(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
1. NATURE OF BUSINESS AND GOING CONCERN
The Company was incorporated on September 2, 1999 in the State of Nevada as LMC Capital Corp. and was organized for the purpose of creating a corporate vehicle to locate and acquire an operating business. On December 12, 2001, the Company changed its name to K-Tronik International Corp. ("KTI").
By the agreement dated November 29, 2001 and approved by the board of directors effective December 12, 2001, KTI issued 14,285,714 shares of restricted common stock to the shareholders of K-Tronik Int'l Corporation, a Nevada corporation, in exchange for 100% interest in K-Tronik Asia Corporation ("KTA"), a Korean corporation. In connection with this transaction, K-Tronik Int'l Corporation changed its name effective December 12, 2001 to K-Tronik N.A. Inc. ("KTNA").
The acquisition resulted in the former shareholders of KTNA acquiring 93.4% of the outstanding shares of KTI and has been accounted for as a reverse acquisition with KTNA being treated as the accounting parent and KTI, the legal parent, being treated as the accounting subsidiary. Accordingly, the consolidated results of operations of KTI included those of KTNA for all periods shown and those of KTI since the date of the reverse acquisition.
KTNA and KTA were engaged in the manufacture and distribution of various types of electronic stabilizers and illuminator ballasts for fluorescent lighting fixtures. KTNA granted credit, on an unsecured basis, to distributors and installers located throughout the United States.
On December 15, 2004, KTI entered into an agreement to sell all of its interest in KTNA and the fixed assets of its subsidiary, KTA. KTI is no longer engaged in the business of manufacturing, distributing or selling electronic ballasts and is considered to have re-entered the development stage at December 15, 2004.
On June 13, 2006, KTI announced it would implement a new corporate strategy focusing on horseracing track development opportunities. An agreement was signed on June 19, 2006 to buy exclusive rights for a racetrack and casino (racino) development opportunity in Saskatchewan, Canada. As part of the new strategy the Company incorporated 6584292 Canada Inc. under which it would operate the new development opportunity. On July 5, 2006, KTI changed its name to Racino Royale, Inc. (“RR”) to reflect its intention to engage in the business of owning or leasing race-courses and/or conduct horse-races.
On January 28, 2008, the Company acquired all of the issued and outstanding shares of InterAmerican Gaming Corp. (“InterAmerican”) a private casino management company focused on Latin America. InterAmerican provides experience in the Latin American gaming markets with specialization in implementing technology, systems and marketing programs.
On June 19, 2008, the Company formed a new subsidiary called IAG Peru S.A.C. (“IAG Peru”) to begin to organize the development of certain Peruvian opportunities. IAG Peru is 99% owned by InterAmerican Operations, Inc. and 1% by InterAmerican Gaming, Inc.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
On October 20, 2008, Racino Royale, Inc. changed its name to InterAmerican Gaming, Inc. (“IAG” or the “Company”) to better reflect its business direction to invest in Latin American horseracing and gaming opportunities.
During the 2008 fiscal year, the Company leased video lottery terminal slot machines from a related party and began deploying the assets in non-owned gaming locations. In 2009, the Company installed slot machines at Fantasy Club Del Peru SA (“Fantasy”) locations, operating under various brands throughout the country: “Slot City” in Chiclayo, “Colibri Dorado” in Chincha and “Monos Dorados” in Huacho and Huaral.
During fiscal 2010, the Company made the decision to step back from gaming operations. During the second quarter the Company began moving the slot machines into storage and by the end of the third quarter the Company no longer had machines installed in any casinos.
On August 30, 2010, the Company entered into a settlement agreement with the related party, by virtue of common officers and directors, which held the lease on the slot machines resulting in the disposition of the assets and liabilities associated with the gaming operations.
On July 7, 2011, the Company entered into a letter of intent with Baron Group Ventures ("BGV") to acquire an 80.1% interest in SoFit Mobile Inc. (“SoFit”) (formerly NOWPHIT Operations Inc.).
On October 3, 2011, the Company entered into a settlement agreement with DealNet Capital Corp. (“DealNet”), a related party by virtue of common officers and directors, in which the Company transferred 10,000,000 of its common shares and 100% of its shares of IAG Peru to extinguish $457,875 in liabilities. The 10,000,000 common shares have not yet been issued. The transaction included the forgiveness of debt resulting in a $31,678 charge to equity as DealNet is a related party.
On October 3, 2011, the Company executed a Share Exchange Agreement with SoFit and its shareholders (the “Share Exchange”) pursuant to which the Company purchased 80.1% of SoFit in exchange for 77,800,000 of the Company’s common shares valued at $240,000.
In conjunction with the signing of the Share Exchange, all of the directors and officers of IAG, excluding J. Graham Simmonds, resigned and were replaced by nominees of SoFit. As of October 7, 2011, the Board of Directors of IAG was made up of J. Graham Simmonds, Gary Schwartz, Marc Askenasi and Henry J. Kloepper. Marc Askenasi was also appointed Chief Executive Officer and President, effective as of October 7, 2011.
Officers of the Company are now as follows:
Marc Askenasi
|
Director, Chief Executive Officer and President
|
J. Graham Simmonds
|
Chairman & Interim Chief Financial Officer
|
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
On October 21, 2011, the Company settled amounts of $130,866 owed to directors, officers and consultants with 2,500,000 common shares.
On January 17, 2012, the Company appointed Gerald Goldberg to its Board of Directors.
On January 30, 2012, NOWPHIT Operations Inc. was renamed to SoFit Mobile Inc., short for Social Fitness, as it was determined to better reflect the business of the Company’s subsidiary.
On September 30, 2012, four consultants of the Company exercised their options, purchasing, 1,750,000 common shares at $0.02 and 133,333 common shares, 250,000 common shares and 1,389,889 common shares at $0.03. These options were granted in fiscal 2012. These shares were issued in June, 2013.
On October 11, 2012, Mr. John Ryan was appointed to the Board of Directors.
SoFit products include integrated mobile applications and complementary wireless devices that enable athletes to track, train, and compete with each other in real-time via the SoFit platform. Athletes can earn virtual rewards, such as trophies and medals, as well as real-life rewards, such as location-based coupons and special offers. The SoFit platform also features a charity and event function that allows athletes to raise donations for a charity of their choice and remotely compete in athletic events from anywhere around the world in real-time. The SoFit mobile applications were launched in July 2012.
Going Concern
The Company is in the development stage as defined by FASB Accounting Standards Codification (“FASB ASC”) subtopic 915-10 Development Stage Entities (“ASC 915-10”). As of the date of these financial statements, the Company has not earned any revenue, has working capital deficit of $887,587 and an accumulated deficit of $2,034,651. For the period from January 22, 2010 (date of inception) through September 30, 2012, the Company has accumulated losses of $2,034,651. Until such time that the Company generates sales, it will continue to operate at a loss. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company has been financed by its shareholders and third party lenders to meet its obligations. The Company plans to begin earning revenue in the near future and generate profits to mitigate the above negative indicators.
These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company’s future success is dependent upon its continued ability to raise sufficient capital either through equity financing or the sales of product, not only to finance its operating expenses, but to concentrate on its business activities. The consolidated financial statements do not include any adjustments to the amounts and classifications of the assets and liabilities that would be necessary if the going concern basis was not appropriate.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are in accordance with accounting principles generally accepted in the United States of America. Outlined below are those policies considered particularly significant:
Development Stage Company
The Company complies with the FASB ASC 915 Development Stage Entities and the Securities and Exchange Commission Act 7 for its characterization of the Company as development stage.
Consolidated Financial Statements
The consolidated financial statements include the accounts of the Company, its three subsidiaries, SoFit Mobile Inc., 6584292 Canada, Inc. and InterAmerican Operations, Inc. 6584292 Canada, Inc. and SoFit Mobile Inc. are incorporated under the laws of the Province of Ontario, Canada. 6584292 Canada, Inc is inactive. InterAmerican Gaming, Inc. and InterAmerican Operations, Inc. are incorporated under the laws of Nevada. All inter-company transactions have been eliminated.
Non-controlling interest
Non-controlling interest represents the interests of outside shareholders in the operating results and net assets of SoFit Mobile Inc. The non-controlling interest represents 19.9% of SoFit Mobile Inc.
Foreign Currency Translation
SoFit Mobile Inc.’s functional currency is in Canadian Dollars and it maintains its books and records in Canadian Dollars, the Company’s financial statements are converted to U.S. Dollars. The translation method used is the current rate method. Under the current rate method all assets and liabilities are translated at the current rate, stockholders’ equity accounts are translated at historical rates and revenues and expenses are translated at average rates for the reporting period. Due to the fact that items in the financial statements are being translated at different rates according to their nature, a translation adjustment is created. This translation adjustment has been included in Accumulated Other Comprehensive Income (Loss).
The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows:
|
|
September 30,
2012
|
|
|
September 30,
2011
|
|
Period-end CAD-USD exchange rate
|
|
$
|
1.0171
|
|
|
$
|
0.9540
|
|
Average Period CAD-USD exchange rate
|
|
$
|
0.9927
|
|
|
$
|
1.0135
|
|
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the period. Actual results could differ from these estimates, and such differences could be material.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
Cash and Cash Equivalents
The Company considers all highly liquid investments with an initial maturity date of three months or less and money market accounts to be cash equivalents.
HST Receivable
The Company is required to pay Harmonized Sales Tax ("HST") on the goods and services provided by its suppliers. This is a value added tax that is refunded back to the Company by the Government of Canada. The Company currently has a large receivable due as a result of this tax and expects to receive the refund upon the filing of its overdue income tax returns.
Acquisitions and Business Combinations
The Company accounts for acquisitions and business combinations under the purchase method of accounting. The Company includes the results of operations of the acquired business from the acquisition date. Net assets of the companies acquired are recorded at their fair value at the acquisition date. The excess of the purchase price over the fair value of net assets acquired are included in intangible assets and goodwill in the accompanying consolidated balance sheets.
Advertising Costs
The Company expenses advertising costs as incurred in accordance with FASB ASC 720. During the year ended September 30, 2012 the Company expensed $83,618 as corporate promotions.
Research and Development Cost
In accordance with FASB ASC 985-Software, expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognized in the income statement when it is incurred.
Expenditure on development activities, where research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalized if the product or process is technically and commercially feasible. The expenditure capitalized includes the cost of materials and direct labor. Other development expenditure is recognized in the income statement as an expense is incurred. Capitalized development expenditure is stated at cost less accumulated
amortization and impairment losses.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, sundry assets, due to and due from related parties, bank overdraft and accounts payable approximates fair value because of the short maturity of these instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risk arising from these financial instruments.
Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
●
|
Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;
|
●
|
Level 2 inputs: Inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly; and
|
●
|
Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
Income Taxes
The Company follows FASB ASC 740-Income Taxes, which requires the use of the asset and liability method of accounting of income taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.
Basic and Diluted Earnings (Loss) Per Share
The Company reports basic earnings (loss) per share in accordance with FASB ASC 260-Earnings Per Share. Basic earnings (loss) per share is computed using the weighted average number of shares outstanding during the year. Diluted earnings per share include the potentially dilutive effect of outstanding common stock options and warrants which are convertible to common shares. Diluted loss per share is not presented if the results would be “anti-dilutive”.
Recently Issued Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.
3.
REVERSE MERGER TRANSACTION AND ACCOUNTING
On October 3, 2011, the Company entered into a Share Exchange Agreement (“Share Exchange”) with SoFit, Wagerphone Inc. (D.B.A: Baron Group Ventures) (“BGV”) and the Shareholders of SoFit (“SoFit Vendors”). On October 3, 2011, the Merger contemplated by the Share Exchange by and among the Registrant, SoFit, BGV and the SoFit Vendors was completed (the “Merger”). As a condition to closing, the Company issued a Secured Promissory Note to SoFit for the aggregate unpaid principal amount of up to U.S. $5,000,000 drawn in tranches of $50,000, due on or before October 3, 2016. Any amount owed at the end of the period is eliminated upon consolidation. In return, the Company received a General Security Agreement from SoFit granting the Company a security interest over all assets of SoFit until the Secured Promissory Note was duly repaid in full.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
In connection with the Merger, the Company and SoFit entered into a Deferred Share Issuance Agreement dated October 3, 2011 whereby the parties agreed to defer the issuance of the 77,800,000 fully paid common shares of the Registrant. It was agreed the shares would be issued to the SoFit Vendors from treasury no longer than 270 calendar days after closing. The 77,800,000 shares related to this transaction were issued on May 9, 2012.
Immediately prior to the completion of the Merger, the Registrant had 67,868,234 shares of common stock outstanding. As a result of the Merger, SoFit merged into the Company to become a subsidiary of the Registrant. Following the Merger, the Registrant has 145,668,234 shares of common stock outstanding which is inclusive of the 77,800,000 unissued common shares of the Registrant pursuant to the Deferred Share Issuance Agreement dated October 3, 2011.
As a result of the reverse merger, during the year ended September 30, 2012, the Company recorded a loss on acquisition of $875,541. The significant components of the transaction are as follows:
Assets acquired:
|
|
$
|
-
|
|
Liabilities assumed:
|
|
|
874,862
|
|
Common stock retained:
|
|
|
679
|
|
Net
|
|
$
|
875,541
|
|
In conjunction with the Merger, two out of the three directors and officers of IAG, John G. Simmonds (former Director, Chief Executive Officer and President) and Randy Barber (former Director), resigned from the Company, effective as of October 7, 2011. The Company replaced the Board of Directors with nominees of SoFit. Effective as of October 7, 2011, J. Graham Simmonds (a director prior to the merger) was appointed as Chairman of the Board of Directors; Gary Schwartz was appointed as Executive Vice Chairman of the Board of Directors; Marc Askenasi was appointed as Director, Chief Executive Officer and President; and Henry J. Kloepper was appointed as Director. Carrie J. Weiler remained as the Company’s Corporate Secretary.
For financial purposes, the Merger represents a capital transaction of SoFit or a “reverse merger” rather than a business combination, because the sellers of SoFit effectively controlled the combined company immediately following the completion of the Merger. In accordance with Accounting Standards Codification (“ASC”) 805-10-40, Business Combinations; Reverse Acquisitions, SoFit Mobile was the acquiring entity for accounting purposes. While the transaction is accounted for using the purchase method of accounting, in substance the transaction was a recapitalization of SoFit’s capital structure. Accordingly, the assets and liabilities and the historical operations that will be reflected in IAG’s ongoing consolidated financial statements will be those of SoFit and will be recorded at the historical cost basis
.
IAG’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of SoFit after consummation of the Merger. IAG's historic capital accounts will be retroactively adjusted to reflect the equivalent number of shares issued by IAG in the Merger while SoFit’s historical retained earnings will be carried forward. The historical financial statements of IAG before the Merger will be replaced with the historical financial statements of SoFit before the Merger in all future filings with the SEC. The Merger is intended to be treated as a tax-free exchange under Section 368(a) of the Internal Revenue Code of 1986, as amended.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
4. Related Party Transactions
Transactions with related parties are incurred in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to between the related parties. The Company’s current and former officers and stockholders have advanced funds on a non-interest bearing basis to the Company for travel related and working capital purposes. The Company has not entered into any agreement on the repayment terms for these advances.
As of September 30, 2012, the amounts due to related parties were $344,630. During the year ended September 30, 2012, the Company expensed $220,000 as consulting fee payable to three directors of the Company and expensed $8,000 to consulting fee payable to one individual who is related to a director of the Company.
During the year the Company issued 2,000,000 shares to settle $127,866 in consulting and director fees owing to related parties.
During the year ended September 30, 2012, a director of the Company advanced
company
$25,000 to the Company to assist in the payment of audit fees associated with bringing the Company’s filings current
.
The loan does not have any set repayment terms.
Amounts due (to)/from related parties consisted of:
|
|
September 30,
2012
|
|
|
September 30,
2011
|
|
|
|
|
|
|
|
|
Entities with common directors and /or officers
|
|
$
|
(33,775
|
)
|
|
$
|
9,272
|
|
Loan from director
|
|
|
(25,000
|
)
|
|
|
-
|
|
Fees payable to officers and directors
|
|
|
(179,386
|
)
|
|
|
-
|
|
Expenses owed to an officer of the Company
|
|
|
(106,469
|
)
|
|
|
10,543
|
|
Total
|
|
$
|
(344,630
|
)
|
|
$
|
19,815
|
|
5
.
Research and Development
During the year ended September 30, 2012, the Company developed and released a commercialized version of its social gaming mobile application named SoFit. All costs associated with the development of the Application have been fully expensed as per ASC 985-Software. The Application was brought to market on July 19, 2012 and has since been available to download from both the Apple and Android marketplaces.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
6.
Property and Equipment
Property and equipment consisted of the following at September 30, 2012:
|
|
September
30,
2012
|
|
|
September 30,
2011
|
|
|
|
Cost
|
|
|
Accumulated Depreciation
|
|
|
Foreign Currency Translation
|
|
|
Net
|
|
|
Net
|
|
Computer hardware
|
|
$
|
7,618
|
|
|
$
|
(549
|
)
|
|
$
|
(13
|
)
|
|
$
|
7,056
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,618
|
|
|
$
|
(549
|
)
|
|
$
|
(13
|
)
|
|
$
|
7,056
|
|
|
$
|
-
|
|
At September 30, 2012, the Company has $750,938 in unissued share liability consisting of the following:
●
|
The Company received $84,000 in cash for the purchase of 2,799,999 common shares at $0.03, including warrants to purchase
949,997 shares
, 1,966,666 of the shares were issued on April 2, 2013. The transaction with one shareholder consisting of the 833,333 remaining shares was reversed and $25,000 was refunded in December 2012.
|
●
|
The Company settled $457,875 in amounts owing to a related party with 10,000,000 shares at $0.045, shares to be issued.
|
●
|
The Company settled $39,586 in consultant fees payable to unrelated parties with 1,798,042 shares of which 1,495,710 were at $0.02 and 302,332 were at $0.03, shares to be issued.
|
●
|
The Company settled $119,692 in consultant and director fees owing to related parties with 5,995,000 shares at $0.02 shares to be issued.
|
●
|
The Company settled $80,891 in consultant fees with the exercise of options for a total issuance of 3,523,222 common shares, the exercise price for the issuance of 1,750,000 of these shares was at $0.02 and the price for the remaining 1,773,222 shares was at $0.03. These shares were all issued in June 2013.
|
The Company has authorized capital of 200,000,000 shares of common stock with a par value of $0.00001 of which 169,944,901 and 1,000,000 shares are issued and outstanding as of September 30, 2012 and 2011, respectively.
On May 9, 2012, in connection with the reverse merger transaction, the Company issued 77,800,000 shares of its common stock in exchange for 800,991 shares of SoFit Mobile. See discussion in Note 3 “Reverse Merger Transaction and Accounting”.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
During the twelve months ended September 30, 2012 and 2011, the company issued 168,944,901 and 63,243 shares of its common stock, respectively.
The Company has an Incentive Stock Option Plan which was approved at a shareholders meeting held on July 14, 2008. The Company is authorized to issue up to 7,500,000 shares of its common stock under the plan. There were no stock options outstanding as of September 30, 2011.
During the year ended September 30, 2012, the Company issued 6,750,000 stock options exercisable at $0.02, 1,388,889 stock options exercisable at $0.03 and 60,000 stock options exercisable at $0.05 to consultants of the Company. During the year, 1,750,000 options were exercised at $0.02 and 1,388,889 options were exercised at $0.03. The shares were issued on June 25, 2013. All unexercised stock options issued during the year expired at September 30, 2012.
9. WARRANTS
During fiscal 2012, the Company issued warrants to acquire 949,997 common shares. The warrants were included in units issued as part of a private placement. Each unit of the private placement was comprised of one common share of the Company and one half purchase warrant. Each warrant entitles the holder to acquire one common share of the Company at a price of $0.10 per share. The warrants expire 180 days from date of execution of the subscription agreement or 45 days from the first day of trading upon which the Company’s listed shares trade at $0.15 per share or greater for 10 consecutive trading days.
The following table summarizes the changes in warrants outstanding and related prices for the shares of the Company’s common stock issued to shareholders at September 30, 2012:
Exercise
Price
|
|
Number of Warrants
Outstanding
|
|
Warrants Outstanding
Weighted Average
Remaining Contractual
Life (years)
|
|
Weighted
Average
Exercise price
|
|
Number of Warrants
Exercisable
|
|
Warrants Exercisable
Weighted
Average
Exercise Price
|
|
$
|
0.10
|
|
949,997
|
|
0.3
|
|
$
|
0.10
|
|
949,997
|
|
$
|
0.10
|
|
The following schedule summarizes the outstanding warrants for fiscal 2012 and 2011:
|
|
2012
|
|
|
2011
|
|
|
|
No. of Warrants
|
|
|
WAEP
|
|
|
No. of Warrants
|
|
|
WAEP
|
|
Beginning of year
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Issued
|
|
|
949,997
|
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
End of year
|
|
|
949,997
|
|
|
$
|
0.10
|
|
|
|
-
|
|
|
$
|
-
|
|
The fair value of the issued warrants was determined using the Black-Scholes Option Pricing Model, however, no stock based compensation expense was recorded since the warrants were issued as a part of the private placement of common stock.
The fair value of each warrant was estimated on the date of grant using the Black Scholes option-pricing model with the following assumptions at the measurement date:
Risk-free interest rate
|
0.14%
|
Expected term
|
180 days
|
Estimated volatility in the market price of the common shares
|
141%
|
Dividend yield
|
Nil
|
Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value of the Company’s stock options
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
Under FASB ASC 740 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.
The provision for income taxes has been computed as follows:
|
|
2012
|
|
|
2011
|
|
Expected income tax expense (recovery) at the statutory rate of 24.5%
|
|
$
|
(549,308
|
)
|
|
$
|
(4,217
|
)
|
Tax effect of expenses that are not deductible for income tax purposes (net of other amounts deductible for tax purposes)
|
|
|
1,702
|
|
|
|
-
|
|
Loss on acquisition
|
|
|
214,508
|
|
|
|
|
|
|
|
|
(333,098
|
)
|
|
|
(4,217
|
)
|
Changes in valuation allowance
|
|
|
333,098
|
|
|
|
4,217
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The components of deferred income taxes consisted of:
|
|
September 30,
2012
|
|
|
September 30,
2011
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
Net operating loss carry forwards
|
|
$
|
1,223,165
|
|
|
$
|
890,067
|
|
Valuation allowance
|
|
|
(1,223,165
|
)
|
|
|
(890,067
|
)
|
Deferred income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company has tax losses available to be applied against future years income. Due to the losses incurred from a predecessor business and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting from the tax losses available for carryforward will not be realized in timely manner, through the reduction of future income tax payments. Accordingly a 100% valuation allowance has been recorded for deferred income tax assets.
INTERAMERICAN GAMING INC
.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2012 and 2011
As of September 30, 2012, the Company had approximately $6,022,070 of Federal and State net operating loss carryovers available to offset future taxable income. Such carryovers expire through 2030. The Company’s income tax returns are subject to audit by the IRS and the years 2005 to 2012 remain open and subject to examination.
11. Subsequent Events
On October 11, 2012, Mr. John Ryan was appointed to the Board of Directors.
On November 20, 2012, the Company’s subsidiary SoFit Mobile Inc. was served a statement of claim by a human resources placement agency. The claim is for unpaid invoices dated September 4, 2012 in the amount of $39,550. This amount has been fully recorded in accounts payable on the balance sheet. On July 10. 2013, the Company and the other party reached a settlement in which $20,000 will be paid in cash in installments over a five week period and the remaining $19,550 will be settled with the issuance of 1,000,000 shares.