REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Directors and Stockholders of
Gala Global, Inc.
Las Vegas, NV
We have audited the accompanying consolidated
balance sheets of Gala Global, Inc. as of November 30, 2016 and 2015 the related consolidated statements of operations, changes
in 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 consolidated 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
the audit to obtain reasonable assurance about whether the 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 audit 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 financial statements, assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Gala Global, Inc. as of November
30, 2016 and the results of its operations and its cash flows for the year 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, the Company has suffered continuing losses and has yet to establish a reliable, consistent and proven source
of revenue to meet its operating costs on an ongoing basis and currently does not have sufficient available funding to fully implement
its business plan. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Pritchett, Siler and Hardy PC
Pritchett, Siler and Hardy PC
Salt Lake, City Utah
March
__
,
2017
(The accompanying notes are an integral part
of these consolidated financial statements)
(The accompanying notes are an integral part
of these consolidated financial statements)
(The accompanying notes are an integral part
of these consolidated financial statements)
(The accompanying notes are an integral part
of these consolidated financial statements)
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
1.
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Organization and Nature of Operations
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Gala Global Inc. (the “Company”)
was incorporated in the State of Nevada on March 10, 2010. The Company was formed to provide garment tailoring and alteration services.
The Company has expanded into the Hemp
and Cannabidiol (“CBD”) industry. The expansion is focusing on the development, research, and commercialization of
products derived from the Hemp and Cannabis plant. The Company currently is finalizing its marketing strategy for a new CBD flavored
thin-film strip. The film strip delivery system uses a dissolving film strip that is absorbed in the mouth. The film-strip method
is an advanced method of providing CBD for dietary supplement. The Company also is seeking acquisition candidates in this area
of interest in the nutraceutical and pharmaceutical industries. The Company also plans to enter into the medical marijuana cultivation
industry as approved in the United States and Canada to build legalized cultivation operations.
The Company’s services include the
development of cannabinoid based health and wellness products, the development of medical grade compounds, the licensing of proprietary
testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal herb industry.
Going Concern
These consolidated financial statements
have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its
liabilities in the normal course of business. As at November 30, 2016, the Company has a working capital deficit of $448,108 and
an accumulated deficit of $1,236,713. The continuation of the Company as a going concern is dependent upon the continued financial
support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity
financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any
adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
2.
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Summary of Significant Accounting Policies
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(a)
|
Basis of Presentation
|
These consolidated financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”)
and are expressed in U.S. dollars. The Company’s fiscal year end is November 30.
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(b)
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Principles of Consolidation
|
These consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries: Cannabis Ventures Inc (USA), Cannabis Ventures Inc (Canada),
and CBD Life, Inc. All inter-company transactions and balances have been eliminated on consolidation.
The preparation of consolidated financial
statements in conformity with US GAAP requires preparation of financial statements in conformity with US GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. The Company regularly evaluates estimates and assumptions related to the net realizable value of inventory, share-based
compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts,
historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that
are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely
from the Company’s estimates.
GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
2.
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Summary of Significant Accounting Policies
(continued)
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Inventory is comprised of finished goods
related to hemp and the CBD industry purchased for resale, and is recorded at the lower of cost or net realizable value on a first-in
first-out basis. The Company establishes inventory reserves for estimated obsolete or unsaleable inventory equal to the difference
between the cost of inventory and the estimated realizable value based upon assumptions about future market conditions.
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(e)
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Cash and Cash Equivalents
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The Company considers all highly liquid
instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As of November 30, 2016 and
2015, there were no cash equivalents.
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(f)
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Financial Instruments
|
The Company’s financial instruments
consist principally of cash, accounts payable and accrued liabilities, loans payable to related parties, and amounts due to related
party. The recorded values of all these financial instruments approximate their current fair values because of the short term nature
of these financial instruments.
The Company accounts for income taxes using
the asset and liability method in accordance with ASC 740,
Accounting for Income Taxes
. The asset and liability method provides
that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between
the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences
are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized.
The Company earns revenue from the sale
of products related to hemp and CBD, including modified electronic cigarettes and vape pens. Revenue is recognized only when the
price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability
is assured.
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(i)
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Stock-based Compensation
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The Company records stock-based compensation
in accordance with ASC 718,
Compensation – Stock Compensation
using the fair value method. All transactions in which
goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value
of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity
instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the
fair value of the equity instruments issued.
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(j)
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Foreign Currency Translation
|
The Company’s functional and reporting
currency is the U.S. dollar. Monetary assets and liabilities of integrated operations and other monetary assets and liabilities
denominated in foreign currencies are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Non-monetary
assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the
period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains
or losses are recognized in the statements of operations.
GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
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2.
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Summary of Significant Accounting Policies
(continued)
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(k)
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Basic and Diluted Net Loss per Share
|
The Company computes net income (loss)
per share in accordance with ASC 260,
Earnings per Share
. ASC 260 requires presentation of both basic and diluted earnings
per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available
to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti dilutive. No potentially dilutive debt or equity instruments were issued and outstanding
during the years ended November 30, 2016 and 2015. All effects of the reverse stock split discussed at Note 9(d) has been applied
retroactively to calculations of basic and diluted net loss per share for periods presented.
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(l)
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Recent Accounting Pronouncements
|
The Company has implemented all new accounting
pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new
accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
In
April 2015, the Company incurred costs relating to the commencement of a patent application process at a fair value of $63,750.
Refer to Note 6(j). During the year ended November 30, 2015, the Company discontinued the filing process, and recorded an impairment
charge for the intangible asset.
4
.
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Related Party Transactions
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a)
|
During the year ended November 30, 2016, the Company issued 6,250 shares of common stock with a
fair value of $10,625 to the former Chief Executive Officer of the Company for services as a director of the Company. During the
year ended November 30, 2016, the Company incurred consulting services of $13,540 (2015 - $21,250). As at November 30, 2016, the
Company had a prepaid expense balance of $nil (2015 - $2,917) to the former Chief Executive Officer of the Company related to these
services.
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b)
|
During the year ended November 30, 2016, the Company issued 6,250 shares of common stock with a
fair value of $7,187 to the Chief Financial Officer for consulting services. During the year ended November 30, 2016, the Company
incurred consulting services of $12,813 (2015 - $31,875). As at November 30, 2016, the Company owed $5,625 to the Chief Financial
Officer, which has been included in accounts payable and accrued liabilities - related party.
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c)
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As at November 30, 2016, the Company owed $249,835 (2015 - $255,295) to a company controlled by
a significant shareholder of the Company to fund payment of operating expenditures. The amount owing is unsecured, non-interest
bearing, and due on demand.
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d)
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As at November 30, 2016, the Company owed $10,000 (2015 - $10,000) to a company controlled by a
significant shareholder of the Company. The amount owing is unsecured, non-interest bearing, and due on demand.
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e)
|
As at November 30, 2016, the Company owed $2,064 (2015 - $nil) to a significant shareholder of
the Company. The amount is unsecured, bears interest at 3% per annum, and due 180 days from the date of issuance. As at November
30, 2016, accrued interest of $20 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.
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GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
4
.
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Related Party Transactions
(continued)
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f)
|
On September 21, 2016, the Company owed $10,000 (2015 - $nil) to the former spouse of a significant
shareholder of the Company. Under the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due
180 days from the date of issuance. As at November 30, 2016, accrued interest of $58 (2015 - $nil) has been included in accounts
payable and accrued liabilities - related party.
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g)
|
As at November 30, 2016, the Company owed $200 (2015 - $200) to the former Chief Executive Officer
of the Company. The amount is unsecured, bears interest at 1% per annum, and due 180 days from the date of issuance. As at November
30, 2016, accrued interest of $3 (2015 - $nil) has been included in accounts payable and accrued liabilities - related party.
|
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h)
|
As at November 30, 2016, the Company owed $nil (2015 - $42,000) to a significant shareholder of
the Company. The amount was unsecured, bore interest at 3% per annum, and due 180 days from the date of issuance. As at November
30, 2016, accrued interest of $nil (2015 - $435) has been included in accounts payable and accrued liabilities - related party.
On January 27, 2016, the Company issued 333,334 shares of preferred stock to the loan holder as part of settling all of the outstanding
notes payable and accrued interest owed to this related party as noted in Note 6(f).
|
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i)
|
As at November 30, 2016, the Company owed $nil (2015 - $5,000) to a significant shareholder of
the Company. The amount was unsecured, bore interest at 1% per annum, and due 180 days from the date of issuance. As at November,
2016, accrued interest of $nil (2015 - $1) has been included in accounts payable and accrued liabilities - related party. On January
27, 2016, the Company issued 333,334 shares of preferred stock to the loan holder as part of settling all of the outstanding notes
payable and accrued interest owed to this related party as noted in Note 6(f).
|
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j)
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As at November 30, 2016, the Company owed $nil (2015 - $805) to a significant shareholder of the
Company. The amount was unsecured, bore interest at 1% per annum, and due 180 days from the date of issuance. On January 27, 2016,
the Company issued 333,334 shares of preferred stock to the loan holder as part of settling all of the outstanding notes payable
and accrued interest owed to this related party as noted in Note 6(f).
|
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k)
|
As at November 30, 2016, the Company owed $79,333 (2015 - $76,500) to a significant shareholder
of the Company, which has been recorded in accounts payable and accrued liabilities - related party. The amount is unsecured, non-interest
bearing, and due on demand. During the year ended November 30, 2016, the Company incurred legal fees of $36,000 (2015 - $76,500)
to this significant shareholder. On January 27, 2016, the Company issued 166,666 shares of preferred stock to settle outstanding
debt owed to related parties of $24,167.
|
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l)
|
During the year ended November 30, 2016, the Company recognized revenue of $nil (2015 - $1,592)
from a Company controlled by significant shareholders of the Company.
|
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m)
|
During the year ended November 30, 2016, the Company incurred $nil (2015 - $101,500) in consulting
fees to the former President of the Company. During the year ended November 30, 2015, the Company issued 21,324 shares of common
stock with a fair value of $51,617 to settle the amount owing in addition to paying $8,300 to settle debt owed to the former President
of the Company. During the year ended November 30, 2015, $33,000 of the amount owing was paid by a significant shareholder and
the remainder of $8,583 has been forgiven and recorded as additional paid-in capital.
|
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n)
|
On May 9, 2014, CVI (Canada) entered into a contract to acquire certain property in Vancouver,
Canada for $600,000 (“the Contract”).
|
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On May 9, 2015, the Company entered into
an addendum with the owner of the property. In addition to the nonrefundable payment of $2,500 a month to extend the Contract,
the Company issued 1,400 shares of common stock on June 16, 2015 as part of the non-refundable deposit towards the purchase of
the property. During the year ended November 30, 2016, the Company paid $nil (2015 - $48,500).
|
GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
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a)
|
On December 29, 2015, the Company issued a $20,000 promissory note to an unrelated party. Under
the terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.
|
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b)
|
On April 19, 2016, the Company issued a $3,000 promissory note to an unrelated party. Under the
terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.
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c)
|
On April 22, 2016, the Company issued a $22,000 promissory note to an unrelated party. Under the
terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.
|
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d)
|
On June 3, 2016, the Company issued a $20,000 promissory note to an unrelated party. Under the
terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.
|
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e)
|
On June 23, 2016, the Company issued a $10,000 promissory note to an unrelated party. Under the
terms of the note, the amount due is unsecured, bears interest at 3% per annum, and is due 180 days from the date of issuance.
|
Stock transactions
for the year ended November 30, 2016:
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(a)
|
On December 23, 2015, the Company issued 12,500 shares of common stock with a fair value of $25,000
to a consultant pursuant to a consulting agreement dated May 1, 2015.
|
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(b)
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On December 23, 2015, the Company issued 25,000 shares of common stock with a fair value of $39,063
to the Chief Financial Officer and director of the Company pursuant to the agreement dated September 1, 2015. 12,500 shares were
issued for the consultant’s services as a director, and 12,500 shares for services as the Company’s Chief Financial
Officer.
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(c)
|
On December 23, 2015, the Company issued 12,500 of shares of common stock with a fair value of
$21,250 to the former Chief Executive Officer of the Company for the consultant’s services as a director pursuant to the
consulting agreement dated September 1, 2015.
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(d)
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On December 23, 2015, the Company issued 6,250 of shares of common stock with a fair value of $10,625
to the former Chief Executive Officer of the Company for services as the Company’s Chief Executive Officer pursuant to the
consulting agreement dated June 29, 2015.
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(e)
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On December 23, 2015, the Company issued 12,500 of shares of common stock with a fair value of
$17,500 to a consultant pursuant to a consulting agreement dated December 14, 2015.
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(f)
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On January 27, 2016, the Company issued 500,000 shares of preferred stock to significant shareholders
to settle debt of $72,620. Each preferred share is entitled to receive dividends when and if declared by the Company’s board
of directors, has 500 to 1 voting power and liquidation rights in the amount of the shares; par value in accordance with the Company’s
certificate of designation. Of the 500,000 shares issued, 166,666 shares were issued to a significant shareholder to settle outstanding
payables to a significant shareholder of $24,167, and the remaining 333,334 shares are issued to another significant shareholder
to settle debts of $42,638, $5,009, and $806 described at Note 4 for a total of $48,453 in outstanding principal and accrued interest.
|
Stock transactions for the year ended November
30, 2015:
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(g)
|
On January 6, 2015, the Company issued 15,000 shares of common stock with a fair value of $105,000
for advertising consulting services. The fair value of the shares of shares of common stock was calculated based on the closing
price of the Company’s common shares on the date of the agreement.
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GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
6.
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Stockholders’ Equity
(continued)
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(h)
|
On January 15, 2015, the Company issued 20,000 shares of common stock with a fair value of $83,000
for business development consulting services. The fair value of the shares of common stock was calculated based on the closing
price of the Company’s shares of common stock on the date of the agreement.
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(i)
|
On January 22, 2015, the Company issued 5,000 shares of common stock with a fair value of $39,450
to a former director of the Company for marketing consulting services. The fair value of the shares of common stock was calculated
based on the closing price of the Company’s common shares on the date of the agreement.
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(j)
|
On April 23, 2015, the Company issued 21,250 shares of common stock with a fair value of $63,750
to a former director of the Company for consulting services relating to patent applications. The fair value of the shares of common
stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.
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(k)
|
On June 16, 2015, the Company issued 14,000 shares of common stock with a fair value of $28,000
as part of a non-refundable payment to further extend the Company’s option to acquire certain property in Vancouver, Canada.
The fair value of the shares of common stock was calculated based on the closing price of the Company’s common shares on
the date of the agreement.
|
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(l)
|
On May 19, 2015, the Company issued 12,500 shares of common stock with a fair value of $37,500
to the former President of the Company for consulting services rendered. The fair value of the shares of common stock was calculated
based on the closing price of the Company’s common shares on the date of the agreement.
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(m)
|
On July 28, 2015, the Company issued 6,250 shares of common stock with a fair value of $11,250
to a director of the Company for services relating to the formation and development of business contacts. The fair value of the
shares of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.
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(n)
|
On August 31, 2015, the Company issued 6,250 shares of common stock with a fair value of $17,500
to the former Chief Executive Officer of the Company for consulting services rendered. The fair value of the shares of common stock
was calculated based on the closing price of the Company’s common shares on the date of the agreement. Refer to Note 8(b).
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(o)
|
On August 31, 2015, the Company issued 8,824 shares of common stock with a fair value of $14,117
to the former President of the Company as settlement for his outstanding compensation of $12,882. The fair value of the shares
of common stock was calculated based on the closing price of the Company’s common shares on the date of the agreement.
|
On September 1, 2015, the Company entered
into an agreement with the Chief Financial Officer of the Company. Pursuant to the agreement, the Company is to issue 12,500 shares
of common stock to the Chief Financial Officer upon execution and every twelve months as compensation for being the Chief Financial
Officer. The Company shall also issue an additional 6,250 shares of common stock to the Chief Financial Officer upon execution
and every six months as compensation for being a director. The agreement shall be terminated upon mutual agreement with the Company
and the Chief Financial Officer.
GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
As at November 30, 2016, the Company has
$827,000 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030.
The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income
taxes. As at November 30, 2016, the Company had no uncertain tax positions and has not filed tax returns since its inception. All
prior tax years from inception will be subject to examination by major tax jurisdictions when they are filed.
|
|
2016
$
|
|
|
2015
$
|
|
|
|
|
|
|
|
|
Net loss before taxes
|
|
|
(170,176
|
)
|
|
|
(679,466
|
)
|
Statutory rate
|
|
|
34%
|
|
|
|
34%
|
|
|
|
|
|
|
|
|
|
|
Computed expected tax recovery
|
|
|
(57,860
|
)
|
|
|
(231,017
|
)
|
Permanent differences
|
|
|
–
|
|
|
|
114,177
|
|
Redetermination of prior year taxes
|
|
|
(86,588
|
)
|
|
|
–
|
|
Change in Valuation allowance
|
|
|
144,448
|
|
|
|
116,840
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
–
|
|
|
|
–
|
|
The significant components of deferred
income tax assets and liabilities at November 30, 2016 and 2015 are as follows:
|
|
2016
$
|
|
|
2015
$
|
|
|
|
|
|
|
|
|
Net operating losses carried forward
|
|
|
281,180
|
|
|
|
248,445
|
|
Related party share based compensation
|
|
|
21,498
|
|
|
|
–
|
|
Share based compensation
|
|
|
58,269
|
|
|
|
–
|
|
Payables to related parties
|
|
|
31,946
|
|
|
|
–
|
|
Valuation allowance
|
|
|
(392,893
|
)
|
|
|
(248,445
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset
|
|
|
–
|
|
|
|
–
|
|
|
(a)
|
On December 9, 2016, the Company issued a $2,500 promissory note to a related party. Under the
terms of the note, the amount due is unsecured, bears interest at 2% per annum, and is due 180 days from the date of issuance.
|
|
(b)
|
On January 3, 2017, the Company issued a $6,000 promissory note to a related party. Under the terms
of the note, the amount due is unsecured, bears interest at 2% per annum, and is due 180 days from the date of issuance.
|
|
(c)
|
On January 9, 2017, the Company dissolved its wholly owned subsidiary, CBD Life, Inc.
|
|
(d)
|
On January 30, 2017, the Company effected a share consolidation on a 100 old shares for 1 new share
basis. The share consolidation has been applied retroactively to the earliest period presented.
|
|
(e)
|
On February 12, 2017, the Company entered into an agreement to acquire 51% of the issued and outstanding
common stock of Chill-N-Out Cryotherapy in exchange of the Company's preferred shares. Pursuant to the agreement, the Company shall
fund an initial minimum investment of $100,000 within 14 days and up to $250,000 in aggregate within 30 - 45 days of the definitive
agreement. Thereafter, the Company will fund an additional $2,750,000 within a 12 month period as needed. After a minimum of an
additional 12 months, the Company shall formalize a spin-off of the new subsidiary at 70% to Chill-N-Out and 30% to the Company.
On March 1, 2017, the parties agreed to cancel the agreement dated February 12, 2017.
|
GALA GLOBAL INC.
Notes to the Consolidated Financial Statements
Years ended November 30, 2016 and 2015
9.
|
|
Subsequent Events
(continued)
|
|
(f)
|
On February 14, 2017, the Company entered into an agreement whereby the Company agreed to acquire
80% of the issued and outstanding common stock of a to be incorporated company, Controlled Environment Genomics Inc ("CEG
Inc"), in exchange for a new series of the Company’s preferred shares. Pursuant to the agreement, the Company will appoint
CEG Inc.’s executive as the Chief Executive officer of the Company. An additional 5,000,000 restricted common shares will
also be issued to acquire CEG's intellectual property. In the case that CEG, Inc. becomes its own public entity, the executive
shall receive 51% ownership of the new entity, and the Company will retain the remaining 49%. The purpose of this acquisition is
to retain the services of CEG Inc.’s executive, and to acquire CEG's intellectual property as part of the Company's plan
to expand in the cannabis industry.
|