Viva Entertainment Group Inc. (formerly Black River Petroleum
Corp.)
Notes to Financial Statements
NOTE 1 – NATURE OF OPERATIONS
Description of Business and History
The Company was incorporated on October
26, 2009 in the State of Nevada. The Company originally engaged in the development of a website and also the design and development
of a catalogue to sell over the counter and prescription medications, and supplements. In 2012, the Company undertook a change
in focus to the natural resources sector where it was engaged in the acquisition and exploration of base metals and mineral mining
properties.
On April 5, 2016, the Company
completed the purchase of Viva Entertainment Group, Inc. (“Viva Entertainment”), a Delaware corporation, from EMS Find,
Inc. (“EMS”) pursuant to a stock purchase agreement. Viva Entertainment’s Chief Executive Officer, Johnny Falcones,
was appointed as the Company’s sole director, President and Chief Executive Officer to manage the development and marketing
of Viva Entertainment’s over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart
phones.
Pursuant to the stock purchase agreement,
the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the purchase of all outstanding shares
of stock of Viva Entertainment by the Company in exchange for the issuance to EMS of a 10% promissory note in the principal amount
of $100,000, due six months from the Closing (the “EMS Note”), and the issuance of 22,000,000 shares of common stock
to Johnny Falcones. For accounting purposes, the transaction was treated as a reverse merger since the acquired entity now forms
the basis for operations and the transaction resulted in a change in control, with the acquired company electing to become the
successor issuer for reporting purposes. The accompanying financial statements have been prepared to reflect the assets, liabilities
and operations of Viva Entertainment Group, Inc. exclusive of Black River Petroleum since all predecessor operations were discontinued.
As part of the transaction, stock payable and amounts due to former officers were forgiven, with the balances recorded as Contributed
Capital. For equity purposes, additional paid-in capital and retained deficit shown are those of Viva, exclusive of Black River
Petroleum. Viva had no operations prior to the quarter ended April 30, 2016.
In management’s opinion, all adjustments
necessary for a fair statement of the results for the presented periods have been made. All adjustments made were of a normal
recurring nature.
Viva Entertainment Group Inc.
(the “Company”) develops and markets Viva Entertainment’s over the top (IPTV/OTT) application for connected TV’s,
desktop computers, tablets, and smart phones. The Company is based in Briarwood, New York.
Going Concern
These financial statements have been
prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations
for the next fiscal year. Realization value may be substantially different from carrying values as shown and 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. As of January 31,
2017, the Company has a working capital deficiency and has an accumulated deficit of $5,732,298. The continuation of
Viva Entertainment Group as a going concern is dependent upon the continued financial support from its shareholders, the ability
of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These
factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim information Regulation S-K. Accordingly, they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete financial statements. In the opinion of management,
all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included.
These financial statements should be read in conjunction with out audited financial statements for the year ended October 31, 2016.
Use of Estimates
The preparation of financial statements
in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue
and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to the useful life and recoverability
of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions
on current facts, historical experience and various other factors that we believe 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 us may differ materially and adversely
from our estimates. To the extent there are material differences between our estimates and the actual results, our future results
of operations will be affected.
Loss Per Common Share
The Company reports net loss per share
in accordance with provisions of the FASB. The provisions require dual presentation of basic and diluted loss per share.
Basic net loss per share excludes the impact of common stock equivalents. Diluted net loss per share utilizes the average market
price per share when applying the treasury stock method in determining common stock equivalents. As of January 31, 2017 and 2016,
there were no dilutive common stock equivalents outstanding.
Fair Value of Financial Instruments
Pursuant to ASC No. 820, “Fair
Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included
on its balance sheet as of January 31, 2017 and 2016. The Company’s financial instruments consist of cash and derivative
liabilities. The Company considers the carrying value of such amounts in the financial statements to approximate their
fair value due to the short-term nature of these financial instruments.
The Company adopted ASC No. 820-10 (ASC
820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines
fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of
America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting
pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value
of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level
3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
|
•
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
•
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
•
|
Level 3
|
Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and July include the Company's own data.)
|
The following presents the Company's
fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of January 31, 2017 and
October 31, 2016:
January 31, 2017:
|
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
|
Convertible
Notes Payable, net
|
|
$
|
515,359
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
515,359
|
|
Derivative
Liability
|
|
|
1,393,168
|
|
|
|
|
|
|
|
|
|
|
|
1,393,168
|
|
Total
|
|
$
|
1,908,527
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,908,527
|
|
October 31, 2016:
|
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
|
Convertible
Notes Payable, net
|
|
$
|
367,323
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
367,323
|
|
Derivative
Liability
|
|
|
1,248,689
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,248,689
|
|
Total
|
|
$
|
1,616,012
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,616,012
|
|
Derivative Financial Instruments
Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing
model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional
convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered
conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once determined, derivative liabilities are
adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in
results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments
such as warrants, are also valued using the Black-Scholes option-pricing model.
Cash and Cash Equivalents
For purposes of the Condensed
Statements of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be
cash equivalents. As of January 31, 2017 and October 31, 2016, the company had no cash equivalents.
NOTE 3 – RELATED PARTY TRANSACTIONS
In connection with the acquisition of
Viva Entertainment and the resignation of our former officers and directors, the Company received forgiveness of stock payable
of $3,390,000 and amounts due to former CEO of $132,854. These amounts were written off prior to closing and have therefore not
been included in Equity. However, the former CEO funded an additional $30,000 to the Company for working capital during the year
ended October 31, 2016.
The detail composition of $246,742 in
accrued wages with related parties as of January 31, 2017 is as follows: Johnny Falcones $88,489, Alberto Gomez $94,028 and John
Sepulveda $64,028. This accrual covered services rendered by the employees for the period from April, 2016 through January 31,
2017 less payments made to such employees during the period.
The detail composition of the $512,400
in stock payable with related parties as of January 31, 2017 is as follows: Johnny Falcones $487,200, Alberto Gomez $16,800 and
John Sepulveda $8,400. This stock payable is due to unissued shares earned on the employment agreements during the year ended October
31, 2016. The remaining balance of stock payable is discussed in Note 7.
In addition, John Sepulveda funded $10,000
to the Company for working capital during the year ended October 31, 2016 which remains outstanding together with advances of $21,280
from the spouse of the company’s Chief Executive as of January 31, 2017.
NOTE 4 – CONVERTIBLE NOTES
PAYABLE
|
|
Principal Balance
|
|
Loan Discount
|
|
Accrued interest
|
October 31, 2016
|
|
$
|
975,100
|
|
|
$
|
(607,777
|
)
|
|
$
|
43,426
|
|
Issued in the year
|
|
$
|
63,000
|
|
|
|
(63,000
|
)
|
|
|
—
|
|
Converted into stock or repaid
|
|
|
(205,367
|
)
|
|
|
103,229
|
|
|
|
—
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
250,174
|
|
|
|
—
|
|
Interest accrued
|
|
|
—
|
|
|
|
—
|
|
|
|
24,927
|
|
January 31, 2017
|
|
$
|
832,733
|
|
|
$
|
(317,374
|
)
|
|
|
68,353
|
|
The Company evaluated the terms
of the conversion features of its convertible debentures in accordance with ASC Topic No. 815 - 40,
Derivatives and Hedging
- Contracts in Entity's Own Stock
and determined they are indexed to the Company's common stock and the conversion features
meet the definition of a liability, and therefore bifurcated the conversion features and accounted for them as a separate derivative
liability.
The Company evaluated the terms of the
conversion features of its convertible debentures in accordance with ASC Topic No. 815 - 40,
Derivatives and Hedging -
Contracts in Entity's Own Stock
and determined they are indexed to the Company's common stock and the conversion features
meet the definition of a liability, and therefore bifurcated the conversion features and accounted for them as a separate derivative
liability.
On
April 6, 2016, the Company issued a convertible promissory note for $145,000 to Essex Global Investments. The note bears
interest at the rate of 10% per annum and becomes due and payable March 30, 2017. The Company received proceeds of $135,000,
net of original issuance discounts of $10,000 which included prepaid interest and legal expenses. The debt discount was
recorded as a reduction (contra-liability) of the convertible debenture and amortized over the life of the convertible
debenture. The Company has the right to prepay the Note during the first six months following the date of issuance with a
premium of up to 135% of all amounts owed, including default interest, depending upon when the prepayment is effectuated.
During the three months ended January 31, 2017, the Company converted $45,000 in principal on this note into 19,430,253
shares of common stock, which was in accordance with the terms of the note. There was no gain or loss associated with this conversion.
On
May 23, 2016, the Company issued a convertible promissory note in the amount of $50,000 to GreenTree Financial Group, Inc. The
note bears interest at a rate of 12% per annum and becomes due and payable six months from the date of issuance. The Company received
SEC compliance services in the amount of $50,000 in exchange for the note. All principal and accrued interest on the note is convertible
at any time into shares of the Company's common stock at the election of the holder at a conversion price for each share of common
stock of 50%
of the lowest reported trading price of the Company’s common stock for the lowest of the three
prior
trading days including the day upon which the conversion notice is received by the Company or its transfer agent.
The Company has the right to prepay this note during the first six months following the date of issuance with premium of 120%
of all amounts owed, including default interest, depending upon when the prepayment is effectuated. The note may not be redeemed
after 180 days. During the three months ended January 31, 2017, the Company converted $10,000 in principal on this note into 6,666,667
shares of common stock, which was in accordance with the terms of the note. There was no gain or loss associated with this conversion.
On May 3, 2016, the Company issued a
convertible promissory note in the amount of $78,750 to LG Capital Funding, LLC. The note bears interest at a rate of 10% per annum
and becomes due and payable one year from the date of issuance. The Company received capital in the amount of $78,750 in exchange
for the note. All principal and accrued interest on the note is convertible at any time into shares of the Company's common stock
at the election of the holder at a conversion price for each share of common stock at 50%
of the lowest reported trading
price of the Company’s common stock for the twenty prior
trading days including the day upon which the conversion
notice is received by the Company or its transfer agent. The Company has the right to prepay the note during the first six months
following the date of issuance with a premium between 125-150% of the amount owed, including default interest, depending upon when
the prepayment is effectuated. The note may not be redeemed after 180 days. During the three months ended January 31, 2017, the
Company converted $38,700 in principal on this note into 30,469,138 shares of common stock, which was in accordance with the terms of the note. There was no gain or loss associated with this conversion.
On May 3, 2016, the Company issued a
convertible promissory note in the amount of $78,750 to Cerberus Finance Group Ltd. The note bears interest at a rate of 10% per
annum and becomes due and payable six months from the date of issuance. The Company received capital in the amount of $78,750 in
exchange for the note. All principal and accrued interest on the note is convertible at any time into shares of the Company's common
stock at the election of the holder at a conversion price for each share of common stock at 50%
of the lowest reported
trading price of the Company’s common stock for the twenty prior
trading days including the day upon which the
conversion notice is received by the Company or its transfer agent. The Company has the right to prepay the note during the first
six months following the date of issuance with a premium between 125-150% of the amount owed, including default interest, depending
upon when the prepayment is effectuated. The note may not be redeemed after 180 days. During the three months ended January 31,
2017, the Company converted $18,900 in principal on this note into 13,882,395 shares of common stock, which was in accordance with the terms of the note. There was no gain or loss associated with this conversion.
On June 3, 2016, the Company issued
a convertible promissory note in the amount of $78,750 to LG Capital Funding, LLC. The note bears interest at a rate of 10% per
annum and becomes due and payable six months from the date of issuance. The Company received capital in the amount of $78,750 in
exchange for the note. All principal and accrued interest on the note is convertible at any time into shares of the Company's common
stock at the election of the holder at a conversion price for each share of common stock at 50%
of the lowest reported
trading price of the Company’s common stock for the twenty prior
trading days including the day upon which the
conversion notice is received by the Company or its transfer agent. The Company does not have the right to prepay the note.
On June 8, 2016, the Company issued
a convertible promissory note in the amount of $78,750 to Cerberus Finance Group Ltd. The note bears interest at a rate of 10%
per annum and becomes due and payable one year from the date of issuance. The Company received capital in the amount of $78,750
in exchange for the note. All principal and accrued interest on the note is convertible at any time into shares of the Company's
common stock at the election of the holder at a conversion price for each share of common stock at 50%
of the lowest
reported trading price of the Company’s common stock for the twenty prior
trading days including the day upon
which the conversion notice is received by the Company or its transfer agent. The Company does not have the right to prepay the
note.
On July 1, 2016, the Company entered
into a Loan Agreement with Greentree Financial Group, Inc., and issued a 12% Convertible Promissory Note pursuant thereto. The
note was in a principal amount of $50,000, and is convertible a price equal to fifty percent (50%) of the Volume Weighted Average
Price (“VWAP”) for the five-day period prior to the conversion date. The note further states that no amount of the
note may be converted in an amount that would result in the beneficial ownership of greater than 4.99% of the common stock immediately
after giving effect to the conversion, with the exception that the limitation may be increased to 9.99% with 61 days prior notice.
On July 1, 2016, the Company entered
into a Loan Agreement with Collision Capital, LLC, and issued a 12% Convertible Promissory Note pursuant thereto. The note was
in a principal amount of $110,000, and is convertible a price equal to fifty percent (50%) of the Volume Weighted Average Price
(“VWAP”) for the five-day period prior to the conversion date. The note further states that no amount of the note may
be converted in an amount that would result in the beneficial ownership of greater than 4.99% of the common stock immediately after
giving effect to the conversion, with the exception that the limitation may be increased to 9.99% with 61 days prior notice. During
the three months ended January 31, 2017, the Company converted $8,100 in principal on this note into 6,000,000 shares of common
stock, which was in accordance with the terms of the note. There was no gain or loss associated with this conversion.
On July 19, 2016, the Company issued
a convertible promissory note in the amount of $37,100 to Essex Global Investment Corp. The note bears interest at a rate of 10%
per annum and becomes due and payable one year from the date of issuance. The Company received capital in the amount of $35,000,
net of an original issuance discount of $2,100 which included prepaid interest and legal expenses. The debt discount was recorded
as a reduction (contra-liability) of the convertible debenture and amortized over the life of the convertible debenture. All principal
and accrued interest on the note is convertible at any time into shares of the Company's common stock at the election of the holder
at a conversion price for each share of common stock at 60%
of the lowest reported trading price of the Company’s
common stock for the twenty prior
trading days including the day upon which the conversion notice is received by the
Company or its transfer agent. The Company has the right to prepay the above note during the first six months following
the date of issuance with premium between 115-120% of all amounts owed, including default interest, depending upon when the prepayment
is effectuated. The note may not be redeemed after 180 days. During the three months ended January 31, 2017, the Company
converted $23,000 in principal on this note into 19,999,999 shares of common stock.
On August 1, 2016, the Company issued
a convertible promissory note to Robert Rico in the aggregate principal face amount of $25,000,
pursuant
to a consulting agreement dated August 1
st
, 2016 for services rendered
. The note can be converted into common
shares of the Company’s common stock at the request of the holder after six months at a discount of 40% off the lowest preceding
20-day trading price at the time of conversion.
On
August 1, 2016, the Company issued a convertible promissory note to DBL Group, Inc. in the aggregate principal face amount of $25,000,
pursuant to a consulting agreement dated August 1, 2016 for services rendered
. The note can be converted into common shares
of the Company’s common stock at the request of the holder after six months at a discount of 40% off the lowest preceding
20-day trading price at the time of conversion.
On
August 2, 2016, the Company issued a convertible promissory note to Crossover Promotions in the aggregate principal face
amount of $35,000
,
pursuant to a consulting agreement dated August 2, 2016
for services rendered
. The note can be converted into common shares of the Company’s common stock at the request
of the holder after six months at a discount of 40% off the lowest preceding 20-day trading price at the time of conversion.
In January 2017, Crossover sold this note to GPL Ventures, which resulted in the original note being cancelled and replaced
with a new note. The company recorded a gain of $10,590 on this transaction resulting from the change in derivative liability
associated with the two notes on the date of the re-issuance.
On August 4, 2016, the Company entered
into a Service Agreement with Greentree Financial Group, Inc., and as payment for those services issued a 12% Convertible Promissory
note thereto. The note was in a principal amount of $25,000, , and is convertible a price equal to five cents ($.05) per share,
or fifty percent (50%) of the Volume Weighted Average Price (“VWAP”) for the ten day period prior to the conversion
date, whichever is lower. The note further states that no amount of the note may be converted in an amount that would result in
the beneficial ownership of greater than 4.99% of the common stock immediately after giving effect to the conversion, with the
exception that the limitation may be increased to 9.99% with 61 days’ prior notice.
On August 4, 2016, the Company entered
into a Service Agreement with Collision Capital, LLC, and as payment for those services issued a 12% Convertible Promissory note
thereto. The note was in a principal amount of $25,000, and is convertible a price equal to five cents ($.05) per share, or fifty
percent (50%) of the Volume Weighted Average Price (“VWAP”) for the ten day period prior to the conversion date, whichever
is lower. The note further states that no amount of the note may be converted in an amount that would result in the beneficial
ownership of greater than 4.99% of the common stock immediately after giving effect to the conversion, with the exception that
the limitation may be increased to 9.99% with 61 days’ prior notice.
On
August 5, 2016, the Company issued a convertible promissory note to Hector Cruz in the aggregate principal face amount of $25,000,
pursuant to a consulting agreement dated August 5, 2016 for services rendered. The note can be converted into common shares of
the Company’s common stock at the request of the holder after six months at a discount of 40% off the lowest preceding 20-day
trading price at the time of conversion.
On
August 17, 2016, the Company issued a convertible promissory note to Mercedes Benites in the aggregate principal face amount of
$13,000, pursuant to a consulting agreement dated August 17, 2016 for services rendered
. The note can be converted into
common shares of the Company’s common stock at the request of the holder after six months at a discount of 40% off the lowest
preceding 20-day trading price at the time of conversion.
On September 7, 2016, the Company issued
a convertible promissory note in the amount of $45,000 to Crown Bridge Partners, LLC. The note bears interest at a rate of 8% per
annum and becomes due and payable one year from the date of issuance. The Company received capital in the amount of $40,500, net
of an original issuance discount of $4,500 which included prepaid interest and legal expenses. The debt discount was recorded as
a reduction (contra-liability) of the convertible debenture and amortized over the life of the convertible debenture. All principal
and accrued interest on the note is convertible at any time into shares of the Company's common stock at the election of the holder
at a conversion price for each share of common stock at 50%
of the lowest reported trading price of the Company’s
common stock for the twenty prior
trading days including the day upon which the conversion notice is received by the
Company or its transfer agent. The Company has the right to prepay the above seven notes during the first six months following
the date of issuance with a premium between 135-150% of all amounts owed, including default interest, depending upon when the prepayment
is effectuated. The note may not be redeemed after 180 days.
On
September 12, 2016, the Company issued a convertible promissory note to Greentree Financial Group, Inc. in the aggregate principal
face amount of $50,000, which is due and payable together with interest at the rate of 12% per annum in September of 2017. The
principal and interest may be converted into shares of common stock equal to 50% of the average of the lowest 3 closing bid prices
for the ten prior trading days. Consulting services were rendered subsequent to period end in exchange for the note pursuant to
an agreement in September of 2016.
As
of October 2016, the company issued convertible promissory notes totaling $323,000 as consideration for services contracts to the
following individuals:
Name
|
|
Amount
|
|
|
Date
|
|
Dbl Group
|
$
|
25,000
|
|
|
August 1, 2016
|
|
Robert Rico
|
$
|
25,000
|
|
|
August 1, 2016
|
|
Crossover Promotions
|
$
|
35,000
|
|
|
August 2, 2016
|
|
Hector Cruz
|
$
|
25,000
|
|
|
August 5, 2016
|
|
Mercedes Benites
|
$
|
13,000
|
|
|
August 17, 2016
|
|
Greentree Financial Group, Inc.
|
$
|
50,000
|
|
|
May 23, 2016
|
|
Greentree Financial Group, Inc.
|
$
|
50,000
|
|
|
July 1, 2016
|
|
Greentree Financial Group, Inc.
|
$
|
25,000
|
|
|
August 4, 2016
|
|
Greentree Financial Group, Inc.
|
$
|
50,000
|
|
|
September 12, 2016
|
|
Collision Capital LLC
|
$
|
25,000
|
|
|
August 4, 2016
|
|
These notes bear interest between 8 - 12% and are due and payable twelve months
from the date of issuance. They can be converted into common shares of the Company’s common stock at the request of the
holder after six months at a discount of 40% off the lowest preceding 20-day trading price of at the time of conversion.
On January 3, 2017, the Company
issued a convertible promissory note in the amount of $28,000 to Power Up Lending. The note bears interest at a rate of 8% per
annum and becomes due and payable one year from the date of issuance. The Company received capital in the amount of $25,000, net
of an original issuance discount of $3,000 which included in prepaid interest. The debt discount of $28,000 was recorded as a
reduction (contra-liability) of the convertible debenture and will be amortized over the life of the convertible debenture. All
principal and accrued interest on the note is convertible at any time into shares of the Company's common stock at the election
of the holder at a conversion price for each share of common stock at 50%
of the lowest reported trading price of
the Company’s common stock for the twenty prior
trading days including the day upon which the conversion notice
is received by the Company or its transfer agent. The Company has the right to prepay the above seven notes during the first six
months following the date of issuance with a premium between 135-150% of all amounts owed, including default interest, depending
upon when the prepayment is effectuated. The note may not be redeemed after 180 days.
On January 25, 2017, GPL Ventures acquired
a $35,000 convertible note previously issued to Cross Over Promotions. The Company reissued the note in the name of GPL Ventures
with similar terms. As a result, the Company recorded the retirement of the old note and the reissuance of a new note, with associated
changes to derivative liability and debt discount as of January 25, 2017.
The Company valued the conversion features
on its convertible debentures at origination at $1,874,658, of which $871,558 was recognized as a debt discount on the convertible
debenture. The balance of $1,003,100 was recorded as derivative issuance expense. The debt discount was recorded as reduction (contra-liability)
to the convertible debenture and will be amortized over the life of the convertible debentures. ASC 815 requires assessment of
the fair market value of derivative liability at the end of each reporting period and recognition of any change in the fair market
value as other income or expense.
Changes in Derivative Liabilities were as follows:
October 31, 2016
|
|
$
|
1,248,689
|
|
Issuance of derivative
|
|
|
96,529
|
|
Conversions of debt to common stock
|
|
|
(204,315
|
)
|
Extinguishment of debt
|
|
|
(10,590
|
)
|
Change in fair value
|
|
|
262,855
|
|
January 31, 2017
|
|
$
|
1,393,168
|
|
Accrued interest as of January 31, 2017 and October
31, 2016 was as follows:
|
|
January 31, 2017
|
|
October 31, 2016
|
Accrued Interest
|
|
$
|
68,353
|
|
|
$
|
43,426
|
|
Interest Expense
|
|
$
|
24,927
|
|
|
$
|
43,426
|
|
NOTE 5 – NOTES PAYABLE
Pursuant to the Stock Purchase
Agreement, the Company issued to EMS a promissory note in the principal amount of $100,000, due on demand from the Closing,
which represents the purchase price paid by the Company for Viva Entertainment. The note bears interest at the rate of 10%
per annum and is still outstanding as of January 31, 2017. Interest expense for the three months ended January 31, 2017 was
$2,521.
NOTE 6 - COMMON STOCK
During the three months ended
January 31, 2017 the Company had the following common stock transactions:
|
·
|
21,200,000 shares issued to various individuals
for consulting services previously rendered. Below is the detail of the shares issued and value of each issuance.
|
|
|
|
|
|
|
|
|
|
Share price
|
|
|
|
Shares issued
|
|
|
|
Total value
|
|
|
10-Jan
|
|
|
|
Padron
|
|
|
|
0.005
|
|
|
|
1,250,000
|
|
|
$
|
6,250
|
|
|
9-Jan
|
|
|
|
Nagle
|
|
|
|
0.004
|
|
|
|
1,000,000
|
|
|
$
|
4,000
|
|
|
16-Nov
|
|
|
|
Klappenbach
|
|
|
|
0.009
|
|
|
|
150,000
|
|
|
$
|
1,350
|
|
|
3-Nov
|
|
|
|
Isaacs
|
|
|
|
0.013
|
|
|
|
500,000
|
|
|
$
|
6,500
|
|
|
24-Jan
|
|
|
|
Harrison
|
|
|
|
0.0038
|
|
|
|
6,000,000
|
|
|
$
|
22,800
|
|
|
24-Jan
|
|
|
|
Caucayo
|
|
|
|
0.004
|
|
|
|
2,000,000
|
|
|
$
|
8,000
|
|
|
16-Dec
|
|
|
|
Brewer
|
|
|
|
0.003
|
|
|
|
9,000,000
|
|
|
$
|
27,000
|
|
|
16-Nov
|
|
|
|
Benites
|
|
|
|
0.009
|
|
|
|
250,000
|
|
|
$
|
2,250
|
|
|
9-Jan
|
|
|
|
Ashley
|
|
|
|
0.004
|
|
|
|
1,000,000
|
|
|
$
|
4,000
|
|
|
16-Nov
|
|
|
|
Alcantara
|
|
|
|
0.009
|
|
|
|
50,000
|
|
|
$
|
450
|
|
|
·
|
96,448,452 shares issued on the conversion
of notes payable (see Note 4).
|
Each of these issuances
was made pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933.
NOTE 7
– STOCK PAYABLE
Common
stock issuable consists of the value of shares payable under employment contracts with officers of the Company. Common stock issuable
was $512,464 and $512,400 as of January 31, 2017 and October 31, 2016.
NOTE 8 – SUBSEQUENT EVENTS
Subsequent to January 31, 2017, the Company issued a
total of 245,684,053 shares of restricted common stock to several individuals on the conversion of notes payable and associated
accrued interest.
The Company also issued 16,250,000 shares of restricted
common stock to several individuals for services previously rendered.