NOTES TO
FINANCIAL STATEMENTS
April 30, 2017
and January 31, 2017
NOTE 1 - NATURE
OF ORGANIZATION AND BASIS OF PRESENTATION
Nature of
Organization
Gold Entertainment
Group, Inc. (the "Company") was originally incorporated in the
State of Nevada on February 3, 1999. The Company was
organized formerly for the purpose of establishing a multimedia
internet-based communication network between the healthcare industry
manufacturers and the key base managers in the medical field to
advertise and promote the manufacturers products. On
August 28, 2007, the Company filed a certificate of domestication
with the State of Florida whereby the Company became a Florida
corporation. Simultaneously, the Company's capital
structure was increased to 25,000,000,000 common shares having a par
value of $0.0001 per share and 50,000,000 preferred shares having no
par value per share.
Our strategy is to seek an appropriate company as a working partner looking to develop new markets for its products or services. This may involve any of the following business strategies; licensing, co-ownership or distribution of a number of products and/or services suitable for the North American marketplace. The working partner company will have to provide proof to Management of its ability to sustain operations while expanding its market reach.
The Company intends to use its capital stock, debt, or a combination of these to effect a business combination with a target business which management believes has
significant growth potential.
Basis of
Presentation
The financial
statements included herein have been prepared by the Company. In the
opinion of the Company's management, all adjustments (consisting of
normal recurring adjustments and reclassifications and non-recurring
adjustments) necessary to present fairly our results of operations
and cash flows for the three months ended April 30, 2017 and 2016 and
our financial position as of April 30, 2017 and January 31, 2017 have
been made.
NOTE 2 - GOING
CONCERN
Gold's financial
statements have been presented on the basis that it is a going
concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Gold
has incurred net losses through April 30, 2017 in the amount of
$3,021,837 This factor raises doubt as to Gold's ability to obtain
debt and/or equity financing and achieve profitable operations.
Gold's management
intends to raise additional operating funds through equity and/or
debt offerings. However, there can be no assurance management will
be successful in its endeavors. Ultimately, Gold will need to
achieve profitable operations in order to continue as a going
concern.
There are no
assurances that Gold will be able to either (1) achieve a level of
revenues adequate to generate sufficient cash flow from operations;
or (2) obtain additional financing through either private placement,
public offerings and/or bank financing necessary to support Gold's
working capital requirements. To the extent that funds generated
from operations and any private placements, public offerings and/or
bank financing are insufficient, Gold will have to raise additional
working capital. No assurance can be given that additional financing
will be available, or if available, will be on terms acceptable to
the Company. If adequate working capital is not available, Gold may
be required to curtail its operations.
NOTE 3 -
SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of
financial statements in conformity with accounting principles
generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities and assets at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these
estimates. Significant estimates include the valuation of
stock-based compensation, the valuation of discount on debt, the
valuation of derivative instruments, the valuation of debt
guarantees, and the valuation allowance on deferred tax assets.
Concentration of
Risk
Gold places its cash
and temporary cash investments with established financial
institutions. Management feels this risk is mitigated due to the
longstanding reputation of these banks.
In the normal course
of business, the Company extends unsecured credit to the majority of
its customers. Management periodically reviews its outstanding
accounts receivable and establishes an allowance for doubtful
accounts based on historical collection trends and other criteria.
Cash and Cash
Equivalents
The Company
considers all short-term highly liquid investments with an original
maturity at the date of purchase of three months or less to be cash
equivalents. There were no cash equivalents at April 30, 2017 and
January 31, 2017, respectively.
Fair Value of
Financial Instruments
Effective January 1,
2008, the Company adopted FASB ASC 820, Fair Value Measurements and
Disclosures, Pre Codification SFAS No. 157, "Fair Value
Measurements", which provides a framework for measuring fair value
under GAAP. Fair value is defined as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on
the measurement date. The standard also expands disclosures about
instruments measured at fair value and establishes 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:
Level 1 - Quoted
prices for identical assets and liabilities in active markets;
Level 2 - Quoted
prices for similar assets and liabilities in active markets; quoted
prices for identical or similar assets and liabilities in markets
that are not active; and model-derived valuations in which all
significant inputs and significant value drivers are observable in
active markets; and
Level 3 -
Valuations derived from valuation techniques in which one or more
significant inputs or significant value drivers are unobservable.
The Company
designates cash equivalents (consisting of money market funds) and
investments in securities of publicly traded companies as Level 1.
The total amount of the Company's investment classified as Level 3
is de minimis.
The fair value of
the Company's debt as of April 30, 2017 and January 31, 2017,
approximated fair value at those times.
Fair value of
financial instruments: The carrying amounts of financial instruments,
including cash and cash equivalents, short-term investments, accounts
payable, accrued expenses and notes payables approximated fair value
as of April 30, 2017 and January 31, 2017 because of the relative
short term nature of these instruments. At April 30, 2017 and January
31, 2017, the fair value of the Company's debt approximates
carrying value.
Goodwill and Intangibles without Finite Lives
In accordance with paragraph 350-20-35-1 of the FASB Accounting Standards Codification for intangibles without finite lives are not amortized. The Company periodically, at least on an annual basis, reviews intangibles, considering factors such as projected cash flows and revenue and earnings multiples, to determine whether the carrying value of the intangible is impaired. If the intangible is deemed to be impaired, the difference between the carrying amount reflected in the financial statements and the estimated fair value is recognized as an expense in the period in which the impairment occurs. The Company issued 200,000,000 shares of its common stock for certain a software license and share agreement on April 30, 2017 and valued the intangibles acquired at $20,000, with no provision for impairment as it was not deemed necessary at April 30, 2017.
Intangibles with
Finite Lives
The Company applies
the provisions of Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 360-10,
Property,
Plant and Equipment,
where applicable to all long lived assets.
FASB ASC 360-10 addresses accounting and reporting for impairment and
disposal of long-lived assets. The Company periodically evaluates the
carrying value of long-lived assets to be held and used in accordance
with FASB ASC 360-10. FASB ASC 360-10 requires impairment losses to
be recorded on long-lived assets used in operations when indicators
of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying
amounts. In that event, a loss is recognized based on the amount by
which the carrying amount exceeds the fair market value of the
long-lived assets. Loss on long-lived assets to be disposed of is
determined in a similar manner, except that fair market values are
reduced for the cost of disposal.
The Company does not
amortize any intangible assets with finite lives.
Goodwill and
intangible assets are reviewed for potential impairment whenever
events or circumstances indicate that their carrying amounts may not
be recoverable. Management determined no impairment adjustment
related to these intangibles was necessary.
Income taxes
The Company accounts
for income taxes under an asset and liability approach. This process
involves calculating the temporary and permanent differences between
the carrying amounts of the assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
temporary differences result in deferred tax assets and liabilities,
which would be recorded on the Company's balance sheets in
accordance with ASC 740, which established financial accounting and
reporting standards for the effect of income taxes. The Company must
assess the likelihood that its deferred tax assets will be recovered
from future taxable income and, to the extent the Company believes
that recovery is not likely, the Company must establish a valuation
allowance. Changes in the Company's valuation allowance in a period
are recorded through the income tax provision on the statements of
operations.
On January 1, 2007,
the Company adopted ASC 740-10 (formerly known as FIN No. 48,
Accounting for Uncertainty in Income Taxes). ASC 740-10 clarifies the
accounting for uncertainty in income taxes recognized in an entity's
financial statements and prescribes a recognition threshold and
measurement attributes for financial statement disclosure of tax
positions taken or expected to be taken on a tax return. Under ASC
740-10, the impact of an uncertain income tax position on the income
tax return must be recognized at the largest amount that is
more-likely-than-not to be sustained upon audit by the relevant
taxing authority. An uncertain income tax position will not be
recognized if it has less than a 50% likelihood of being sustained.
Additionally, ASC 740-10 provides guidance on de-recognition,
classification, interest and penalties, accounting in interim
periods, disclosure and transition. As a result of the implementation
of ASC 740-10, the Company recognized no material adjustment in the
liability for unrecognized income tax benefits.
Basic and Diluted Net Loss Per Common Share
Basic net loss per
share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period. Diluted
net loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding for the period
and, if dilutive, potential common shares outstanding during the
period. Potentially dilutive securities consist of the
incremental common shares issuable upon exercise of stock options
(using the treasury stock method) and convertible debt
instruments. Potentially dilutive securities are excluded
from the computation if their effect is anti-dilutive. Accordingly,
potentially dilutive securities for all periods presented have not
been included in the calculation of diluted net loss per common share
as such effect would have been anti-dilutive. As a result,
the basic and diluted per share amounts for all periods presented are
identical.
Concentrations of
Credit Risk
Financial
instruments which potentially subject the Company to concentrations
of credit risk consist principally of cash. The Company
has not experienced any losses in such accounts and believes it is
not exposed to any risks on its cash in bank accounts.
Recently Issued
Accounting Standards
From time to time,
new accounting pronouncements are issued by FASB that are adopted by
the Company as of the specified effective date. If not
discussed, management believes that the impact of recently issued
standards, which are not yet effective, will not have a material
impact on the Company's financial statements upon adoption. No new
pronouncements that would affect these financial statements had been
issued during or subsequent to these financial statements
NOTE 4 -
RELATED PARTY TRANSACTIONS
Due (To) Related
Party
From time to time
during the three months ended April 30, 2017 and the year ended
January 31, 2017, advances were made to and from the Company's
current President (also a significant stockholder) and an entity
owned 100% by this individual (collectively, the "related party")
and another shareholder of the Company. These advances are
short-term in nature, non-interest bearing and are the primary source
of funding for the Company. For the three months ended
April 30, 2017 and the year ended January 31, 2017, the activity with
the related parties consisted of the following:
|
|
Three Months Ended
|
|
|
Year
Ended
|
|
|
April 30,
2017
|
|
|
January 31,
2017
|
Balance due from (to) related party - Beginning
|
|
$
|
109,445
|
|
|
$
|
87,343
|
Accrued
consulting fees
|
|
|
3,000
|
|
|
|
24,000
|
Repayments
made to related party
|
|
|
-
|
|
|
|
(25,898)
|
Proceeds
received from related party
|
|
|
23,199
|
|
|
|
24,000
|
Balance
due to related party - Ending
|
|
$
|
135,644
|
|
|
$
|
109,445
|
NOTE 5 - INCOME
TAXES
At the adoption date
of January 1, 2007, we had no unrecognized tax benefit, which
would affect the effective tax rate if recognized. There has been no
significant change in the unrecognized tax benefit during the three
months ended April 30, 2017.
We classify interest
and penalties arising from the underpayment of income taxes in the
statement of income under general and administrative expenses. As of
April 30, 2017, we had no accrued interest or penalties related to
uncertain tax positions. The tax years 2016, 2015 and 2014 federal
return remain open to examination.
Deferred taxes are
provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences and operating loss
and tax credit carry forwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date
of enactment.
The provision
(benefit) for income taxes for the three months ended April 30, 2017
and the year ended January 31, 2017 consists of the following:
|
|
|
2017
|
2017
|
|
|
Federal:
|
|
|
|
|
Current
|
$
-
|
$
-
|
|
|
Deferred
|
-
|
-
|
|
|
|
|
|
|
|
State:
|
|
|
|
|
Current
|
-
|
-
|
|
|
Deferred
|
-
|
-
|
|
|
|
|
|
|
|
|
$
-
|
$
-
|
Net deferred tax
assets consist of the following components as of April 30, 2017 and
January 31, 2017:
|
|
|
2017
|
2017
|
|
|
|
|
|
|
|
Deferred
tax assets:
|
|
|
|
|
Operating
Loss
|
$1,027,425
|
$1,026,290
|
|
|
Deferred
tax liabilities:
|
-
|
-
|
|
|
|
|
|
|
|
Valuation
allowance
|
(1,027,425)
|
(1,026,290)
|
|
|
|
|
|
|
|
Net
deferred tax asset
|
$
-
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
The income tax
provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rate of 34% to pretax
income from continuing operations for the three months ended April
30, 2017 and the year ended January 31, 2017.
The Company has
unused net operating loss carryforwards for income tax purposes
totaling approximately $3,018,501 and $2,992,985 at January 31, 2017
and 2016, respectively, expiring through the year 2036 subject to the
Internal Revenue Code Section 382, which places a limitation on the
amount of taxable income that can be offset by net operating losses
after a change in ownership. In accordance with certain
provisions of the Tax Reform Act of 1986 a change in ownership of
greater than fifty (50%) percent of a corporation within a three
(3) year period will place an annual limitation on the
corporation's ability to utilize its existing tax benefit
carryforwards. Such a change in ownership may have
occurred in connection with the private placement of securities.
Additionally, the Company's utilization of its tax benefit
carryforwards may be restricted in the event of possible future
changes in the ownership of the Company from the exercise of options
or other future issuances of common stock.
NOTE 6 - COMMON
STOCK
On April 30, 2017, the Company licensed and acquired an option on other intellectual property valued at $20,000 for 200,000,000 shares of its common stock. The cost of $20,000 valued at fifty percent of the trading value of the Company's common stock was treated as a software license on the Company's balance sheet.
NOTE 7 -
PREFERRED STOCK
Preferred Stock
The Company is
authorized to issue 50,000,000 shares of preferred stock as described
below:
|
Total
Series
Authorized
|
|
Stated
Value
|
|
Voting
|
|
Annual
Dividends per
Share
|
|
Conversion
Rate
|
Series
A
|
25,000,000
|
|
None
|
|
Yes
|
|
As
per common stock
|
|
5,000
shares of common for every preferred share.
|
NOTE 8 -
SUBSEQUENT EVENTS
In preparing these
financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through August 7,
2017, the date the financial statements were issued, and no subsequent
events had occurred.
FORWARD
LOOKING STATEMENTS
Statements
made in this Form 10-Q that are not historical or current facts are
"forward-looking statements" made pursuant to the safe
harbor provisions of Section 27A of the Securities Act of 1933 (the
"Act") and Section 21E of the Securities Exchange Act of
1934. These statements often can be identified by the use of terms
such as "may," "will," "expect,"
"believe," "anticipate," "estimate,"
"approximate" or "continue," or the negative
thereof. We intend that such forward-looking statements be subject to
the safe harbors for such statements. We wish to caution readers not
to place undue reliance on any such forward-looking statements, which
speak only as of the date made. Any forward-looking statements
represent managements best judgment as to what may occur in the
future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond our control that could
cause actual results and events to differ materially from historical
results of operations and events and those presently anticipated or
projected. We disclaim any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after
the date of such statement or to reflect the occurrence of
anticipated or unanticipated events.
ITEM
2.