company is to provide compensation of 1,500,000 common shares of the Company per annum and 1% of the issued and outstanding common shares of the Company on September 30th of each fiscal year of this agreement. |
| (b) | On May 8, 2017, the Company entered into a consulting and management agreement with the Chief Executive Officer of the Company for management and consulting services until March 30, 2020, subject to termination upon providing 10 days written notice. The Company is to provide compensation of 1,500,000 common shares of the Company per annum, and issue 1% of the issued and outstanding common shares of the Company on November 1st of each fiscal year of this agreement. In addition, the Company is to compensate $10,000 per month until the sale of the 1,500,000 common shares or the fair value of the 1% of the issued and outstanding common shares issued on November 1st of each fiscal year equals or exceeds $10,000 per month ($120,000 per annum). |
| 12 |
GALA GLOBAL INC.
Notes to the Condensed Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2017 and 2016
(unaudited)
| 10. | Subsequent Events |
We have evaluated subsequent events through to the date of issuance of the condensed consolidated financial statements, and the following subsequent events:
| (a) | On June 13, 2017, the Company issued 1,500,000 common shares to a non-related party for consulting services. |
| (b) | On June 23, 2017, the Company issued 1,500,000 common shares for cash pursuant to a Stock Purchase Agreement at $.08 per share. |
| (c) | On July 20, 2017, the Company authorized the issuance of 2,000,000 common shares to a non-related parties for consulting services. As of the date of filing, the shares have not been issued. |
| (d) | On July 21, 2017, the Company authorized the settlement of $44,290 of loans payable, comprised of principal amounts of $43,000 and accrued interest of $1,290, with the issuance of 553,625 common shares. As of the date of filing, the shares have not been issued. |
| 13 |
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement
This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.
Business Expansion (Subsequent event):
On May 8, 2017, Gala Global Inc. (“GLAG”) and Controlled Environment Genomics, Inc. (“CEG”) entered into a definitive agreement whereby GLAG is acquiring 80% of CEG. The transaction will be closing shortly.
Controlled Environment Genomics, Inc. (CEG), Akron, Ohio, is a genomics company with expertise in digital plant gene sequencing, editing and cloning technologies. Genomics is an interdisciplinary field of science and branch of molecular biology focused on the structure, function, evolution and mapping of genomes, complete sets of DNA within single cells of an organism. CEG’s state-of-the-art genomics technology enables computerized genome sequencing and plant cloning using a fully automated turnkey solution for digitally sequencing the genomes of the world’s most desirable plant varieties based on flavor and nutrition.
CEG improves the most valuable crop varieties currently available on the market by utilizing proprietary Cloud computing-based digital cloning technologies to crossbreed crops that have advantageous traits with established varieties featuring the best genetic profiles for commercial production. The very best plant traits can be used to improve the most sought-after commercial varieties by adding characteristics like maximized yields and quality conducive to increased consumer demand and optimized production profitability.
CEG’s patent-pending digital cloning technology makes it possible for plant breeders to edit the original genetic profile of any crop by modifying it with specific genes that control traits like active compound production and/or nutritional/medicinal value, thus increasing business efficiencies while boosting commercial viability.
CEG Inc. designed its digital plant cloning incubation and growth chambers with plant breeders in mind. CEG incubation technology enables breeders to control temperature, light, humidity and more for agricultural biotechnology, phytopathology, entomology and other plant science research. Using CEG technology, plant breeders can quickly clone hybridized plants containing specific desirable genes and traits “on demand” in any geographical location.
| 14 |
RESULTS OF OPERATIONS
Working Capital
| May 31, 2017 $ | November 30, 2016 $ | |||||||
| Current Assets | 358,794 | 13,082 | ||||||
| Current Liabilities | (498,847 | ) | (461,190 | ) | ||||
| Working Capital (Deficit) | (140,053 | ) | (448,108 | ) | ||||
Cash Flows
| Six months ended May 31, 2017 $ | Six months ended May 31, 2016 $ | |||||||
| Cash Flows from (used in) Operating Activities | (39,655 | ) | (38,771 | ) | ||||
| Cash Flows from (used in) Investing Activities | (5,000 | ) | – | |||||
| Cash Flows from (used in) Financing Activities | 285,367 | 39,040 | ||||||
| Net Increase (decrease) in Cash During Period | 240,712 | 269 | ||||||
Operating Expenses
Three Months Ended May 31, 2017 and 2016
During the three months ended May 31, 2017, the Company incurred operating expenses of $99,631 compared to $50,475 during the three months ended May 31, 2016. The increase in operating expenses is due to the issuance of common shares to officers and directors of the Company totaling $490,000 of which $80,630 was expensed during the period and the remaining amount of $409,370 was recorded as prepaid expense for the fair value of future services due to the Company related to those share issuances. The increases were offset by a decrease of $13,600 in rent expense as the Company is minimizing expenditures in order to maintain sufficient cash flow for future use.
The Company incurred a net loss of $373,098 during the three months ended May 31, 2017 compared to a net loss of $50,712 during the three months ended May 31, 2016. In addition to operating expenses incurred during the three months ended May 31, 2017, the Company also recorded a loss on settlement of related party debt of $88,334 for the difference in the fair value of shares issued to a related party above the carrying value of related party debt, $10,032 for the change in fair value of the derivative liability, and $175,101 for interest and accretion expense related to the issuance and revaluation of the convertible debenture issued during the period and for the fair value of share purchase warrants issued during the period of $105,396. For the three months ended May 31, 2017, the Company had minimal other expense items.
Six Months Ended May 31, 2017 and 2016
During the six months ended May 31, 2017, the Company incurred operating expenses of $130,333 compared to $95,352 during the three months ended May 31, 2016. The increase in operating expenses is due to the issuance of common shares to officers and directors of the Company totaling $490,000 of which $80,630 was expensed during the period and the remaining amount of $409,370 was recorded as prepaid expense for the fair value of future services due to the Company related to those share issuances. The increases were offset by a decrease of $12,550 in rent expense and decrease of $17,500 in non-related consulting expense as the Company is minimizing expenditures in order to maintain sufficient cash flow for future use.
The Company incurred a net loss of $404,473 during the six months ended May 31, 2017 compared to a net loss of $95,905 during the six months ended May 31, 2016. In addition to operating expenses incurred during the six months ended May 31, 2017, the Company also recorded a loss on settlement of related party debt of $88,334 for the difference in the fair value of shares issued to a related party above the carrying value of related party debt, $10,032 for the change in fair value of the derivative liability, and $175,774 for interest and accretion expense related to the issuance and revaluation of the convertible debenture issued during the period and for the fair value of share purchase warrants issued during the period of $105,396. For the three months ended May 31, 2017, the Company had minimal other expense items.
| 15 |
Net Loss
During the three months ended May 31, 2017, the Company incurred a net loss of $373,098 or $0.02 loss per share compared to a net loss of $50,712 and loss per share of $0.04 during the three months ended May 31, 2017. During the six months ended May 31, 2017, the Company incurred a net loss of $404,473 or $0.04 loss per share compared to a net loss of $95,905 or $0.07 loss per share during the six months ended May 31, 2016. The increase in the net loss and loss per share amounts were due to greater expenditures relating to the fair value of share-based compensation that was issued during the current period.
Liquidity and Capital Resources
As of May 31, 2017, the Company has a working capital deficit of $140,053 and an accumulated deficit of $1,641,186 compared to a working capital deficit of $448,108 and an accumulated deficit of $1,236,713. The increase in working capital was due to the issuance of common shares for compensation to officers and directors of the Company of which $409,370 was recorded as deferred compensation in shareholders’ equity as at May 31, 2017. Furthermore, the Company issued 5,000,000 common shares to a company controlled by the Chief Executive Officer of the Company with a fair value of $100,000 as a deposit for the purchase of intangible assets from a related company which has not been finalized as of May 31, 2017.
During the six months ended May 31, 2017, the Company issued the following common shares:
| · | Issuance of 490,742 common shares with a fair value of $176,667 to settle outstanding debt of $88,333 owed to a director of the Company; |
| · | Issuance of 1,387,970 common shares to settle outstanding debt of $249,835 owed to a company controlled by a director of the Company; |
| · | Issuance of 10,000,000 common shares with a fair value of $200,000 to a director of the Company for compensation services of one year, ending March 30, 2018; |
| · | Issuance of 10,000,000 common shares with a fair value of $200,000 to a director of the Company for compensation services of one year, ending March 30, 2018; |
| · | Issuance of 1,500,000 common shares with a fair value of $30,000 to the Chief Financial Officer of the Company for compensation services of one year, ending March 30, 2018; |
| · | Issuance of 1,500,000 common shares with a fair value of $30,000 to an officer of the Company for compensation services of one year, ending March 30, 2018; |
| · | Issuance of 1,500,000 common shares with a fair value of $30,000 to the Chief Executive Officer of the Company for compensation services of one year, ending May 17, 2018; and |
| · | Issuance of 5,000,000 common shares with a fair value of $100,000 to a company controlled by the Chief Executive Officer of the Company for the purchase of intangible assets, which have not been finalized as of May 31, 2017. |
Cash flow from Operating Activities
During the six months ended May 31, 2017, the Company used cash of $39,655 in operating activities compared to the use of $38,771 of cash for operating activities during the six months ended May 31, 2016. Overall, the cash used for operating activities was consistent to prior year, as the Company incurred a significant amount of non-cash expenditures during the period.
Cash flow from Investing Activities
During the six months ended May 31, 2017, the Company used cash of $5,000 for the issuance of a loan to a company controlled by the Chief Executive Officer of the Company. During the six months ended May 31, 2016, the Company did not have any investing activities.
Cash flow from Financing Activities
During the six months ended May 31, 2017, the Company received cash of $285,367 from financing activities compared to $39,040 during the six months ended May 31, 2016. The increase in the cash received from financing activities was due to the receipt of $250,000 from the issuance of a convertible debenture as well as $35,367 received from related parties in the form of operating advances and related party notes compared to net cash received of $39,040 from related parties during the six months ended May 31, 2016.
| 16 |
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Subsequent Events
| (a) | On June 13, 2017, the Company issued 1,500,000 common shares with a fair value of $330,000 to a non-related party for consulting services. | ||
| (b) | On June 23, 2017, the Company issued 1,500,000 common shares for cash pursuant to a Stock Purchase Agreement at $.08 per share. | ||
| (c) | On July 20, 2017, the Company authorized the issuance of 2,000,000 common shares to a non-related parties for consulting services. As of the date of filing, the shares have not been issued. | ||
| (d) | On July 21, 2017, the Company authorized the settlement of $44,290 of loans payable, comprised of principal amounts of $43,000 and accrued interest of $1,290, with the issuance of 553,625 common shares. As of the date of filing, the shares have not been issued. | ||
Going Concern
The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note (1) of the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes for the reporting period. Significant areas requiring the use of management estimates relate to the valuation of its mineral leases and claims and our ability to obtain final government permission to complete the project.
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
| 17 |
Derivative Liability
From time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise provision. The derivative liability is records at is fair value calculated by using an option pricing model such as a multi-nominal lattice model. The fair value of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in the consolidated statement of operations.
Beneficial Conversion Features
From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
Recently Issued Accounting Pronouncements
The Company has reviewed all the recently issued, but not yet effective, accounting pronouncements and does not believe that the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations as reported in its financial statements.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Management's Report on Internal Control over Financial Reporting.
Our Internal control over financial reporting is a process that, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, was designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that our controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As management, it is our responsibility to establish and maintain adequate internal control over financial reporting. As of May 31, 2017, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting using criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation, we concluded that the Company maintained effective internal control over financial reporting as of May 31, 2017, based on criteria established in the Internal Control Integrated Framework issued by the COSO.
| 18 |
This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this quarterly report.
Evaluation of disclosure controls and procedures.
As of May 31, 2017, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the date of filing this annual report applicable for the period covered by this report.
Changes in internal controls.
During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 19 |
As of May 31, 2017 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
For the three months ended May 31, 2017, there were the following equity transactions.
| (j) | On March 22, 2017, the Company issued 490,742 common shares with a fair value of $176,667 to settle outstanding debt of $88,333 owed to a director of the Company for legal services. |
| (ii) | On March 22, 2017, the Company issued 1,387,970 common shares to settle outstanding debt of $249,835 owed to a company controlled by a director of the Company. |
| (iii) | On March 30, 2017, the Company issued 10,000,000 common shares with a fair value of $200,000 to a director of the Company for compensation services for a period of twelve months from the date of issuance. As at May 31, 2017, deferred compensation of $165,479 has been recorded in prepaid expense. |
| (iv) | On March 30, 2017, the Company issued 10,000,000 common shares with a fair value of $200,000 to a director of the Company for compensation services for a period of twelve months from the date of issuance. As at May 31, 2017, deferred compensation of $165,479 has been recorded in prepaid expense. |
| (v) | On March 30, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to the Chief Financial Officer of the Company for compensation services for a period of twelve months from the date of issuance. As at May 31, 2017, deferred compensation of $24,822 has been recorded in prepaid expense. |
| (vi) | On March 30, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to an officer of the Company for compensation services for a period of twelve months from the date of issuance. As at May 31, 2017, deferred compensation of $24,822 has been recorded in prepaid expense. |
| (vii) | On May 17, 2017, the Company issued 1,500,000 common shares with a fair value of $30,000 to the Chief Executive Officer of the Company for compensation services for a period of twelve months from the date of issuance. As at May 31, 2017, deferred compensation of $28,767 has been recorded in prepaid expense. |
| (viii) | On May 17, 2017, the Company issued 5,000,000 common shares with a fair value of $100,000 to a company controlled by the Chief Executive Officer of the Company for the purchase of intangible assets. |
| (ix) | On May 15, 2017, the Company issued 486,786 share purchase warrants with an exercise price of $0.09 per share for a period of five years. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None noted
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
None noted
| 20 |
|
Exhibit Number |
Exhibit Description |
| 31.1 | Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase |
| 21 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.
| GALA GLOBAL INC. | ||
| (REGISTRANT) | ||
| Date: July 28, 2017 | /s/ Timothy Madden | |
| Timothy Madden | ||
| Chief Executive Officer | ||
| (Authorized Officer for Registrant) | ||
| 22 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 USC, ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Timothy Madden, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Gala Global 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 in order 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 controls 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 procedure 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 upon 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 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 my 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. |
| Dated: July 28, 2017 | |
| /s/ Timothy Madden | |
| Timothy Madden President, Chief Financial Officer, and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
| (1) | the Quarter Report on Form 10-Q of Gala Global Inc. for the quarter ended May 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Gala Global Inc. |
|
Dated: July 28, 2017
|
||
|
/s/ Timothy Madden
|
||
|
Timothy Madden
|
||
|
President, Chief Financial Officer, and Director
|
||
|
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
|
Document and Entity Information - shares |
6 Months Ended | |
|---|---|---|
May 31, 2017 |
Jul. 25, 2017 |
|
| Document And Entity Information | ||
| Entity Registrant Name | Gala Global Inc. | |
| Entity Central Index Key | 0001513403 | |
| Document Type | 10-Q | |
| Document Period End Date | May 31, 2017 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --11-30 | |
| 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 | 38,301,531 | |
| Document Fiscal Period Focus | Q2 | |
| Document Fiscal Year Focus | 2017 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) |
May 31, 2017 |
Nov. 30, 2016 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, par value per share | $ 0.001 | $ 0.001 |
| Preferred stock, shares issued | 500,000 | 500,000 |
| Preferred stock, shares outstanding | 500,000 | 500,000 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, par value per share | $ 0.001 | $ 0.001 |
| Common stock, shares issued | 32,747,936 | 1,369,224 |
| Common stock, shares outstanding | 32,747,936 | 1,369,224 |
| Unamortized discount | $ 268,348 | $ 0 |
Condensed Consolidated Statements Of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2017 |
May 31, 2016 |
|
| Operating expenses | ||||
| Consulting fees | $ 0 | $ 0 | $ 0 | $ 17,500 |
| Consulting fees - related party | 46,109 | 8,907 | 46,109 | 15,365 |
| General and administrative | 14,601 | 17,568 | 25,253 | 29,487 |
| General and administrative - related party | 37,521 | 9,000 | 56,521 | 18,000 |
| Rent | 1,400 | 15,000 | 2,450 | 15,000 |
| Total operating expenses | 99,631 | 50,475 | 130,333 | 95,352 |
| Loss before other expense | (99,631) | (50,475) | (130,333) | (95,352) |
| Other expense | ||||
| Change in fair value of derivative liability | (10,032) | 0 | (10,032) | 0 |
| Interest expense | (175,101) | (237) | (175,774) | (553) |
| Loss on settlement of related party debt | (88,334) | 0 | (88,334) | 0 |
| Total other expense | (273,467) | (237) | (274,140) | (553) |
| Net loss | $ (373,098) | $ (50,712) | $ (404,473) | $ (95,905) |
| Net loss per share, basic and diluted | $ (0.02) | $ (0.04) | $ (0.04) | $ (0.07) |
| Weighted average common shares outstanding | 19,267,388 | 1,369,224 | 10,367,208 | 1,360,630 |
1. Organization And Nature Of Operations |
6 Months Ended |
|---|---|
May 31, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Nature of Operations | Gala Global Inc. (the “Company”) was incorporated in the State of Nevada on March 10, 2010. The Company was formed to provide garment tailoring and alteration services.
The Company has has expanded into the Hemp and Cannabidiol (“CBD”) industry. The expansion is focusing on the development, research, and commercialization of products derived from the Hemp and Cannabis plant. The Company currently is finalizing its marketing strategy for a new CBD flavored thin-film strip. The film strip delivery system uses a dissolving film strip that is absorbed in the mouth. The film-strip method is an advanced method of providing CBD for dietary supplement. The Company also is seeking acquisition candidates in this area of interest in the nutraceutical and pharmaceutical industries. The Company also plans to enter into the medical marijuana cultivation industry as approved in the United States and Canada to build legalized cultivation operations.
The Company’s services include the development of cannabinoid based health and wellness products; the development of medical grade compounds; the licensing of proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal herb industry.
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at May 31, 2017, the Company has generated no revenues and has an accumulated deficit of $1,641,186. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
2. Summary Of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies |
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is November 30.
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Cannabis Ventures Inc. (USA), Cannabis Ventures Inc. (Canada), from the date of their acquisition by the Company effective June 26, 2014 and CBD Life, Inc. from June 26, 2014 (date of acquisition) to December 30, 2016 (date of dissolution). All inter-company transactions and balances have been eliminated on consolidation.
The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management’s opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the six months ended May 31, 2017 are not necessarily indicative of the results that may be expected for the year ended November 30, 2017. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended November 30, 2016 included in our Form 10-K filed with the SEC.
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of derivative liability and share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Inventory is comprised of Vape Mods purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future market conditions.
Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, loans payable, and amounts due to related parties. The recorded values of all these financial instruments approximate their current fair values because of the short term nature of these financial instruments.
The Company earns revenue from the sale of Vape Mods, which are modified electronic cigarettes and vape pens. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services. There were no sales during any of the periods presented.
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At May 31, 2017, the Company had 486,873 (November 30, 2016 – nil) potentially dilutive shares outstanding.
From time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise provision. The derivative liability is records at is fair value calculated by using an option pricing model such as a multi-nominal lattice model. The fair value of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in the consolidated statement of operations.
From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
3. Deferred Compensation |
6 Months Ended |
|---|---|
May 31, 2017 | |
| Retirement Benefits [Abstract] | |
| Deferred Compensation | Deferred compensation is comprised of common shares issued to officers and directors of the Company for compensation services. During the six months ended May 31, 2017, the Company issued 24,500,000 common shares with a fair value of $490,000 for compensation of which $80,630 was expensed during the period and the remaining $409,370 was recorded as deferred compensation within shareholders’ equity. |
4. Convertible Debenture |
6 Months Ended |
|---|---|
May 31, 2017 | |
| Debt Disclosure [Abstract] | |
| Convertible Debenture | On May 15, 2017, the Company entered into a $280,000 promissory note agreement with a non-related party for proceeds of $250,000, which is net of an original issuance discount and legal fees of $30,000 which were capitalized and amortized over the period of the convertible debenture. The promissory note is unsecured, bears interest at 10% per annum, and is due on November 30, 2017. The promissory note is convertible into common shares at the lesser of: (a) $0.35; or (b) 65% of the average of the three lowest volume weighted average price of the Company’s common shares in the 20 days preceding the notice of conversion limited by a conversion floor price of $0.05 per share.
The embedded conversion option qualifies for derivative accounting under ASC 815-15, Derivatives and Hedging. The fair value of the derivative liability resulted in a full discount of the $250,000 based on the net proceeds received from promissory note. The carrying value of the convertible debenture will be accreted over the term of the convertible debenture up to the face value of $280,000. As at May 31, 2017, the carrying value of the convertible debenture was $11,752 and the unamortized discount on the convertible debenture was $268,248, which includes $135,264 of unamortized discount on the convertible note and $132,984 of unamortized debt issuance costs incurred. |
5. Derivative Liability |
6 Months Ended | ||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||
| Derivative Liability |
The Company records the fair value of the conversion price of the convertible debentures, as disclosed in Note 3, in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative liability is revalued on each balance sheet date or upon conversion of the underlying convertible debenture into equity with corresponding gains and losses recorded in the consolidated statement of operations. The fair value of the derivative as of May 15, 2017 was $305,957 calculated using the binomial option pricing model. $144,604 was applied against the net proceeds received from promissory note as a conversion discount and the remaining $161,353 was included in interest expense. During the three and six months ended May 31, 2017, the Company recorded a loss on the change in fair value of derivative liability of $10,032 (2016 - $nil). As at May 31, 2017, the Company recorded a derivative liability of $315,989 (November 30, 2016 - $nil).
The following inputs and assumptions were used to value the convertible debentures outstanding during the period ended May 31, 2017:
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6. Related Party Transactions |
6 Months Ended | ||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||
| Related Party Transactions |
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7. Common Shares |
6 Months Ended | |||||||||||||||||||||||||||
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May 31, 2017 | ||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||
| Common Shares |
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8. Share Purchase Warrants |
6 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 | ||||||||||||||||
| Equity [Abstract] | ||||||||||||||||
| Share Purchase Warrants | On May 15, 2017, the Company issued 486,783 share purchase warrants with an exercise price of $0.09 per share for a period of five years. The fair value of the share purchase warrants was $105,396, calculated using the binomial option pricing model assuming no expected dividends, volatility of 199%, expected life of 5 years, and a risk free rate of 1.05%. The fair value of the share purchase warrants were recorded in the consolidated statement of operations as interest expense.
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9. Commitments |
6 Months Ended | |||||||||||||||
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May 31, 2017 | ||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||
| Commitments |
(a) On March 30, 2017, the Company entered into the following consulting and management agreements:
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10. Subsequent Events |
6 Months Ended | ||||||||||||
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May 31, 2017 | |||||||||||||
| Subsequent Events [Abstract] | |||||||||||||
| Subsequent Events |
We have evaluated subsequent events through to the date of issuance of the condensed consolidated financial statements, and the following subsequent events:
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2. Summary Of Significant Accounting Policies (Policies) |
6 Months Ended | |||
|---|---|---|---|---|
May 31, 2017 | ||||
| Accounting Policies [Abstract] | ||||
| Basis of Presentation |
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is November 30. |
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| Principles of Consolidation |
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Cannabis Ventures Inc. (USA), Cannabis Ventures Inc. (Canada), from the date of their acquisition by the Company effective June 26, 2014 and CBD Life, Inc. from June 26, 2014 (date of acquisition) to December 30, 2016 (date of dissolution). All inter-company transactions and balances have been eliminated on consolidation. |
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| Interim Financial Statements |
The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management’s opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the six months ended May 31, 2017 are not necessarily indicative of the results that may be expected for the year ended November 30, 2017. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended November 30, 2016 included in our Form 10-K filed with the SEC. |
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| Use of Estimates |
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of inventory, valuation of derivative liability and share-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
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| Inventory |
Inventory is comprised of Vape Mods purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference between the cost of inventory and the estimated realizable value based upon assumptions about future market conditions. |
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| Financial Instruments |
Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, loans payable, and amounts due to related parties. The recorded values of all these financial instruments approximate their current fair values because of the short term nature of these financial instruments. |
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| Revenue Recognition |
The Company earns revenue from the sale of Vape Mods, which are modified electronic cigarettes and vape pens. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services. There were no sales during any of the periods presented. |
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| Stock-Based Compensation |
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. |
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| Basic and Diluted Net Loss Per Share |
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At May 31, 2017, the Company had 486,873 (November 30, 2016 – nil) potentially dilutive shares outstanding. |
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| Derivative Liability |
From time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise provision. The derivative liability is records at is fair value calculated by using an option pricing model such as a multi-nominal lattice model. The fair value of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in the consolidated statement of operations. |
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| Beneficial Conversion Features |
From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. |
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| Recently Issued Accounting Pronouncements |
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
5. Derivative Liability (Tables) |
6 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 | |||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||
| Assumptions used |
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8. Share Purchase Warrants (Tables) |
6 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 | ||||||||||||||||
| Equity [Abstract] | ||||||||||||||||
| Summary of Warrants Granted |
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1. Organization And Nature Of Operations (Details Narrative) - USD ($) |
May 31, 2017 |
Nov. 30, 2016 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accumulated deficit | $ (1,641,186) | $ (1,236,713) |
2. Summary Of Significant Accounting Policies (Details Narrative) - shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
May 31, 2017 |
Nov. 30, 2016 |
|
| Accounting Policies [Abstract] | ||
| Potentially dilutive shares | 486,873 | 0 |
3. Deferred Compensation (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |
|---|---|---|---|
May 31, 2017 |
May 31, 2017 |
Nov. 30, 2016 |
|
| Retirement Benefits [Abstract] | |||
| Stock issued for compensation, shares | 24,500,000 | ||
| Stock issued for compensation, value | $ 490,000 | ||
| Share-based compensation | $ 80,630 | 80,630 | |
| Deferred compensation | $ 409,370 | $ 409,370 | $ 0 |
4. Convertible Debenture (Details Narrative) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
Nov. 30, 2016 |
|
| Proceeds from convertible debt | $ 250,000 | $ 0 | |
| Unamortized discount | 268,348 | $ 0 | |
| Convertible Debt [Member] | |||
| Debt face amount | 280,000 | ||
| Proceeds from convertible debt | 250,000 | ||
| Payment of debt issuance costs | $ 30,000 | ||
| Debt stated interest percent | 10.00% | ||
| Debt maturity date | Nov. 30, 2017 | ||
| Convertible debenture carrying amount | $ 11,752 | ||
| Unamortized discount | 268,248 | ||
| Unamortized discount on convertible note | 132,264 | ||
| Unamortized discount on debt issuance costs | $ 132,984 | ||
5. Derivative Liability (Details) |
6 Months Ended |
|---|---|
May 31, 2017 | |
| Date of Issuance [Member] | |
| Expected volatility | 288.00% |
| Risk-free interest rate | 1.02% |
| Expected dividend yield | 0.00% |
| Expected life (in years) | 6 months |
| Mark-to-Market [Member] | |
| Expected volatility | 267.00% |
| Risk-free interest rate | 1.08% |
| Expected dividend yield | 0.00% |
| Expected life (in years) | 6 months |
8. Share Purchase Warrants (Details) - Warrants [Member] |
6 Months Ended |
|---|---|
|
May 31, 2017
$ / shares
shares
| |
| Warants outstanding, beginning balance | shares | 0 |
| Warrants issued | shares | 486,783 |
| Warants outstanding, ending balance | shares | 486,783 |
| Weighted average exercise price, beginning balance | $ / shares | |
| Weighted average exercise price, warrants issued | $ / shares | .09 |
| Weighted average exercise price, ending balance | $ / shares | $ 0.09 |
8. Share Purchase Warrants (Details Narrative) |
May 31, 2017
USD ($)
|
|---|---|
| Warrants [Member] | |
| Fair value of warrants issued | $ 105,396 |