3
PART I
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements are only predictions and provide our current expectations or forecasts of future events and financial performance and may be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “will” or “should” or, in each case, their negative, or other variations or comparable terminology, though the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements include all matters that are not historical facts and include, without limitation statements concerning: our business strategy, outlook, objectives, future milestones, plans, intentions, goals, and future financial condition, including the period of time for which our existing resources will enable us to fund our operations.
We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from any future results expressed or implied by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.
The forward-looking statements contained in this Report or the documents incorporated by reference herein speak only of their respective dates. Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict them all. Except to the extent required by applicable laws, rules or regulations, we do not undertake any obligation to publicly update any forward-looking statements or to publicly announce revisions to any of the forward-looking statements, whether as a result of new information, future events or otherwise.
ITEM 1.
BUSINESS OVERVIEW
(i)
Principal products or services and their markets
;
We were incorporated in the State of Nevada on June 16, 2010 under the name “Monarchy Resources, Inc.” in order to seek out and acquire mineral properties. With strong gold prices at that time we were interested in acquiring a property whereby gold might be discovered on it in sufficient quantities to warrant a production decision being made in the future.
Prior to incorporation on June 16, 2010, we entered into an assignment agreement with Rodelio Mining Ltd., an unrelated third party company, to acquire La Carlota for the sum of $5,000. At the time of entering into the assignment agreement, our previous President, Guilfred Casimiro, believed that the Company had already been incorporated on the laws of the State of Nevada. As a result, the assignment agreement constitutes a “pre-incorporation contract” and was subsequently ratified, including all other prior acts and actions, by our board of directors.
Subsequent to incorporation, our two directors and officers purchased “seed stock” in the Company and engaged a consulting geologist, Angela Ventura, to prepare a geological report on the La Carlota Property. Mr. Ventura’s geological report dated June 28, 2010 recommends a two phase program which is set out in detail in the section below titled “Properties”.
We do not have any gold as of yet on La Carlota since we have not done any exploration work to support a calculation as to the ounces of gold which might be on the claim. To our knowledge we do not know, and may never know, if there is gold on the claim unless our future exploration work verifies this fact. At the present time we do not have any products for sale.
On May 14, 2013, the Company entered into a Share Purchase Agreement (the “SPA”) with the owners of New World Minerals S.A.P.I. de C.V. (“New World”) Under the terms of the SPA, on September 9, 2013, the Company issued 10,000,000 shares of the Company at a deemed value of $1.00 per share to the owners of New World in exchange for 28% of the issued and outstanding shares of New World. New World is a mining operator in the Chihuahua region of Mexico which owns three working mines; Morelos, La Luna, and Peneto.
New World has mined gold and silver raw ore in its three small Mexican Mines. In order to mill, float, smelt and refine this ore, we must invest in additional equipment. No third party calculation of the gold in place at the three Mexican Claims has been made.
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We have previously spent significant funds on these three Mexican mining interests since their acquisition. We have not yet undertaken sufficient exploration work on our mineral claim in the Philippines, La Carlota. We have mined the Mexican claims and hope that the mining becomes profitable. We are also hopeful that our future exploration programs on the La Carlota claim will identify mineralization which eventually can be put into commercial production. However, it should be kept in mind that very few mineral claims explored are ever able to go into commercial production. This might be the case with La Carlota. Nevertheless, we would like to be able to generate revenue from La Carlota by selling the mineral we locate on the claim.
On October 12, 2014, at a special meeting of the board of directors of the Company, the Company resolved to enter into, execute, and close a share exchange agreement to acquire 100% of the outstanding shares of The Spud Shack Fry Company Ltd., an operating British Columbia based restaurant company (“Spud Shack”). Under the terms of the Agreement, the Company acquired 100% of Spud Shack in exchange for the issuance of 90,000,000 restricted common shares of the Company at a deemed price of $0.01 per share for a total acquisition cost of $900,000. The Agreement was closed on Friday, October 17, 2014.
On December 21, 2015, the Company entered into an exclusive marketing agreement and was granted the exclusive worldwide marketing rights to a health and fitness application called 60K which is currently under development for iPhone, Android, tablets and desktop computers. Pursuant to the exclusive marketing agreement the Company will provide $100,000 in initial financing to complete the application as well as for marketing the release of a prototype. The Company will retain 30% of all revenue generated by the application.
In January 2016, the Company merged with its wholly owned subsidiary, I-Wellness Marketing Group Inc. which is a Nevada corporation incorporated during the six months ended December 31, 2015.
In February 9, 2016, the Company changed its name from Monarchy Ventures Inc. to I-Wellness Marketing Group Inc.
While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be enough to support the Company’s daily operations. Management intends to raise additional funds by way of increasing revenue, and a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.
(ii)
Distribution methods of the products or services
;
Not applicable to our previous and now discontinued mining operations. Our restaurant operation has one location for walk-in customers.
(iii)
Status of any publicly announced new product or service
;
Not applicable
(iv)
Competitive business conditions and the smaller reporting company's competitive position in the industry and methods of competition
;
We are a small company with limited personnel and funds. There are many other restaurant companies who have more personnel at their disposal and funds on hand to undertake substantial expansion of locations on restaurants they own. In the market place for workers they will have advantage over us because they can offer higher salaries and longer periods of employment. This puts our Company as a disadvantage in seeking workers for future expansion to new locations of the Spud Shack Fry Company Ltd.
In regards to our restaurant operation, our location is in a new developed area with plenty of new restaurants trying to attract the same clientele. However, none in our immediate vicinity offer Belgian fries, craft beers, and the same fresh ingredients we use in our burgers, sandwiches, salads, and sauces. If anything, our competitors draw more people to the area who are then willing to try something new.
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(v)
Sources and availability of raw materials and the names of principal suppliers
;
Our restaurant operation relies on several food wholesalers for our products including, but not limited to, Pacific Bottle Company, Sysco Foods, and Conte Foods.
(vi)
Dependence on one or a few major customers
;
Not applicable to our restaurant operation.
(vii)
Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration;
Not applicable
(viii)
Need for any government approval of principal products or services
.
Our restaurant operation is licensed to serve alcohol and subject to regular health inspections.
(ix)
Effect of existing or probable governmental regulations on the business
;
No applicable to our restaurant operation.
(x)
Estimate of the amount spent during each of the last two fiscal years on research and development activities, and if applicable, the extent to which the cost of such activities is borne directly by customers
;
Not applicable
(xi)
Costs and effects of compliance with environmental laws (federal, state and local)
; and
Not applicable
(xii)
Number of total employees and number of full-time employees
We have approximately 10 employees at our restaurant operating and no employees for our mining operation other than our directors and officers.
ITEM 1A.
RISK FACTORS.
As a smaller reporting company we are not required to provide this information.
ITEM 1B
.
UNRESOLVED STAFF COMMENTS
None
ITEM 2.
LEGAL PROCEEDINGS.
On October 7, 2015, we received a letter from an attorney demanding repayment of $171,803 of principal and accrued interest on funds allegedly advanced to the company by his client. Although this historical debt has been recorded on our financial statements and was confirmed by our auditors, there are some discrepancies in the documents provided by the attorney in support of the demand for repayment. We have requested further evidence of the advances so that we can make a determination as to the validity of the debt and what terms and conditions may apply. As of the date of this report, we have not received a response.
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ITEM 3.
MINE SAFETY DISCLOSURES.
On October 17, 2014 the Company concluded the acquisition of 100% of the outstanding shares of Spud Shack Fry Company and subsequently, The Company has discontinued its interests in the Mexican mining properties with New World Metals SAPI and the La Carlota mineral claim in the Philippines.
The Securities and Exchange Commission (SEC) approved amendments to its rules on December 21, 2011 to implement the mine safety disclosure requirements contained in Section 1503 of the Dodd-Frank Act. Section 1503 requires SEC registrants that are operators of coal or other mines to include in their periodic and current reports disclosures regarding certain safety violations, orders and regulatory actions. Based on Item 104 of Regulation S-K the Company is able to report the following, for the time period covered by the report:
·
no violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under Section 104 of the Federal Mine
Safety and Health Act of 1977 (Mine Safety Act) for which the operator received a citation from the Mine Safety and Health Administration (MSHA);
·
no orders issued under Section 104(b) of the Mine Safety Act;
·
no citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Safety Act;
·
no flagrant violations under Section 110(b)(2) of the Mine Safety Act;
·
no imminent danger orders issued under Section 107(a) of the Mine Safety Act; and
·
no proposed assessments (regardless of whether the assessment is being challenged or appealed) from the MSHA under the Mine Safety Act.
PART II
ITEM 4.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is quoted on the OTC Markets Group, Inc.’s OTCQB tier under the symbol “IWMG” The following is a summary of the high and low closing bid prices of our common stock for the periods indicated, as reported by the OTC Markets Group, Inc. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.
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High
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Low
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Year ended June 30, 2016:
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First Quarter
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$
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1.34
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$
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0.46
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Second Quarter
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$
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0.55
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$
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0.265
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Third Quarter
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$
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0.91
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$
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0.31
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Fourth Quarter
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$
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0.40
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$
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0.10
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The share prices above reflect our 1-for-3 stock consolidation effective November 24, 2014.
On June 30, 2016, the closing bid price on the OTC Markets Group, Inc.’s OTCQB tier for our common stock was $0.11.
Stockholders
As of June 30, 2016, we had approximately 19 shareholders of record and 66,937,845 shares of common stock outstanding.
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Dividends
We have not declared or paid any cash dividends on our capital stock in our history as a public company. We currently intend to retain all future earnings to finance our business and do not anticipate paying cash or other dividends on our common stock in the foreseeable future.
Transfer Agent
Our transfer agent is Action Stock Transfer Corp. at: 2469 E. Fort Union Blvd Suite 124 Salt Lake City, UT 84121. Tel: (801) 274-1088, Fax: (801) 274-1099
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None
Recent Sales of Unregistered Securities
During the year ended June 30, 2016, $10,000 (2015 - $69,500) of debt was converted into 10,000,000 (2015 – 26,500,000) common shares as follows:
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Effective Date
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Purpose
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Shares
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Value
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September 15, 2015
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Conversion of debt
1
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10,000,000
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$ 10,000
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Total
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10,000,000
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$ 10,000
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Notes:
1. Value based on par value of $0.001 per (pre-reverse split) share as per convertible debt agreement
2. Value based on par value of $0.001 per share as per convertible debt agreement
In connection with the above stock issuances, we did not pay any underwriting discounts or commissions. None of the sales of securities described or referred to above was registered under the Securities Act of 1933, as amended (the “Securities Act”). We or one of our investors had a prior business relationship with each of the purchasers, and no general solicitation or advertising was used in connection with the sales. In making the sales without registration under the Securities Act, we relied upon the exemption from registration contained in Section 4(2) of the Securities Act.
ITEM 5.
SELECTED FINANCIAL DATA
As a smaller reporting company we are not required to provide this information.
ITEM 6.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements set forth below under this caption constitute forward-looking statements. See “Forward-Looking Statements” preceding Item 1 of this Annual Report on Form 10-K for additional factors relating to such statements
.
You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Report.
Overview
The Company, I-Wellness Marketing Group Inc. (formerly Monarchy Ventures Inc.) (the “Company”), was incorporated under the laws of the State of Nevada on June 16, 2010 with authorized capital stock of 300,000,000 shares at $0.001 par value..
On October 17, 2014, the Company acquired 100% of the outstanding shares of The Spud Shack Fry Company Ltd., an operating British Columbia based restaurant company (“Spud Shack”). Under the terms of the Agreement, the Company acquired 100% of Spud Shack in exchange for the issuance of 90,000,000 restricted common shares of the Company at a deemed price of $0.01 per share for a total acquisition cost of $900,000. The Agreement was closed on Friday, October 17, 2014.
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On December 21, 2015, the Company entered into an exclusive marketing agreement and was granted the exclusive worldwide marketing rights to a health and fitness application called 60K which is currently under development for iPhone, Android, tablets and desktop computers. Pursuant to the exclusive marketing agreement the Company will provide $100,000 in initial financing to complete the application as well as for marketing the release of a prototype. The Company will retain 30% of all revenue generated by the application.
In January 2016, the Company merged with its wholly owned subsidiary, I-Wellness Marketing Group Inc. which is a Nevada corporation incorporated during the six months ended December 31, 2015.
In February 9, 2016, the Company changed its name from Monarchy Ventures Inc. to I-Wellness Marketing Group Inc.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain generate revenues from operations or raise additional financing.
As of June 30, 2016, we had a working capital deficit of $1,050,249 and an accumulated deficit of $1,135,522.
Despite the commitment of one of our director to continue to advance us funds over the next twelve months, our future financial success will be dependent on the success of the restaurant and further development of “60K”, our health and fitness application.
Our Company has no current plans, proposals or arrangement, written or otherwise, to seek a business combination with another entity.
Results of Operations
The Year Ended June 30, 2016 compared to the Year Ended June 30, 2015
During the year ended June 30, 2016 and June 30, 2015 our restaurant generated gross income of $134,688 and $115,170, respectively. This increase can be attributed to an increase in total sales over the same period while cost of goods decreased from 70% in 2015 to 67% for 2016.
Liquidity and Capital Resources
Net cash used in operating activities for the year ended June 30, 2016 and 2015was $26,505 and $77,942, respectively. This can be attributable to an increase in our expenses for the years ended June 30, 2016 and 2015 were $223,742 and $252,970, respectively. The decrease in expenses is attributable to a decrease in general and administrative expenses and depreciation offset by an increase in interest expense and professional fees. Changes in foreign exchange improved the company’s financial position by $12,304 during the year ended June 30, 2016 such that the losses for the year ended June 30, 2016 were $(76,750) compared to ($90,832) for the same period in 2015.
Net cash used in investing activities for the year ended June 30, 2016 and 2015, was $-0- and $4,144, respectively. As the restaurant operation matures and the menu stabilizes, we expect the need for new food preparation property and equipment to decline as evidenced by the drop in the purchase on property and equipment.
Net cash provided by financing activities for the year ended June 30, 2016 and 2015, was $26,505 and $65,837, respectively. As our restaurant sales have grown or required for cash infusions have declined.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
In presenting our financial statements in conformity with U.S. generally accepting accounting principles, or GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.
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Some of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. We base these estimates and assumptions on historical experience or on various other factors that we believe to be reasonable and appropriate under the circumstances. On an ongoing basis, we reconsider and evaluate our estimates and assumptions. Actual results may differ significantly from these estimates.
We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our financial statements. In addition, we believe that a discussion of these policies is necessary to understand and evaluate the financial statements contained in this Form 10-K.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
Recent Accounting Pronouncements
The Company does not expect the adoption of any recent accounting pronouncements to have a materially impact on its financial statements.
ITEM 7.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements attached to this Form 10-K for the year ended June 30, 2016 have been audited by our independent auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants.
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 8A.
CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures
Our principal executive officer, who is also our principal financial officer, has evaluated the Company’s disclosure controls and procedures as of June 30, 2016. Based on this evaluation, we have concluded that because of the material weakness in our internal control over financial reporting discussed below, the disclosure controls and procedures were not effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 are accumulated and communicated to Company’s management as appropriate to allow timely decisions regarding required disclosure.
Notwithstanding the material weakness discussed below, our management has concluded that the consolidated financial statements included in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
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Management’s annual report on internal control over financial reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f). The Company’s internal control over financial reporting is a process affected by the Company’s management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
In designing and evaluating our internal controls and procedures, our management recognized that internal controls and procedures, no matter how well conceived and operated, can provide only a reasonable, not absolute, assurance that the objectives of the internal controls and procedures are met.
The Company’s management assessed the effectiveness of its internal control over financial reporting as of June, 2016. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission’s 2013 Internal Control—Integrated Framework. Based on its assessment, management identified deficiencies in both the design and operating effectiveness of the Company’s internal control over financial reporting, which when aggregated, represent a material weakness in internal control. The most significant of these are:
(1) lack of segregation of duties; (2) lack of accounting expertise; and (3) lack of timely closing of books; (4) inability to get accounting information and schedules to our auditors in a timely manner.
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified above result from insufficient qualified personnel in our finance department. This results in an inability to provide effective oversight and review of financial transactions with regard to accumulating and compiling financial data in the preparation of financial statements. The lack of sufficient personnel also results in a lack of segregation of duties and the accounting technical expertise necessary for an effective system of internal control. As soon as our finances allow, we plan on hiring additional finance staff and, where necessary, utilizing competent outside consultants to provide a layer of review and technical expertise that is currently lacking in our internal controls over financial reporting.
As a result of these material weaknesses, management concluded that the Company did not maintain effective control over financial reporting as of June 30, 2016.
This annual 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 an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in internal control over financial reporting
There have been no changes in the Company’s internal controls over financial reporting during the year ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
Limitations on Controls and Procedures
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ITEM 8B.
OTHER INFORMATION
.
None.
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PART III
ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
DIRECTORS AND EXECUTIVE OFFICERS
Each of our Directors serves until his successor is elected and qualified. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his successor is duly elected and qualified, or until he is removed from office. The Board of Directors has no nominating or compensation committees.
Our officers and directors and their respective ages and positions as of June 30, 2016 were as follows:
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Name and address
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Age
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Position(s)
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Tim Ferguson
3651 Lindell Road Suite D612
Las Vegas, NV 89103
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52
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Chief Executive Officer, Chief Financial Officer, President and Director
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Ambrocio Lainez-Morales
3651 Lindell Road Suite D612
Las Vegas, NV 89103
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50
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Director
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Tim Ferguson was appointed to the Board of Directors on September 3, 2014 and was appointed as Chief Executive Officer, President, and Chief Financial Officer on September 18, 2014 by a Resolution of the Board of Directors.
Ambrocio Lainez-Morales was appointed to the Board of Directors on September 3, 2014.
A description of the work experience of our directors and officers is as follows.
Mr. Timothy J. Ferguson, aged 52, has been the Owner and President of North By Northwest Ventures Inc., a private Canadian company that is an industry leader in commercial and residential landscape construction working throughout the Greater Vancouver Region and British Columbia for over 19 years. Mr. Ferguson has 25 years of experience in landscaping, land reclamation and environmental mitigation projects. Over this period, Mr. Ferguson has worked with major mining companies, governmental and private developers, and been closely involved in the design, estimating and operational aspects of these projects. Mr. Ferguson attended the British Columbia Institute of Technology where he became certified as a Bioscience Technician. He is also a certified horticultural technician in Canada.
Mr. Ambrocio Lainez-Morales, aged 50, is a certified Journeyman Horticultural Landscaper. For the past 18 years, he has worked full-time for North By Northwest Ventures Inc. with Mr. Ferguson. Mr. Lainez-Morales has served in almost every capacity in the company, beginning as a labourer, through to a site superintendent. Currently, Mr. Lainez-Morales’ primary role in this company is Construction Superintendent, where he is responsible for ensuring projects are completed professionally and accurately. Mr. Lainez-Morales also speaks fluent Spanish.
Family Relationships
Our President and our Chief Financial Officer and Secretary Treasurer are one person, Tim Ferguson. Mr. Ferguson and Mr. Lainez-Morales are not related.
Term of Office
Members of our Board of Directors are appointed to hold office until the next annual meeting of our stockholders or until his successor is elected and qualified, or until they resign or are removed in accordance with the provisions of the Nevada Revised Statutes. Our officers are appointed by our Board of Directors and hold office until removed by the Board.
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Involvement in Certain Legal Proceedings
To the knowledge of our Company, during the past ten years, none of our directors or executive officers:
(i)
engaged in any type of business practice; or
(ii)
engaged in any activities in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws,
Which was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; or found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgement in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Board of Directors Audit Committee
Below is a description of the Audit Committee of the Board of Directors. The Charter of the Audit Committee of the Board of Directors sets forth the responsibilities of the Audit Committee. The primary function of the Audit Committee is to oversee and monitor the Company’s accounting and reporting processes and the audits of the Company’s financial statements.
Our audit committee is comprised of Tim Ferguson, our President and Chairman of the Audit Committee, who is not independent. Tim Ferguson cannot be considered an “audit committee financial expert” as defined in Item 407 of Regulation S-K. The Company does not presently have, among its officers and directors, a person meeting these qualifications and given our financial conditions, does not anticipate in seeking an audit committee financial expert in the near future. However Tim Ferguson, Chairman of the Audit Committee, is considering engaged the services of an independent Chartered Accountant as a consultant to provide advice to the Audit Committee as and when the Committee meets to review the Company’s financial statements.
Apart from the Audit Committee, the Company has no other Board committees.
Conflicts of Interest
None of our officers and directors is a director or officer of any other company involved in the mining industry. However there can be no assurance such involvement will not occur in the future. Such present and potential future, involvement could create a conflict of interest.
To ensure that potential conflicts of interest are avoided or declared to our Company and its shareholders and to comply with the requirements of the Sarbanes Oxley Act of 2002, the Board of Directors adopted, on July 23, 2010, a Code of Business Conduct and Ethics. I-Wellness’s Code of Business Conduct and Ethics embodies our commitment to such ethical principles and sets forth the responsibilities of I-Wellness and its officers and directors to its shareholders, employees, customers, lenders and other stakeholders. Our Code of Business Conduct and Ethics addresses general business ethical principles and other relevant issues.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of the copies of such forms received by us, we believe that, during the last fiscal year, the following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act:
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Name and Principal Position
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Number of Late Insider
Reports
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Transactions Not Timely Reported
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Known Failures to File a Required Form
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Tim Ferguson
CEO, President, CFO, Secretary & Treasurer
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None
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None
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1
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Danny Close
Control Person
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None
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None
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1
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Ambrocio Lainez-Morales
Director
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None
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None
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None
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ITEM 10.
EXECUTIVE COMPENSATION.
Summary Compensation Table
We did not pay monetary compensation to our directors in 2016 however Danny Close is the manager of our restaurant operation for which he has been paid CAD $3,000 per month.
Outstanding Equity Awards
We have never granted any stock options or stock appreciation rights to our executive officers or directors.
Compensation of Directors and Officers
We have no standard arrangement to compensate directors for their services in their capacity as directors. There is no compensation arrangement, either written or unwritten, to compensate our officers and directors. Directors are not paid for meetings attended. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.
ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of June 30, 2016 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities of our shares of common stock, (ii) our executive officers and directors, and (iii) our named executive officers as defined in Item 402(m) (2) of Regulation S-K. Unless otherwise indicated, the stockholder listed possess sole voting and investment power with respect to the shares shown.
|
|
|
|
|
|
|
|
|
|
Title of Class
|
Name and Address of Beneficial Ownership
|
Amount and Nature of Beneficial
Ownership
|
Percentage of
Common Stock
1
|
|
|
|
|
|
|
Common Stock
|
Tim Ferguson
|
18,166,167 (Direct)
|
27.1%
|
|
Common Stock
|
Danny Close
|
12,000,000 (Direct)
|
17.9%
|
|
Common Stock
|
All Directors and Officers as a Group (1 people)
|
18,166,167 (Direct)
|
27.1%
|
Note 1 - The percentage of class beneficially owned is based on 66,937,845 shares of common stock outstanding as of June 30, 2016.
14
A beneficial owners of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our Board of Directors
Equity Compensation Plans
There are no securities authorized for issuance under equity compensation plans or individual compensation arrangements.
Penny Stock Rule
I-Wellness Marketing Group’s common stock is considered to be a “penny stock” because it meets one or more of the definitions in SEC Rule 3a51-1:
(i)
It has a price less than five dollars per share;
(ii)
It is not traded on a recognized national exchange;
(iii)
It is not quoted on a FINRA automated quotation system (NASDAQ), or even if so, has a price of less than five dollars per share; or
(iv)
It is issued by a company with net tangible assets of less than $2,000,000, if in business more than three years continuously, or $5,000,000, if the business is less than three years continuously or with average revenues of less than $6,000,000 for the past three years.
A broker-dealer will have to undertake certain administrative functions required when dealing win a penny stock transaction. Disclosure forms detailing the level of risk in acquiring I-Wellness Marketing Group’s shares will have to be sent to an interested investor, current bid and offer quotations will have to be provided with an indication as to what compensation the broker-dealer and the salesperson will be receiving from this transaction and a monthly statement showing the closing month price of the shares being held by the investor. In addition, the broker-dealer will have to receive from the investor a written agreement consenting to the transaction. This additional administrative work might make the broker-dealer reluctant to participate in the purchase and sale of I-Wellness Marketing Group’s shares.
From I-Wellness Marketing Group’s point of view, being subject to the Penny Stock Rule could make it extremely difficult for it to attract new investors for future capital requirements since many financial institutions are restricted under their by-laws from investing in shares under a certain dollar amount. Ordinary investors might not be willing to subscribe to shares in the capital stock of I-Wellness Marketing Group due to the uncertainty as to whether the share price will ever be able to be high enough that the Penny Stock Rule is no longer a concern.
15
In addition, the stock market in general, and the market prices for thinly traded companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These wide fluctuations may adversely affect the trading price of our shares regardless of our future performance and that of I-Wellness Marketing Group. In the past, following periods of volatility in the market price of a security, securities class action litigation has often been instituted against such company. Such litigation, if instituted, whether successful or not, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, results of operations and financial conditions.
Any new investor purchasing shares in our Company might consider whether they will be able to sell their shares at a given price since if no broker-dealer becomes involved with I-Wellness Marketing Group and if we are unable to raise future investment capital the price per share may deteriorate to a point that an investor’s entire investment could be lost.
Outstanding Stock Opinion, Purchase Warrants and Convertible Securities
I-Wellness Marketing Group has not issued any stock options to either of its two directors and officers nor has it attached share purchase warrants to the share issued and outstanding. There are no convertible securities as of the date of this Form 10-K. I-Wellness Marketing Group has not registered any shares for sale by security holders under the Securities Act other than as disclosed in this Form 10-K.
Our authorized capital consists of 300,000,000 shares of common stock, par value $0.001 per share, of which 66,937,845 shares are presently issued and outstanding as of the date of this Annual Report.
The holders of our common stock are entitled to receive dividends as may be declared by our Board of Directors; are entitled to a pro-rated share in all of our assets available for distribution upon winding up of the affairs our Company; and are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all Meetings of the shareholders.
The shareholders are not entitled to preference as to dividends or interest; pre-emptive rights to purchase in new issues of shares; preference upon liquidation; or any other special rights or preferences.
There are no restrictions on dividends under any loan or other financing arrangements.
Non-Cumulative Voting.
The holders of our shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our Directors.
Employment Agreements
We have no employment agreements with any of our executive officers.
Equity Compensation Plans, Stock Options, Bonus Plans
No such plans or options exist. None have been approved or are anticipated. No Compensation Committee exists either.
Pension Benefits
We do not maintain any defined benefit pension plans.
Nonqualified Deferred Compensation
We do not maintain any nonqualified deferred compensation plans.
Change in Control of Our Company
We do not know of any arrangements which might result in a change in control.
16
Registered Agent
We are required by Section 78.090 of the Nevada Revised Statutes (the “NRS”) to maintain a registered agent in the State of Nevada. Our registered agent for this purpose is Frederick C Bauman with an address at: 6440 Sky Pointe Drive Suite 140-149 Las Vegas, NV 89131. All legal process and any demand or notice authorized by law to be served upon us may be served upon our registered agent in the State of Nevada in the manner provided in NRS 14.020(2).
Transfer Agent
We have engaged the service of Action Stock Transfer Corp. located in Salt Lake City, UT., to act as transfer and registrar.
Debt Securities and Other Securities
There are no debt securities outstanding or other securities.
ANTI-TAKEOVER PROVISION
The Chapter 78 of Nevada Revised Statutes contains a provision governing "acquisition of controlling interest." This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires "control shares" whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges: 20 to 33 1/3%; 33 1/3 to 50%; or more than 50%.
A "control share acquisition" is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The shareholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from the control share acquisition act.
The control share acquisition act is applicable only to shares of "Issuing Corporations" as defined by the Nevada law. An Issuing Corporation is a Nevada corporation, which: has 200 or more shareholders, with at least 100 of such shareholders being both shareholders of record and residents of Nevada; and does business in Nevada directly or through an affiliated corporation.
At this time, we do not have 100 shareholders of record resident of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply, the provisions of the control share acquisition act may discourage companies or persons interested in acquiring a significant interest in or control of us, regardless of whether such acquisition may be in the interest of our shareholders.
The Nevada "Combination with Interested Shareholders Statute" may also have an effect of delaying or making it more difficult to effect a change in control of us. This statute prevents an "interested shareholder" and a resident domestic Nevada corporation from entering into a "combination," unless certain conditions are met. The statute defines "combination" to include any merger or consolidation with an "interested shareholder," or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an "interested shareholder" having: an aggregate market value equal to 5 percent or more of the aggregate market value of the assets of the corporation; an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or representing 10 percent or more of the earning power or net income of the corporation.
CORPORATE GOVERNANCE
Director Independence
Tim Ferguson is not independent within the meaning of Section 5605 of NASDAQ.
17
Board Committees
The Audit Committee
We have an Audit Committee whose members consist of Tim Ferguson who is not independent. Further, Tim Ferguson can be considered an “audit committee financial expert” as defined in Item 401 of Regulation S-K. It is our intention to seek a financial expert but with limited funds to date we might not be able to in the near future. Apart from the Audit Committee, we have no other Board Committees. Since inception, our Board has conducted its business entirely by consent resolutions.
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS’ INDEPENDENCE
Except as described below, none of the following parties have, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that have or will materially affect us, other than as noted in this section:
·
Any of our directors or officers;
·
Any person proposed as a nominee for election as a director;
·
Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;
·
Any of our promoters; and
·
Any member of the immediate family (including spouse, parents, children, step-parents, step-children, siblings and in-laws) of any of the foregoing persons.
Directors’ Independence
Under NASDAQ Rule 4200(a) (15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. As Tim Ferguson is our executive officers and directors, we have determined that Tim Ferguson is not an independent director as defined under NASDAQ Rule 4200(a) (15). The Company does not have any promoters involved with it.
ITEM 13.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
The aggregate fees billed for the two most recently completed fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal periods were as follows:
|
|
|
|
|
Year Ended June 30, 2016
|
Year Ended June 30, 2015
|
|
Audit Fees
|
$10,000
|
$15,000
|
|
Audit-Related Fees
|
$Nil
|
$Nil
|
|
Tax Fees
|
$Nil
|
$Nil
|
|
All Other Fees
|
$Nil
|
$Nil
|
|
Total
|
$10,000
|
$15,000
|
18
ITEM 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
.
The following exhibits are either provided with this Annual Report or are incorporated herein by reference:
|
|
|
Exhibit Number
|
Description of Exhibits
|
|
3.1
|
Articles of Incorporation*
|
|
3.2
|
Bylaws*
|
|
31
|
Sec. 302 Certification of Principal Executive Officer and Principal Financial Officer
|
|
32
|
Sec. 906 Certification of Principal Executive Officer and Principal Financial Officer
|
*Previously filed as an exhibit to our Registration Statement on Form S-1 originally filed with the SEC on March 15, 2011, as amended July 28, 2011, September 28, 2011, November 16, 2011 and February 24, 2012 and declared effective March 12, 2012.
FINANCIAL STATEMENTS SCHEDULES
|
|
|
F-1
|
Independent Auditor’s Report;
|
|
F-2
|
Balance Sheets as at June 30, 2016 and June 30, 2015
|
|
|
|
|
F-3
|
Statements of Operations for the years ended June 30, 2016 and June 30,2015
|
|
|
|
|
F-4
|
Statement of Stockholders’ Deficiency from June 30, 2012 through June 30, 2016;
|
|
|
|
|
F-5
|
Statements of Cash Flows for year ended June 30, 2015 and June 30, 2015
|
|
|
|
|
F-6
|
Notes to Financial Statements
|
|
|
|
|
|
|
19
I-WELLNESS MARKETING GROUP INC.
(formerly Monarchy Ventures Inc.)
Consolidated Financial Statements
Years Ended June 30, 2016 and 2015
Report of Independent Registered Public Accounting Firm
F-1
Consolidated
Balance Sheets
F-2
Consolidated
Statements of Operations
F-3
Consolidated
Statements of Stockholders’ Deficit
F-4
Consolidated
Statements of Cash Flows
F-5
Notes to the Consolidated
Financial Statements
F-6
![[F10K063016_10K001.JPG]](http://content.edgar-online.com/edgar_conv_img/2017/02/17/0001078782-17-000232_F10K063016_10K001.JPG)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of I-Wellness Marketing Group Inc. (formerly Monarchy Ventures, Inc.)
We have audited the accompanying consolidated balance sheets of I-Wellness Marketing Group Inc. (the “Company”) as at June 30, 2016 and 2015 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2016 and 2015 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, to date the Company has reported losses since inception from operations and requires additional funds to meet its obligations and fund the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ DALE MATHESON CARR-HILTON LABONTE LLP
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, Canada
February 14, 2017
![[F10K063016_10K002.JPG]](http://content.edgar-online.com/edgar_conv_img/2017/02/17/0001078782-17-000232_F10K063016_10K002.JPG)
F-1
I-WELLNESS MARKETING GROUP INC.
(formerly Monarchy Ventures Inc.)
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash
|
$
|
19,218
|
$
|
20,043
|
|
Inventory (Note 3)
|
|
6,487
|
|
5,033
|
|
Total current assets
|
|
25,705
|
|
25,076
|
|
|
|
|
|
|
|
Non-Current Assets
|
|
|
|
|
|
Deposits
|
|
5,638
|
|
3,315
|
|
Property and equipment, net (Note 5)
|
|
146,358
|
|
176,184
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
|
177,701
|
$
|
204,575
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Bank indebtedness
|
$
|
13,621
|
$
|
16,629
|
|
Accounts payable
|
|
175,901
|
|
160,745
|
|
Accrued liabilities
|
|
2,325
|
|
1,985
|
|
Convertible notes payable (Note 10)
|
|
407,678
|
|
388,892
|
|
Current portion of deferred lease incentive (Note 6)
|
|
1,448
|
|
1,510
|
|
Due to related parties (Note 4)
|
|
474,981
|
|
493,283
|
|
Total Current Liabilities
|
|
1,075,954
|
|
1,063,044
|
|
Long Term Liabilities
|
|
|
|
|
|
Deferred lease incentive (Note 6)
|
|
7,241
|
|
9,062
|
|
TOTAL LIABILITIES
|
|
1,083,195
|
|
1,072,106
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
300,000,000 shares authorized, at $0.001 par value:
|
|
|
|
|
|
66,937,845 shares issued and outstanding as at June 30, 2016 (56,937,845 shares issued and outstanding as at June 30, 2015)
|
|
66,937
|
|
56,937
|
|
Additional Paid-In Capital
|
|
95,805
|
|
67,018
|
|
Accumulated Other Comprehensive Income
|
|
67,286
|
|
54,982
|
|
Accumulated Deficit
|
|
(1,135,522)
|
|
(1,046,468)
|
|
|
|
|
|
|
|
Total Stockholders’ Deficiency
|
|
(905,494)
|
|
(867,531)
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
$
|
177,701
|
$
|
204,575
|
The accompanying notes are an integral part of these consolidated financial statements.
F-2
I-WELLNESS MARKETING GROUP INC.
(formerly Monarchy Ventures Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
|
|
|
|
$
|
410,701
|
$
|
378,899
|
|
COST OF GOODS SOLD
|
|
|
|
|
|
|
(276,013)
|
|
(263,729)
|
|
GROSS MARGIN
|
|
|
|
|
|
|
134,688
|
|
115,170
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
22,071
|
|
29,487
|
|
General and administrative
|
|
|
|
|
|
|
37,518
|
|
63,486
|
|
Interest expense
|
|
|
|
|
|
|
55,499
|
|
46,594
|
|
Management wages (Note 4)
|
|
|
|
|
|
|
29,440
|
|
33,357
|
|
Professional fees
|
|
|
|
|
|
|
38,042
|
|
34,296
|
|
Rent
|
|
|
|
|
|
|
41,172
|
|
45,750
|
|
TOTAL OPERATING EXPENSES
|
|
|
|
|
|
|
223,742
|
|
252,970
|
|
NET LOSS FROM OPERATIONS
|
|
|
|
|
|
|
(89,054)
|
|
(137,800)
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
|
|
|
|
12,304
|
|
46,968
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS
|
|
|
|
|
|
$
|
(76,750)
|
$
|
(90,832)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
|
|
|
|
|
|
$
|
(0.00)
|
$
|
(0.00)
|
|
Basic and diluted
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE OUTSTANDING SHARES
|
|
|
|
|
|
|
64,834,020
|
|
51,518,422
|
|
Basic and diluted
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-3
I-WELLNESS MARKETING GROUP INC.
(formerly Monarchy Ventures Inc.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
The accompanying notes are an integral part of these consolidated financial statements.
F-4
I-WELLNESS MARKETING GROUP INC.
(formerly Monarchy Ventures Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 months ended
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
(89,054)
|
$
|
(137,800)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
22,167
|
|
29,487
|
|
Non-cash interest expense
|
|
|
|
|
|
28,786
|
|
24,018
|
|
Amortization of deferred lease incentive
|
|
|
|
|
|
(1,422)
|
|
(2,345)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
(1,630)
|
|
1,381
|
|
Deposits
|
|
|
|
|
|
(2,415)
|
|
2,791
|
|
Accounts payable and accrued expenses
|
|
|
|
|
|
17,063
|
|
4,526
|
|
Net cash used in operating activities
|
|
|
|
|
|
(26,505)
|
|
(77,942)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
|
|
|
-
|
|
(4,144)
|
|
Net cash used in investing activities
|
|
|
|
|
|
-
|
|
(4,144)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Bank indebtedness
|
|
|
|
|
|
(2,282)
|
|
(2,136)
|
|
Advances from convertible debt
|
|
|
|
|
|
28,787
|
|
24,018
|
|
Advances from related parties
|
|
|
|
|
|
-
|
|
43,955
|
|
Net cash provided by financing activities
|
|
|
|
|
|
26,505
|
|
65,837
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash
|
|
|
|
|
|
(825)
|
|
12,874
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
|
|
|
(825)
|
|
(3,375)
|
|
|
|
|
|
|
|
|
|
|
|
CASH , BEGINNING OF YEAR
|
|
|
|
|
|
20,043
|
|
23,418
|
|
CASH, END OF YEAR
|
|
|
|
|
$
|
19,218
|
$
|
20,043
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
|
$
|
-
|
$
|
-
|
|
Income taxes paid
|
|
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Shares issued for conversion of debt
|
|
|
|
|
$
|
10,000
|
|
69,500
|
The accompanying notes are an integral part of these consolidated financial statements.
F-5
1.
ORGANIZATION
The Company, I-Wellness Marketing Group Inc. (formerly Monarchy Ventures Inc.) (the “Company”), was incorporated under the laws of the State of Nevada on June 16, 2010 with authorized capital stock of 300,000,000 shares at $0.001 par value.
On October 20, 2014, the Company completed the acquisition of The Spud Shack Fry Company Ltd. (“Spud Shack”), a British Columbia company, by the issuance of 30,000,000 common shares. As a result, the former shareholders of Spud Shack will control approximately 99% of the issued and outstanding common shares of the Company. The acquisition is a reverse takeover ("RTO") and therefore has been accounted for using the acquisition method with Spud Shack as the accounting acquirer (legal subsidiary) and continuing entity for accounting and financial reporting purposes, and the Company as the legal parent (accounting subsidiary) (Note 9).
On August 20, 2014, the Company completed a 100:1 stock split, and on November 24, 2014, the Company completed a 3:1 reverse stock split. All shares and per share amounts issued have been restated to reflect the above changes.
On January 20, 2016, the Company completed a merger with I-Wellness Marketing Group, Inc., a wholly owned subsidiary incorporated in the State of Nevada. This resulted in a corporate name change of the Company to I-Wellness Marketing Group, Inc. The Company’s new trading symbol is “IWMG”.
Going Concern
These consolidated financial statements are presented on the basis that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
As at June 30, 2016, the Company has a working capital deficit of $1,050,249, an accumulated deficit of $1,135,522, is not able to finance day to day activities through operations and had recurring losses since inception. The Company’s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These uncertainties cast significant doubt about the Company’s ability to continue as a going concern. The Company requires additional funds to meet its obligations and to fund the costs of its operations.
While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be enough to support the Company’s daily operations. Management intends to raise additional funds by way of increasing revenue, and a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These consolidated financial statements and related notes are presented in accordance with US generally accepted accounting principles (“US GAAP”), and are presented in United States dollars.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, The Spud Shack Fry Company Ltd., a British Columbia incorporated company. All inter-company transactions and account balances have been eliminated upon consolidation.
F-6
Basic and Diluted Net Loss Per Share
Basic net loss per share amounts is computed based on the weighted average number of shares actually outstanding. Diluted net loss per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes anti-dilutive and then the basic and diluted per share amounts are the same. For all periods presented, the Company reported a loss and therefore the effect of all common share equivalents would be anti-dilutive. As at June 30, 2016, the Company has 340,178,750 (2015 – 321,392,000) potentially dilutive shares outstanding.
Estimates and Assumptions
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain of the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors 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. The most significant estimates with regard to these financial statements relate to the expected lives and impairment considerations of property and equipment, determination of fair values of stock based transactions and valuation of deferred income taxes.
Significant accounting judgements
The preparation of consolidated financial statements in accordance with US GAAP requires management to make judgements, apart from those involving estimates, in applying accounting policies. The most significant judgment in applying the Company’s consolidated financial statements include the assessment of the Company’s ability to continue as a going concern.
Property and Equipment
Property and equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the consolidated statement of operations during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the consolidated statement of operations.
Property and equipment includes leasehold improvements, furniture and fixtures, and computer equipment which are recorded at cost. Expenditures for major additions and improvements are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of furniture and fixtures and office equipment is computed as follows:
|
|
|
Furniture and fixtures
|
20% declining balance
|
|
Computer equipment
|
55% declining balance
|
|
Leasehold improvements
|
Term of lease
|
Impairment of Long-lived Assets
The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, measurement of the impairment, if any, is based upon the difference between the asset’s carrying value and estimated fair value.
F-7
Foreign Currency Translations
The books of the Company are maintained in United States dollars and this is the Company’s functional and reporting currency. Transactions denominated in other than the U.S. dollar are translated as follows with the related transaction gains and losses being recorded in the consolidated statement of operations:
(i)
Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;
(ii)
Non-monetary items including equity are recorded at the historical rate of exchange; and
(iii)
Revenues and expenses are recorded at the period average in which the transaction occurred.
The functional currency of the Company's wholly owned subsidiary is the Canadian dollar (“C$”). The Company translates the financial statements of the subsidiary to U.S. dollars using the following method:
(i)
All assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the period-end;
(ii)
Revenue and expenses are translated throughout the period at the weighted average rate; and
(iii)
Exchange gains or losses from such translations are included in accumulated comprehensive income (loss), as a separate component of stockholders’ equity.
Comprehensive Loss
The Company presents changes in accumulated comprehensive income in its statement of stockholders' deficiency. Total comprehensive loss includes, in addition to net loss, changes in equity that are excluded from the statement of operations.
Revenue Recognition
The Company recognizes and accounts for revenue in accordance with ASC 605 as a principal on the sale of goods. Pursuant to ASC 605,
Revenue Recognition,
revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the amount is fixed and determinable, risk of ownership has passed to the customer and collection is reasonably assured. The Company considered ASC 605-45, Principal Agent Considerations, and determined that the Company acts as a principal in its revenue-generating activities as they are responsible for the production of goods purchased by the customer, can determine the pricing costs, goods purchased are paid directly by the Company, and has a credit risk with respect to collection of amounts owed by its customers.
Inventories
Inventories consist of raw materials and includes other costs that are directly incurred to bring the inventory to its present location and condition. Inventory is stated at the lower of cost and net realizable value, determined on the first-in-first-out basis, or market.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
F-8
Recent Accounting Pronouncements
Present Accounting Standards Not Yet Adopted
ASU 2014-09 is intended to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in revenue requirements; providing a more robust framework for addressing revenue issues; improving comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and providing more useful information to users of financial statements through improved revenue disclosure requirements. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The provisions of this ASU were effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2016. Early application was not permitted. In August 2015, the FASB issued ASU 2015-14, “
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”
, which defers the effective date to fiscal periods beginning after December 15, 2017. Early adoption is permitted for fiscal periods beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In June 2014, the FASB issued ASU No. 2014-12,
“Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.”
This ASU requires a reporting entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a performance condition, and apply existing guidance under the Stock Compensation Topic of the ASC as it relates to awards with performance conditions that affect vesting to account for such awards. The provisions of this ASU are effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, “
Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.”
This ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03
, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.”
This ASU is intended to simplify the presentation of debt issuance costs and conform to the guidance in International Financial Reporting Standards, which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6,
“Elements of Financial Statements,”
which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. FASB Concepts Statement No. 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. For public business entities, the amendments in this ASU are effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015. In August 2015, the FASB issued ASU No. 2015-15,
“Interest—Imputation of Interest
(Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting.”
This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements to this topic. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs rateably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
F-9
3. INVENTORY
Inventories consist of raw materials which are used as ingredients to produce meals to be sold. Inventories are stated at the lower of cost and net realizable value, determined using the first-in-first-out basis, or market.
4. TRANSACTIONS WITH RELATED PARTIES
As of June 30, 2016, the Company had amounts due to the President, Vice President, and a company controlled by the Vice President, of $474,981 (2015 - $493,283). These amounts are unsecured, non-interest bearing, and due on demand.
During the year ended June 30, 2016, $29,440 (2015 - $33,357) was incurred as remuneration to officers and directors of the Company.
During the year ended June 30, 2015, the Company issued 166,677 shares in settlement of debt of $125,000 owing to a director.
5. PROPERTY AND EQUIPMENT
|
|
|
|
|
|
|
|
|
June 30, 2016
|
June 30, 2015
|
|
|
Cost
|
Accumulated
Depreciation
|
Net Book Value
|
Cost
|
Accumulated
Depreciation
|
Net Book Value
|
|
Computer equipment
|
$ 5,418
|
$ 4,985
|
$ 433
|
$ 5,650
|
$ 4,646
|
$ 1,004
|
|
Furniture and fixtures
|
91,866
|
50,768
|
41,098
|
95,912
|
42,206
|
53,706
|
|
Leasehold improvements
|
152,561
|
47,734
|
104,827
|
159,110
|
37,636
|
121,474
|
|
|
$ 246,845
|
$ 103,487
|
$ 146,358
|
$ 260,672
|
$ 84,488
|
$ 176,184
|
6. DEFERRED LEASE INCENTIVE
In February 2013, the Company received C$18,840 ($18,759) from the landlord for tenant improvement reimbursements which has been recorded as a lease incentive. It is being amortized on a straight line basis over the lease term of 10 years. Each year’s portion of the lease incentive has been offset against the rent expense.
7. COMMITMENT
The Company is committed until May 31, 2022 for payments totaling C$372,090 for premises under lease. The minimum lease payments are as follows:
|
|
|
2017
|
C$ 47,100
|
|
2018
|
50,868
|
|
2019
|
50,868
|
|
2020
|
50,868
|
|
2021
|
50,868
|
|
|
C$ 250,572
|
F-10
8. INCOME TAXES
The reported income taxes differ from the amounts obtained by applying statutory rates to the loss before income taxes as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
Loss before income taxes
|
|
|
|
|
|
|
$
|
(89,054)
|
$
|
(137,800)
|
|
Corporate tax rate
|
|
|
|
|
|
|
|
34%
|
|
34%
|
|
Expected income tax recovery
|
|
|
|
|
|
|
|
(30,278)
|
|
(46,852)
|
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange and others
|
|
|
|
|
|
|
|
4,570
|
|
10,000
|
|
Impact of foreign statutory tax rates
|
|
|
|
|
|
|
|
473
|
|
5,077
|
|
Change in valuation allowance
|
|
|
|
|
|
|
|
25,235
|
|
31,479
|
|
Future income tax recovery
|
|
|
|
|
|
|
$
|
-
|
$
|
-
|
The tax effects of temporary differences that give rise to the Company's future tax assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
Property and equipment
|
|
|
|
|
$
|
21,000
|
$
|
22,000
|
|
Loss carry forwards
|
|
|
|
|
|
159,000
|
|
133,000
|
|
|
|
|
|
|
|
180,000
|
|
155,000
|
|
Valuation allowance
|
|
|
|
|
|
(180,000)
|
|
(155,000)
|
|
|
|
|
|
|
$
|
-
|
$
|
-
|
As the criteria for recognizing future income tax assets have not been met due to the uncertainty of realization, a valuation allowance of 100% has been recorded for the current and prior years.
The Company has tax pools which can be applied to reduce future taxable income, expiring as follows:
|
|
|
|
Property and equipment
|
$ 80,000
|
No expiry
|
|
Non-capital losses - US
|
$ 310,000
|
2034 - 2036
|
|
Non-capital losses - Canada
|
$ 205,000
|
2034 - 2036
|
9. COMMON STOCK
On October 20, 2014, the Company issued 30,000,000 shares to acquire The Spud Shack Fry Company Ltd., an operating British Columbia based restaurant (Note 1).
In November 2014, the Company issued 21,500,000 shares on conversion of $64,500 of convertible debt (Note 10).
In April 2015, the Company issued 5,000,000 shares on conversion of $5,000 of convertible debt (Note 10).
On September 15, 2015, the Company issued 10,000,000 shares on conversion of $10,000 of convertible debt (Note 10).
As at June 30, 2016 and 2015, the Company has no stock options or share purchase warrants outstanding.
F-11
10. CONVERTIBLE NOTES PAYABLE
The Company has outstanding various promissory notes as at June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Issued
|
|
Amount
|
|
Term
|
|
Interest Rate
|
|
Conversion Rate
|
|
August 1, 2013
|
|
$
|
75,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.01
|
|
|
April 27, 2014
|
|
|
50,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
April 27, 2014
|
|
|
30,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
May 1, 2014
|
|
|
45,705
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
May 1, 2014
|
|
|
32,570
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
June 1, 2014
|
|
|
35,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
July 3, 2014
|
|
|
86,599
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
January 1, 2015
|
|
|
24,018
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
July 31, 2015
|
|
|
28,786
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
|
|
$
|
407,678
|
|
|
|
|
|
|
|
|
|
|
|
The Company has outstanding various promissory notes as at June 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Issued
|
|
Amount
|
|
Term
|
|
Interest Rate
|
|
Conversion Rate
|
|
August 1, 2013
|
|
$
|
75,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.01
|
|
|
April 27, 2014
|
|
|
60,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
April 27, 2014
|
|
|
30,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
May 1, 2014
|
|
|
45,705
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
May 1, 2014
|
|
|
32,570
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
June 1, 2014
|
|
|
35,000
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
July 3, 2014
|
|
|
86,599
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
January 1, 2015
|
|
|
24,018
|
|
|
Demand
|
|
|
5
|
%
|
|
$
|
0.001
|
|
|
|
|
$
|
388,892
|
|
|
|
|
|
|
|
|
|
|
|
The Company assessed the conversion options of the promissory notes granted during the year ended June 30, 2016 and 2015 and determined they had beneficial conversion features with intrinsic values in excess of the principal balance. Therefore, the Company recorded debt discounts of $28,786 for the year ended June 30, 2016 (2015 – $24,018). In addition, as these promissory notes are payable on demand, the debt discounts were fully amortized to interest expense as of June 30, 2016 and 2015.
The amount of interest payable on these notes was $51,178 as of June 30, 2016 (2015 - $31,530) and is included in accounts payable.
During the year ended June 30, 2016, $10,000 (2015 - $69,500) of debt was converted into 10,000,000 (2015 – 26,500,000) common shares (Note 9).
11. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Fair value measurement is based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value which are:
Level 1 —
Quoted prices that are available in active markets for identical assets or liabilities.
Level 2 —
Quoted prices in active markets for similar assets that are observable.
Level 3 —
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
F-12
At June 30, 2016, the Company had Level 1 financial instruments, consisting of cash with a fair value of $19,217 and bank indebtedness of $13,621
The Company's financial instruments generally consist of cash, deposits, bank indebtedness, accounts payable, convertible notes payable, and amounts due to related parties. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values. The Company is exposed to currency risk by incurring certain expenditures in currencies other than the United States dollar. The Company does not use derivative instruments to reduce this currency risk.
F-13
ITEM 15.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
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I-WELLNESS MARKETING GROUP, INC.
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Date: February 15, 2017
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/s/ Tim Ferguson
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Timothy Ferguson, President
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