þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
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Nevada
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88-0335710
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|
(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification Number)
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|
475 Fentress Blvd., Unit L,
Daytona Beach, Florida
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32114
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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o
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Accelerated filer
|
o
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Non-accelerated filer
|
o
(Do not check if a smaller reporting company)
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Smaller reporting company
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þ
|
September 30,
2015
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December 31,
2014
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|||||||
(unaudited)
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(audited)
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 58,935 | $ | 496,724 | ||||
Accounts receivable
|
155,175 | 37,421 | ||||||
Inventory (note 6)
|
147,051 | 78,901 | ||||||
Prepaid expenses and vendor deposits
|
114,976 | 378,252 | ||||||
Total current assets
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476,137 | 991,298 | ||||||
Long term assets
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||||||||
Property and equipment (note 7)
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112,216 | 1,864 | ||||||
Website development (note 8)
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88,325 | 93,323 | ||||||
Goodwill (note 4)
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879,443 | - | ||||||
Total long term assets
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1,079,984 | 95,187 | ||||||
Total assets
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$ | 1,556,121 | $ | 1,086,485 | ||||
LIABILITIES
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 617,664 | $ | 309,139 | ||||
Accrued liabilities
|
97,984 | 69,017 | ||||||
Accrued interest - related parties (note 17)
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102,101 | 39,279 | ||||||
Customer deposit
|
20,000 | - | ||||||
Loans from shareholders (note 9)
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727,803 | 34,739 | ||||||
Due to related parties (note 17)
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986,433 | 1,144,789 | ||||||
Promissory notes (note 4)
|
492,893 | - | ||||||
Credit facility (note 10)
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220,294 | 387,110 | ||||||
Total current liabilities
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3,265,172 | 1,984,073 | ||||||
Long term liabilities
|
||||||||
Loan from shareholders (note 9)
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- | 531,000 | ||||||
Due to related parties (note 17)
|
677,422 | 100,000 | ||||||
Promissory notes (note 4)
|
260,375 | - | ||||||
Convertible debentures (note 12)
|
44,995 | 24,828 | ||||||
Total long term liabilities
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982,792 | 655,828 | ||||||
Total liabilities
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4,247,964 | 2,639,901 | ||||||
Going concern (note 2)
|
||||||||
Related party transactions (note 17)
|
||||||||
Commitments and contingencies (note 18)
|
||||||||
Subsequent events (note 21)
|
||||||||
STOCKHOLDERS’ DEFICIENCY
|
||||||||
Common stock (note 13)
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$ | 19,342 | $ | 18,542 | ||||
Additional paid-in capital
|
4,450,042 | 3,998,482 | ||||||
Shares to be issued (note 15)
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25,000 | - | ||||||
Accumulated deficit
|
(7,485,936 | ) | (5,702,351 | ) | ||||
Accumulated other comprehensive income
|
299,709 | 131,911 | ||||||
Total shareholders’ deficiency
|
(2,691,843 | ) | (1,553,416 | ) | ||||
Total liabilities and stockholders’ deficiency
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$ | 1,556,121 | $ | 1,086,485 |
For the Three Months Ended
September 30,
2015
|
For the Three
Months Ended
September 30,
2014
|
For the Nine Months Ended
September 30,
2015
|
For the Nine
Months Ended
September 30,
2014
|
|||||||||||||
Sales revenue
|
$ | 816,610 | $ | 519,579 | $ | 824,251 | $ | 544,287 | ||||||||
Cost of goods sold
|
560,329 | 426,922 | 562,854 | 464,673 | ||||||||||||
Gross profit (loss)
|
256,281 | 92,657 | 261,397 | 79,614 | ||||||||||||
Consulting revenue
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- | 6,311 | - | 26,737 | ||||||||||||
Operating expenses
|
||||||||||||||||
Administrative
|
508,785 | 447,102 | 1,114,346 | 1,197,487 | ||||||||||||
Consulting fees - related parties (note 17)
|
150,045 | 158,598 | 472,493 | 472,579 | ||||||||||||
Depreciation and amortization
|
12,651 | 493 | 23,509 | 2,294 | ||||||||||||
Loss on sale of fixed asset
|
- | 661 | - | 661 | ||||||||||||
Bad debt expense (note 4)
|
- | 19,523 | - | 19,523 | ||||||||||||
Impairment of inventory
|
75,964 | 42,638 | 75,964 | 42,638 | ||||||||||||
Total operating expenses
|
747,445 | 669,015 | 1,686,312 | 1,735,182 | ||||||||||||
Loss from operations
|
(491,164 | ) | (570,047 | ) | (1,424,915 | ) | (1,628,831 | ) | ||||||||
Other income (expenses):
|
||||||||||||||||
Foreign exchange
|
20,895 | (21,799 | ) | 108,727 | (33,964 | ) | ||||||||||
Gain (loss) on loan receivable written off (note 5)
|
- | (86,615 | ) | - | (66,748 | ) | ||||||||||
Loss on settlement of account receivable
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- | - | (23,312 | ) | - | |||||||||||
Gain (loss) on settlement of debt
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- | - | 16,344 | (27,560 | ) | |||||||||||
Impairment of goodwill (note 4)
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- | (167,538 | ) | - | (167,538 | ) | ||||||||||
Amortization of debt discount
|
(109,558 | ) | (634,212 | ) | (197,167 | ) | (704,780 | ) | ||||||||
Interest expense, net
|
(114,981 | ) | (71,249 | ) | (263,262 | ) | (185,175 | ) | ||||||||
Total other expenses
|
(203,644 | ) | (981,413 | ) | (358,670 | ) | (1,185,765 | ) | ||||||||
Net loss before income taxes
|
(697,808 | ) | (1,551,460 | ) | (1,783,585 | ) | (2,814,596 | ) | ||||||||
Income taxes
|
- | - | - | - | ||||||||||||
Net loss
|
$ | (697,808 | ) | $ | (1,551,460 | ) | $ | (1,783,585 | ) | $ | (2,814,596 | ) | ||||
Loss per weighted average number of shares outstanding (basic and diluted)
|
$ | (0.007 | ) | $ | (0.022 | ) | $ | (0.019 | ) | $ | (0.040 | ) | ||||
Weighted average number of shares outstanding (basic and diluted)
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95,552,198 | 71,022,411 | 93,933,387 | 69,548,145 | ||||||||||||
Comprehensive loss:
|
||||||||||||||||
Net loss
|
$ | (697,808 | ) | $ | (1,551,460 | ) | $ | (1,783,585 | ) | $ | (2,814,596 | ) | ||||
Foreign exchange translation adjustment
|
87,911 | (84,055 | ) | 167,798 | (83,689 | ) | ||||||||||
Comprehensive loss
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$ | (609,897 | ) | $ | (1,467,405 | ) | $ | (1,615,787 | ) | $ | (2,730,907 | ) |
Common Stock
|
Additional
Paid-In
|
Shares To Be
|
Accumulated
|
Accumulated
Other Comprehensive
|
Total Stockholders’
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Issued
|
Deficit
|
Income
|
Deficiency
|
||||||||||||||||||||||
Balance, December 31, 2014
|
92,698,018 | $ | 18,542 | $ | 3,998,482 | $ | - | $ | (5,702,351 | ) | $ | 131,911 | $ | (1,553,416 | ) | |||||||||||||
Common shares issued for settlement of interest payable on convertible debentures at $0.15 per share
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4,918 | 1 | 737 | - | - | - | 738 | |||||||||||||||||||||
Common shares issued for settlement of interest payable on convertible debentures to a director of the Company at $0.15 per share
|
2,385 | - | 358 | - | - | - | 358 | |||||||||||||||||||||
Common shares issued for conversion of convertible debentures at $0.07 per share
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2,299,999 | 460 | 160,540 | - | - | - | 161,000 | |||||||||||||||||||||
Common shares issued for conversion of convertible debentures to a director of the Company at $0.07 per share
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228,572 | 45 | 15,955 | - | - | - | 16,000 | |||||||||||||||||||||
Common shares issued for settlement of consulting fees at $0.11
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300,000 | 60 | 32,940 | - | - | - | 33,000 | |||||||||||||||||||||
Common shares issued for settlement of marketing costs at $0.15
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408,597 | 82 | 61,208 | - | - | - | 61,290 | |||||||||||||||||||||
Gain on common shares issued for settlement of marketing costs
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- | - | (16,344 | ) | - | - | - | (16,344 | ) | |||||||||||||||||||
Common shares and warrants issued for acquisition of subsidiary
|
500,000 | 100 | 49,900 | - | - | - | 50,000 | |||||||||||||||||||||
Common shares issued for settlement of consulting fees at $0.19
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60,000 | 12 | 11,388 | - | - | - | 11,400 | |||||||||||||||||||||
Common shares issued for settlement of interest payable on convertible debentures at $0.10 per share
|
201,945 | 40 | 20,155 | - | - | - | 20,195 | |||||||||||||||||||||
Shares to be issued for settlement of consulting fees
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- | - | - | 25,000 | - | - | 25,000 | |||||||||||||||||||||
Stock based compensation
|
- | - | 114,723 | - | - | - | 114,723 | |||||||||||||||||||||
Foreign currency translation gain
|
- | - | - | - | - | 167,798 | 167,798 | |||||||||||||||||||||
Net loss
|
- | - | - | - | (1,783,585 | ) | - | (1,783,685 | ) | |||||||||||||||||||
Balance, September 30, 2015
|
96,704,434 | $ | 19,342 | $ | 4,450,042 | $ | 25,000 | $ | (7,485,936 | ) | $ | 299,709 | $ | (2,691,843 | ) |
For the Nine
Months Ended
September 30, 2015
|
For the Nine
Months Ended
September 30, 2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES :
|
||||||||
Net loss
|
$ | (1,783,585 | ) | $ | (2,814,596 | ) | ||
Items not requiring an outlay of cash
|
||||||||
Depreciation
|
8,511 | 2,294 | ||||||
Amortization
|
14,998 | - | ||||||
(Gain) on loan receivable written-off
|
- | 66,748 | ||||||
Stock based compensation
|
114,723 | 46,997 | ||||||
Loss on sale of fixed asset
|
- | 661 | ||||||
Bad debt expense
|
- | 19,523 | ||||||
Amortization of debt discount
|
197,167 | 704,780 | ||||||
(Gain) loss on settlement of debt
|
(16,344 | ) | 27,560 | |||||
Interest on promissory notes
|
21,042 | |||||||
Impairment of inventory
|
75,964 | 42,638 | ||||||
Impairment of goodwill
|
- | 167,538 | ||||||
Loss on settlement of account receivable
|
23,312 | - | ||||||
Common shares to be issued for services
|
25,000 | - | ||||||
Common shares issued for services
|
44,400 | 120,000 | ||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
|
(97,488 | ) | (437,366 | ) | ||||
Funds held in trust
|
- | 20,000 | ||||||
Prepaid expenses and vendor deposits
|
267,316 | (52,550 | ) | |||||
Inventory
|
(19,578 | ) | (35,183 | ) | ||||
Accounts payable
|
224,085 | 230,422 | ||||||
Accrued liabilities
|
28,966 | 22,587 | ||||||
Customer deposits
|
20,000 | - | ||||||
Related party payables
|
255,044 | 533,859 | ||||||
Accrued interest-related party
|
62,822 | (56,844 | ) | |||||
Net cash used in operating activities
|
(533,645 | ) | (1,390,932 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Trademarks
|
- | (8,212 | ) | |||||
Disposal (addition) of capital assets
|
- | 2,304 | ||||||
Acquisition of subsidiary
|
(225,000 | ) | - | |||||
Website development
|
- | (57,200 | ) | |||||
Net cash used in investing activities
|
(225,000 | ) | (63,108 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net cash acquired from acquisitions of subsidiaries
|
26,016 | 8,812 | ||||||
Net proceeds from credit facility
|
(166,815 | ) | 400,986 | |||||
Loans to subsidiary prior to acquisition
|
(25,000 | ) | (109,978 | ) | ||||
Shareholder loan received (paid)
|
221,470 | 605,576 | ||||||
Net proceeds from (repayments to) related parties
|
188,574 | (153,167 | ) | |||||
Repayment of related party note payable
|
- | (225,000 | ) | |||||
Proceeds from sale of convertible debentures
|
- | 80,000 | ||||||
Proceeds from common share subscriptions
|
- | 410,200 | ||||||
Net cash provided by financing activities
|
244,245 | 1,017,429 | ||||||
Effect of exchange rate changes on cash
|
76,611 | 87,891 | ||||||
Net increase in cash
|
(437,789 | ) | (348,720 | ) | ||||
Cash at beginning of period
|
496,724 | 355,860 | ||||||
Cash at end of period
|
$ | 58,935 | $ | 7,140 | ||||
Supplemental Schedule of Cash Flow Information:
|
||||||||
Cash paid for interest
|
$ | 22,061 | $ | 148,739 | ||||
Cash paid for income taxes
|
$ | - | $ | - | ||||
Non cash financing activities:
|
||||||||
Common Stock issued in settlement of shareholder loans
|
$ | - | $ | 1,638 | ||||
Common stock issued for payment of consulting fees payable
|
$ | 44,400 | $ | 178,912 | ||||
Common stock issued for settlement of interest payable
|
$ | 21,292 | $ | - | ||||
Common stock issued for settlement of accounts payable
|
$ | 44,946 | $ | - | ||||
Debentures issued for settlement of related party and shareholder loans
|
$ | - | $ | 53,000 |
●
|
Level 1
|
-
|
Unadjusted quoted prices in active markets for identical assets or liabilities;
|
|
●
|
Level 2
|
-
|
Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
|
●
|
Level 3
|
-
|
Inputs that are not based on observable market data.
|
Assets acquired:
|
||||
Cash
|
$
|
20,635
|
||
Receivables
|
46,492
|
|||
Deposits
|
5,874
|
|||
Inventory
|
122,401
|
|||
Fixed assets
|
118,866
|
|||
Goodwill
|
846,974
|
|||
Total assets acquired
|
$
|
1,161,242
|
||
Liabilities assumed:
|
||||
Accounts payable
|
$
|
179,016
|
||
Loan payable
|
25,000
|
|||
Total liabilities assumed
|
$
|
204,016
|
||
Consideration:
|
||||
Cash
|
$
|
225,000
|
||
Promissory Notes A, unsecured and non-interest bearing, due November 1, 2015
|
203,570
|
|||
Promissory Notes B, unsecured and non-interest bearing, due April 1, 2016
|
275,555
|
|||
Promissory Notes C, unsecured and non-interest bearing, due January 1, 2017
|
253,101
|
|||
Total consideration
|
$
|
957,226
|
Assets acquired:
|
||||
Cash
|
$
|
5,381
|
||
Website
|
10,000
|
|||
Inventory
|
2,150
|
|||
Goodwill
|
32,469
|
|||
Total assets acquired
|
$
|
50,000
|
||
Total liabilities assumed
|
$
|
-
|
||
Consideration:
|
||||
500,000 Common Shares & 500,000 warrants
|
$
|
50,000
|
||
Total consideration
|
$
|
50,000
|
Assets acquired:
|
||||
Cash
|
$
|
8,828
|
||
Receivables
|
112,460
|
|||
Inventory
|
60,777
|
|||
Loan receivable
|
84,936
|
|||
Fixed, assets
|
3,826
|
|||
Goodwill
|
167,538
|
|||
Total assets acquired
|
$
|
438,365
|
||
Liabilities assumed:
|
||||
Accounts payable
|
$
|
253,247
|
||
Loans payable
|
130,118
|
|||
Total liabilities assumed
|
$
|
383,365
|
||
Consideration:
|
||||
500,000 Common Shares
|
$
|
55,000
|
||
Total consideration
|
$
|
55,000
|
September 30,
2015
|
December 31,
2014
|
|||||||
E-cigarettes, E-liquids and accessories
|
$
|
119,645
|
$
|
78,901
|
||||
Packaging
|
24,406
|
-
|
||||||
$
|
147,051
|
$
|
78,901
|
September 30,
2015
|
December 31, 2014
|
|||||||||||||||
Cost
|
Accumulated Depreciation
|
Net
|
Net
|
|||||||||||||
Furniture and equipment
|
$ | 3,898 | $ | 2,418 | $ | 1,480 | $ | 595 | ||||||||
Computer hardware
|
7,497 | 3,375 | 4,122 | 1,269 | ||||||||||||
Manufacturing equipment
|
113,334 | 6,720 | 106,614 | |||||||||||||
$ | 124,729 | $ | 12,513 | $ | 112,216 | $ | 1,864 |
September 30,
2015
|
December 31, 2014
|
|||||||||||||||
Cost
|
Accumulated Amortization
|
Net
|
Net
|
|||||||||||||
Charlie’s Club Website
|
$ | 99,989 | $ | 21,664 | $ | 78,325 | $ | 93,323 | ||||||||
E Liquid website
|
10,000 | - | 10,000 | - | ||||||||||||
$ | 109,989 | $ | 21,664 | $ | 88,325 | $ | 93,323 |
September 30,
2015
|
December 31,
2014
|
|||||||
Non-interest bearing, unsecured, no specific terms of repayment
|
$ | 5,000 | $ | 5,000 | ||||
Bears interest of 10% per annum on a cumulative basis, secured by the assets of the Company, matures on January 1, 2016
|
374,650 | 431,000 | ||||||
Bears interest of 10% per annum on a cumulative basis, secured by the assets of the Company, matures on January 1, 2016
|
100,000 | 100,000 | ||||||
Bears interest of 10% per annum on a cumulative basis, secured by the assets of the Company, matures on January 1, 2016
|
224,790 | - | ||||||
Bears interest of 1.5% per month on a cumulative basis, unsecured, no specific terms of repayment
|
23,363 | 29,739 | ||||||
$ | 727,803 | $ | 565,739 |
September 30,
2015
|
December 31,
2014
|
|||||||
96,704,434 Common Shares (2014:92,698,018)
|
$ | 19,342 | $ | 18,542 |
●
|
Issued 201,945 Common Shares at $0.10 per share for settlement of $20,195 in interest payable on a Convertible Debenture to an unrelated party;
|
|
●
|
Issued 60,000 Common Shares at $0.19 per share for settlement of $11,400 in consulting fees to an unrelated party;
|
|
●
|
Issued 500,000 Common Shares valued at $8,025 for the acquisition of a subsidiary;
|
|
●
|
Issued 4,918 Common Shares at $0.15 per share for settlement of $738 in interest payable on Convertible Debentures to unrelated parties;
|
|
●
|
Issued 2,385 Common Shares at $0.15 per share for settlement of $358 in interest payable to a Director of the Company;
|
|
●
|
Issued 2,299,999 Common Shares at $0.07 per share as a result of the conversion of $161,000 of Convertible Debentures;
|
|
●
|
Issued 228,572 Common Shares at $0.07 per share to a Director of the Company as a result of the conversion of $16,000 of Convertible Debentures
|
|
●
|
Issued 300,000 Common Shares at $0.11 per share as compensation for $33,000 in consulting fees to an unrelated party; and
|
|
●
|
Issued 408,597 Common Shares valued at a fair value of $0.11 per share for settlement of $61,290 in marketing costs owing to an unrelated party. The amount allocated to Shareholders’ Deficiency, based on the fair value, amounted to $44,946. The balance of $16,344 has been recorded as a gain on settlement of debt.
|
●
|
Issued 200,000 Common Shares for settlement of $10,000 in consulting fees owing to an unrelated party;
|
|
●
|
Issued 500,000 Common Shares valued at $0.035 per share for cash proceeds of $17,500;
|
|
●
|
Issued 280,433 Common Shares valued at $0.1426 per share for settlement of $40,000 in consulting fees owing to an unrelated party;
|
|
●
|
Issued 270,597 Common Shares valued at $0.1293 per share for settlement of $35,000 in consulting fees owing to an unrelated party;
|
|
●
|
Issued 835,000 Common Shares valued at $0.10 per share for settlement of $83,500 owing as a result of the production costs of advertising;
|
|
●
|
Issued 10,000 Common Shares valued at $0.10 per share for settlement of $1,000 owing to a related party as a result of the production costs of advertising;
|
|
●
|
Issued 92,500 Common Shares valued at $0.19 per share for settlement of $17,500 in consulting fees owing to an unrelated party;
|
|
●
|
Issued 500,000 Common Shares valued at $0.11 per share for the acquisition of Drinan Marketing Ltd.;
|
|
●
|
Issued 55,000 Common Shares valued at $0.25 per share for settlement of $13,750 in consulting fees owing to an unrelated party;
|
|
●
|
Issued 2,734,667 Common Shares valued at $0.15 per share for cash proceeds of $410,200;
|
|
●
|
Issued 300,000 Common Shares valued at $0.18 per share as a prepayment of $54,000 in consulting fees to an unrelated party;
|
|
●
|
Issued 10,919 Common Shares valued at $0.15 per share for settlement of $1,638 of shareholder loans;
|
|
●
|
Issued 182,749 Common Shares valued at $0.15 per share for settlement at $27,412 in consulting fees owing to an unrelated party;
|
|
●
|
Issued 63,559 Common Shares at $0.236 per share as compensation for $15,000 in consulting fees to an unrelated party;
|
|
●
|
Issued 100,000 Common Shares at $0.16 per share as compensation for $16,000 in consulting fees to an unrelated party;
|
|
●
|
Issued 10,357,143 Common Shares at $0.07 per share as a result of the conversion of $725,000 of Convertible Debentures;
|
|
●
|
Issued 5,714,286 Common Shares at $0.07 per share to related parties as a result of the conversion of $400,000 of Convertible Debentures;
|
|
●
|
Issued 638,978 Common Shares at $0.15 per share for settlement of $102,291 in interest payable to unrelated parties;
|
|
●
|
Issued 277,370 Common Shares at $0.15 per share for settlement of $35,162 in interest payable to related parties;
|
|
●
|
Issued 717,840 Common Shares at $0.15 per share for settlement of $107,676 in consulting fees payable to related parties;
|
|
●
|
Issued 800,000 Common Shares at a fair value of $0.15 per share as compensation for consulting fees to an unrelated party in the amount of $120,000;
|
|
●
|
Issued 500,000 Common Shares at $0.15 per share for settlement of $75,000 in consulting fees to a related party; and
|
|
●
|
Issued 490,000 Common Shares at $0.15 per share for cash proceeds of $73,500.
|
September 30,
2015
|
December 31,
2014
|
||||||||
Warrants
Outstanding
|
Weighted Average Exercise Price
|
Warrants Outstanding
|
Weighted Average Exercise Price
|
||||||
Beginning of period
|
1,510,640
|
$
|
0.25
|
-
|
$ |
-
|
|||
Issued
|
2,451,945
|
0.34
|
1,510,640
|
0.25
|
|||||
Expired
|
(10,640)
|
0.15
|
-
|
-
|
|||||
End of period
|
3,951,945
|
$
|
0.31
|
1,510,640
|
$
|
0.25
|
Risk-free interest rate
|
0.32
|
%
|
|
Expected life
|
1 year
|
||
Estimated volatility in the market price of the Common Shares
|
247
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.69
|
%
|
|
Expected life
|
2 years
|
||
Estimated volatility in the market price of the Common Shares
|
357
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.34
|
%
|
|
Expected life
|
1.14 years
|
||
Estimated volatility in the market price of the Common Shares
|
237
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.71
|
%
|
|
Expected life
|
2 years
|
||
Estimated volatility in the market price of the Common Shares
|
320
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.85
|
%
|
|
Expected life
|
2 years
|
||
Estimated volatility in the market price of the Common Shares
|
298
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.51
|
%
|
|
Expected life
|
1 year
|
||
Estimated volatility in the market price of the Common Shares
|
166
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.51
|
%
|
|
Expected life
|
1.5 years
|
||
Estimated volatility in the market price of the Common Shares
|
219
|
%
|
|
Dividend yield
|
Nil
|
Risk-free interest rate
|
0.52
|
%
|
|
Expected life
|
1 year
|
||
Estimated volatility in the market price of the Common Shares
|
174
|
%
|
|
Dividend yield
|
Nil
|
●
|
The Company settled $25,000 in consulting fees owing to unrelated parties with the issuance of 211,389 Common Shares at $0.12 per share. Such Common Shares were issued on November 2, 2015.
|
(a)
|
The Company’s current and former officers and shareholders have advanced funds on an unsecured, non-interest bearing basis to the Company, unless stated otherwise below, for travel related and working capital purposes. The Company has not entered into any agreement on the repayment terms for these advances.
|
September 30,
2015
|
December 31,
2014
|
|||||||
Advances by and amounts payable to Officers of the Company, two of which are also Directors
|
$ | 173,029 | $ | 133,820 | ||||
Advances by and consulting fees payable to a corporation owned by two Officers of the Company, one of which is also a Director
|
127,878 | 523,824 | ||||||
Consulting fees owing to persons related to an Officer who is also a Director of the Company
|
47,427 | 49,255 | ||||||
Advances by Officers of the Company, one of which is also a Director, bears interest at 1.5% per month
|
542,657 | 401,264 | ||||||
Amounts payable to a corporation related by virtue of a common Officer of the Company
|
- | 30,294 | ||||||
Amounts payable to a corporation related by virtue of common Officers and a common Director of the Company
|
35,943 | - | ||||||
Consulting fees and director fees payable to Directors of the Company
|
59,500 | 6,332 | ||||||
$ | 986,433 | $ | 1,144,789 |
(b)
|
Interest accrued to related parties were as follows:
|
September 30, 2015
|
December 31,
2014
|
|||||||
Interest accrued on advances by Officers of the Company, one of which is also a Director
|
$
|
102,101
|
$
|
39,279
|
||||
$
|
102,101
|
$
|
39,279
|
(c)
|
Transactions with related parties were as follows:
|
September 30.
2015
|
September 30,
2014
|
|||||||
Directors
|
$
|
74,250
|
$
|
92,950
|
||||
Officers
|
191,498
|
-
|
||||||
Corporation related by virtue of common Officers and a common Director
|
63,540
|
-
|
||||||
Corporation owned by two Officers, one of which is also a Director
|
94,138
|
326,162
|
||||||
Persons related to a Director
|
47,067
|
53,467
|
||||||
$
|
472,493
|
$
|
472,579
|
2015
|
$
|
2,397
|
||
2016
|
3,196
|
|||
$
|
5,593
|
2015
|
$
|
14,297
|
||
2016
|
57,118
|
|||
2017
|
57,118
|
|||
2018
|
57,118
|
|||
$
|
185,860
|
September 30,
2015
|
December 31,
2014
|
|||||||||
Canada
|
$ | 21,250 | $ | 5,524 | ||||||
United States
|
1,533,250 | 645,383 | ||||||||
Ireland
|
1,621 | 435,578 | ||||||||
$ | 1,556,121 | $ | 1,086,485 |
September 30,
2015
|
September 30,
2014
|
|||||||
Canada
|
$ | - | $ | - | ||||
United States
|
824,251 | 8,921 | ||||||
Ireland
|
- | 562,103 | ||||||
$ | 824,251 | $ | 571,024 |
Assets acquired:
|
||||
Cash
|
$
|
20,635
|
||
Receivables
|
46,492
|
|||
Deposits
|
5,874
|
|||
Inventory
|
122,401
|
|||
Fixed assets
|
118,866
|
|||
Goodwill
|
846,974
|
|||
Total assets acquired
|
$
|
1,161,242
|
||
Liabilities assumed:
|
||||
Accounts payable
|
$
|
179,016
|
||
Loan payable
|
25,000
|
|||
Total liabilities assumed
|
$
|
204,016
|
||
Consideration:
|
||||
Cash
|
$
|
225,000
|
||
Promissory Notes A, unsecured and non-interest bearing, due November 1, 2015
|
203,570
|
|||
Promissory Notes B, unsecured and non-interest bearing, due April 1, 2016
|
275,555
|
|||
Promissory Notes C, unsecured and non-interest bearing, due January 1, 2017
|
253,101
|
|||
Total consideration
|
$
|
957,226
|
● Level 1
|
-
|
Unadjusted quoted prices in active markets for identical assets or liabilities;
|
● Level 2
|
-
|
Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
● Level 3
|
-
|
Inputs that are not based on observable market data.
|
Incorporated by Reference
|
||||||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
Exhibit
|
Filing Date
|
||
10.20
|
Secured Promissory Note from the Company to Gravitas Financial Inc., dated as of June 29, 2015.
|
X
|
||||||||
10.21
|
Form of Promissory Notes from the Company to the vendors of E Vapor Labs Inc.
|
X
|
||||||||
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
||||||||
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
||||||||
32.1
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
X
|
||||||||
32.2
|
Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
X
|
||||||||
101.INS
|
XBRL Instance Document
|
X
|
||||||||
101.SCH
|
XBRL Taxonomy Extension Schema
|
X
|
||||||||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
X
|
||||||||
101.DEF
|
XBRL Taxonomy Definition Linkbase
|
X
|
||||||||
101.LAB
|
XBRL Taxonomy Extension label Linkbase
|
X
|
||||||||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
X
|
GILLA INC.
|
|||
(Registrant)
|
|||
November 20, 2015
|
By:
|
/s/ J. Graham Simmonds
|
|
Name: J. Graham Simmonds
|
|||
Title: Chief Executive Officer and Director
|
|||
|
|||
November 20, 2015
|
By:
|
/s/ Ashish Kapoor
|
|
Name: Ashish Kapoor
|
|||
Title: Chief Financial Officer and
|
|||
Chief Accounting Officer
|
GILLA INC.
|
|
Per:
|
/s/ J. Graham Simmonds
|
Name:
|
J. Graham Simmonds
|
Title:
|
CEO
|
GRAVITAS FINANCIAL INC.
|
|
Per:
|
/s/ David Carbonaro
|
Name:
|
David Carbonaro
|
Title:
|
Officer
|
CAD $300,000 |
Toronto, Ontario
June 29, 2015
|
GILLA INC.
By:
/s/ J. Graham Simmonds
Name: J. Graham Simmonds
Title: Chief Executive Officer
GRAVITAS FINANCIAL INC.
By:
/s/ David Carbonaro
Name: David Carbonaro
Title: Officer
|
Promissory Note
|
Interest Rate
|
Issuance Date
|
Maturity Date
|
CAD $500,000
|
10% per annum
|
February 13, 2014
|
January 1, 2016
|
US $100,000
|
10% per annum
|
July 18, 2014
|
January 1, 2016
|
CAD $300,000
|
10% per annum
|
June 26, 2015
|
January 1, 2016
|
USD $[ Ÿ ] |
Toronto, Ontario
July 1, 2015
|
GILLA INC.
By:______________________
Name: J. Graham Simmonds
Title: Chief Executive Officer
[INSERT NAME]
By:_______________________
|
1.
|
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 the Registrant.
|
Date: November 20, 2015
|
By:
|
/s/ J. Graham Simmonds
Name: J. Graham Simmonds
Title: Chief Executive Officer
|
1.
|
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 the Registrant.
|
Date: November 20, 2015
|
By:
|
/s/ Ashish Kapoor
Name: Ashish Kapoor
Title: Chief Financial Officer
|