UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 28, 2015

 

or

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission file number: 333-176587

 

il2m INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

 

Nevada   27-3492854

(State or other jurisdiction of
incorporation or organization)

  

(I.R.S. Employer
Identification No.)

     

3500 West Olive Avenue

Suite 810

Burbank, California

   91505
(Address of principal executive offices)   (Zip Code)

 

(702) 726-0381

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

 

As of April 20, 2015, there were 1,831,757,244 shares of common stock, par value $0.0001 per share, outstanding.

 

 

 

 
 

  

il2m INTERNATIONAL CORP.

formerly known as Dynamic Nutra Enterprises Holdings Inc.

 

QUARTERLY REPORT ON FORM 10-Q

February 28, 2015

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION PAGE
     
Item 1. Financial Statements F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
Item 4. Controls and Procedures 9
   
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 11
Item 1A. Risk Factors 11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 14
Item 4. Mine Safety Disclosure 14
Item 5. Other Information 14
Item 6. Exhibits 15
   
SIGNATURES 16

 

 
 

 

IL2M INTERNATIONAL CORP

(F/K/A DYNAMIC NUTRA ENTERPRISES HOLDINGS, INC.)

 (A DEVELOPMENT STAGE COMPANY)

 

CONTENTS

 

PAGE F-1 CONDENSED CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 2015
     
PAGE F-2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2015 (UNAUDITED)
     
PAGE F-3 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM OCTOBER 17, 2013 (INCEPTION) TO FEBRUARY 28, 2015 (UNAUDITED)
     
PAGE F-4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE  MONTHS ENDED FEBRUARY 28, 2015 (UNAUDITED)
     
PAGES F-5 - F-16 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS

 

IL2M INTERNATIONAL CORP.
(f/k/a Dynamic Nutra Enterprise Holdings, Inc.)
 
CONSOLIDATED BALANCE SHEET

 

  February 28,   May 31, 
  2015   2014 
Assets:        
Current assets        
Cash  $73   $834 
Total current assets  $73   $834 
Fixed Assets-Net  $32,160   $46,566 
Other Assets   17,303    31,612 
Total Assets  $49,536   $79,012 
Liabilities:          
Current Liabilities:          
Accounts payable and accrued expenses  $74,662   $240,269 
Accrued Interest  $28,435   $1,845 
Deferred Rent   -    1,606 
Note Payable-Related Party   212,797    213,088 
Loan Payable-Related Party   4,379    26,544 
Convertible Notes Payable-net of discount   438,475    101,370 
Convertible notes payable-related party   740,600    740,600 
Derivative Liability   1,059,452    12,136,192 
Total current liabilities   2,558,800    13,461,514 
           
Deferred Rent   -    38,389 
           
Total Long Term Liabilities        38,389 
           
Total liabilities   2,558,800    13,499,903 
           
STOCKHOLDERS' DEFICIT          
Preferred Stock,$0.0001 par 10,000,000 authorized 0 issued   -    - 
Common stock; 500,000,000 shares authorized at $0.0001 par value; 365,114,744 and 180,511,500 shares issued and outstanding, respectively   36,511    18,051 
           
Unearned Stock for Services   (6,250)   - 
Additional paid-in capital   5,894,421    4,064,896 
Accumulated Deficit   (8,433,946)   (17,503,838)
Total Stockholders' Deficit   (2,509,264)   (13,420,891)
           
Total Liabilities and Stockholders' Deficit  $49,536   $79,012 

 

The accompanying notes are an integral part of these financial statements.

 

F-1
 

 

IL2M INTERNATIONAL CORP
(f/k/a Dynamic Nutra Enterprises Holdings, Inc.)
 
CONSOLIDATED STATEMENT OF OPERATIONS

 

   Three Months Ended   Nine months Ended 
   28-Feb   28-Feb   February 28,   February 28, 
   2015   2014   2015   2014 
Revenues  $-   $-   $-    - 
Cost of Services   -    -    -      
                     
Gross Margin   -    -    -    - 
                     
Operating Expenses:                    
Consulting Expense   -    375,107    67,000    527,314 
              -    - 
General and Administrative Expenses   517,639    292,591    1,279,804    354,652 
         -           
Total Operating Expenses   517,639    667,698    1,346,804    881,966 
                     
Operating Loss   (517,639)   (667,698)   (1,346,804)   (881,966)
Other Income (Expense)                    
Change in Fair Value of embedded derivative liability and expense   509,252    (23,246,071)   11,003,160    (23,246,071)
Loss on debt extinguishment   -    20,423,321    (110,903)   20,423,321 
Amortization of debt issued costs   (91,408)   -    (430,417)     
Foreign Currency   -    -    (1,185)     
Interest   (21,098)   (4,516)   (43,959)   (5,104)
    Total Other Expenses   396,746    -    10,416,696      
                     
Net income (Loss) before income taxes   120,093    (2,875,924)   9,069,892    (2,876,512)
                     
Income Tax   -    -    -      
                     
Net Loss  $120,093   $(3,543,622)  $9,069,892    (3,758,478)
                     
Loss per Share, Basic & Diluted  $0.00   $(0.02)  $0.03   $(0.03)
                     
Weighted Average Shares Outstanding   286,273,341    146,635,674    272,813,122    139,369,963 

 

The accompanying notes are an integral part of these financial statements.

 

F-2
 

 

IL2M INTERNATIONAL CORP.
(f/k/a Dynamic Nutra Holdings, Inc.)
(An Exploration Stage Company)
 
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
From Inception October 17, 2013 through November 30, 2014

 

           Additional   Subscriptions   Services Not       Total 
   Common Stock   Paid-in   Payable   Yet   Retained   Stockholders' 
   Issued   Amount   Capital   Issuable   Amount   Earned   Deficit   Deficit 
Balance at inception - October 17, 2013   -   $-   $-    -    -    -   $-   $- 
Stock issued to Founders   125,000    12,500    (12,490)                       10 
In kind contribution of services             309,590                        309,590 
In Kind contribution of interest             13,899                        13,899 
Stock issued for services   2,500    -    2,500    -    -    -    -    2,500 
Stock issued for services   2,300,000    230    814,770                        815,000 
Stock issued in merger   709,000    71    (6,014,623)                       (6,014,552)
Stock issued for debt   52,500,000    5,250    47,250                        52,500 
Beneficial conversion   -    -    52,500.00    -    -    -         52,500 
Beneficial conversion Related Party             99,000    -    -    -         99,000 
Reclassification of Derivative             8,752,500                        8,752,500 
Net loss                                 (17,503,838)   (17,503,838)
                                         
Balance May 31, 2014   180,511,500    18,051    4,064,896                   (17,503,838)   (13,420,891)
Stock issued for services   2,850,000    285    132,085                        132,370 
Convertible Stock converted   3,601,810    360    108,175                        108,535 
Reclassification of Derivative             1,087,515    -    -    -    -    1,087,515 
In kind Contribution             124,658                        124,658 
In Kind contribution of interest             12,915                        12,915 
Stock issued reducing convertible debt   1,568,627    157    7,843                        8,000 
Stock issued for services   18,900,000    1,890    187,110    -    -    (6,250.00)   -    182,750.00 
Stock issued reducing convertible debt   107,682,807    10,768    36,830                        47,598 
Stock issued for accounts payable   50,000,000    5,000    132,394                        137,394 
Net Income   -    -    -    -    -    -    9,069,892    9,069,892 
Balance February 28, 2015   365,114,744    36,511    5,894,421    -    -    (6,250.00)   (8,433,946)   (2,509,264)

 

The accompanying notes are an integral part of these financial statements.

 

F-3
 

 

IL2M INTERNATIONAL CORP

(f/k/a Dynamic Nutra Enterprises Holdings, Inc.)

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

   Nine Months 
   28-Feb   28-Feb 
   2015   2014 
CASH FLOW FROM OPERATING ACTIVITIES:        
Net Income  $9,069,892   $(3,758,478)
Adjustments to reconcile net loss from operations:          
Depreciation   14,406    1,926 
Stock issues for Services   311,995    2,510 
In Kind Contributions   137,573    189,467 
Amortization   430,417    - 
Change in Fair value of Derivative and Derivative Expense   (10,618,906)   23,294,729 
Loss on Debt extinguishment   110,903    (20,423,321)
Change in Operating Assets and Liabilities:          
Increase (decrease) in accounts payable   74,662    104,212 
Increase in accrued interest   26,590      
(Decrease) in Deferred Rent   (1,606)   42,620 
(Increase ) in other Assets   (14,309)   (29,070)
           
Net cash used in Operating Activities   (458,383)   (575,405)
           
CASH FLOW FROM INVESTING ACTIVITIES:          
Purchase of Assets   -     (21,278)
Net Cash used in Investing Activities   -    (21,278)
           
CASH FLOW FROM FINANCING ACTIVITIES:          
Repayments of Loan Payable   (24,544)   596,683 
Proceeds from notes net of dicounts   482,166    - 
           
Net Cash provided by Financing Activities   457,622    596,683 
           
Net Increase (Decrease) in Cash   (761)     
Cash at Beginning of Period   834      
Cash at End of Period  $73      

 

The accompanying notes are an integral part of these financial statements.

 

F-4
 

 

IL2M INTERNATIONAL CORP

 

(F/K/A DYNAMIC NUTRA ENTERPRISES HOLDINGS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF FEBRUARY 28, 2015
(UNAUDITED)

 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION 

 

(A) Basis of Presentation

 

The accompanying condensed consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information.  Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

 

It is management’s opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statements presentation.  The results for the interim period are not necessarily indicative of the results to be expected for the year.

 

il2m International Corp. was incorporated under the laws of the State of Nevada on June 8, 2010 under the name "Dynamic Nutra Enterprises Holdings, Inc." to market and sell a brewer's yeast product called Beta Glucan that can eliminate acne for a majority of people who use it as a dietary supplement. Effective November 15, 2013, our Board of Directors and the majority shareholders of the Company approved an amendment to our articles of incorporation to change our name from "Dynamic Nutra Enterprises Holdings Inc." to "il2m International Corp." (the “Name Change Amendment”). The Name Change Amendment was filed with the Secretary of State of Nevada on November 26, 2013 changing the name of the Company to "il2m International Corp." (the "Name Change"). The Name Change was effectuated to better reflect the future business operations of the Company.

 

On October 17, 2013, il2m Inc. was incorporated under the laws of State of Nevada. On January 9, 2014, il2m Inc. entered into a Stock Purchase and Share Exchange agreement with il2m International Corporation. For accounting purposes, this transaction is being accounted for as a merger of entities under common control and has been treated as a recapitalization of il2m, International Corporation with il2m, Inc. as the accounting acquirer (see Note 9(F). The historical financial statements of the accounting acquirer became the financial statements of the registrant. The Company did not recognize goodwill or any intangible assets in connection with the transaction. The 125,000,000 shares issued to the shareholder of il2m Inc. in conjunction with the share exchange transaction has been presented as outstanding for all periods.

 

The Company’s accounting year end is May 31, which was the year end of il2m International Corp.

 

On November 15, 2013 the Company declared a 1 for 10 reverse common stock split to stockholders. The Stock Split was effectuated on January 9, 2014 based upon filing the appropriate documentation with FINRA. Per share and weighted average amounts have been retroactively restated in the accompanying financial statements and related notes to reflect this stock split (See Note 9(E)).

 

Therefore, our business operations will change to that of developing, creating and marketing a social media platform called Ilink2music.com. Ilink2music.com is an unparalleled social media platform that will allow users to unify their personal digital-mobile lifestyle while simultaneously providing exclusive international music entertainment content, networking, events, products, services; featuring a unique internet radio station and exceptional co-creation content aiming at facilitating and revolutionizing the management of your on-line “way of life”. Our platform is a Horizontal - adaptable business model based on the strategic use of Multi-Sensory Branding, Co-Creation, Product Placement, Immersion User Experience Applications, ROI Relationship/Currency with Economy and Licensing Structures. It is built to adapt and to embrace the monumental shifts and disruptive technologies that are changing every facet of business. Ilink2music.com is positioned to leverage and facilitate change in the Global end user driven Digital/Mobile content/Product placement Eco system.

 

Ilink2music.com will enable the user to create a profile in the music entertainment zone that displays his/her talents or expertise, whether they are a musician, composer, songwriter, vocalist, performer, conductor, arranger, instrumentalist, dancer, choreographer, DJ, music video producer and/or director, booking agent, recording studio, audio engineer, record label, events planner, music venue, music broadcaster, music educator, music publisher, road crew, talent manager, entertainment lawyer, etc. The user can also simply be a music fan that enjoys listening to music, socializing or following and supporting others. Each member will be able to network within our community in order to find what they’re looking for: a singer for a band, an event planner for a nightclub, a DJ for a party, a violinist or pianist for an orchestra, a choreographer for your dance crew, a music venue for your event.

 

F-5
 

 

(B) Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of il2m Inc. and its wholly owned subsidiary, il2m International Corporation (from January 9, 2014, merger). All intercompany accounts have been eliminated upon consolidation.

 

(C) Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and derivative instruments and recorded debt discount, valuation of deferred tax assets and valuation of in-kind contribution of services and interest.

 

(D) Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At February 28, 2015 and May 31, 2014, the Company had no cash equivalents.

 

(E) Loss Per Share

 

In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The computation of basic and diluted loss per share at Febraury 28, 2015 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

     February 28,
2015		 
       
  Convertible Debt (Exercise price - $0.001 - $0.25/share)   566,789,121 
  Total   566,789,121 

 

(F) Operating Leases

 

The Company leases approximately 3,300 square feet of space under a 4-year lease executed on October 2, 2013. The lease commenced on February 1, 2014. The Company occupied the lease space on October 15, 2013 through January 31, 2014 free of charge. These months were included as part of the monthly straight-line rent expense calculation. The rent expense under this lease for the six months ended November 30, 2014 was $111,843.

 

(G) Business Segments

 

The Company operates in one segment and therefore segment information is not presented.

 

(H) Revenue Recognition

 

The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

 

F-6
 

 

(I) Fair Value of Financial Instruments

 

The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

 

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

 

  ● Level 1 - quoted market prices in active markets for identical assets or liabilities.
     
  ● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  ● 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.

 

The Company's financial instruments consist of accounts payable, accrued expenses, notes payable, notes payable - related party, loan payable - related party, convertible notes payable, convertible notes payable - related party and deferred rent payable. The carrying amount of the Company's financial instruments approximates their fair value as of November 30,2014 and May 31, 2014, due to the short-term nature of these instruments.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3 (see Note 8).

 

(J) Embedded Conversion Features

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.

 

(K) Derivative Financial Instruments

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

(L) Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.

 

F-7
 

 

(M) Debt Issue Costs and Debt Discount

 

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

(N) Stock-Based Compensation - Non Employees

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

 

Pursuant to ASC Section 505-50-30, 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. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

 

  ● Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.  The Company uses historical data to estimate holder’s expected exercise behavior.  If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
     
  ● Expected volatility of the entity’s shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
     
  ● Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends.  The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

 

F-8
 

 

  ● Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

 

Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.

 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.

 

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

 

(O) Foreign Currency Transaction Gains and Losses

 

Transaction gains and losses, such as those resulting from the settlement of nonfunctional currency receivables or payables are included in foreign currency loss in our consolidated statements of earnings.  Additionally, payable and receivable balances denominated in nonfunctional currencies are marked-to-market at each reporting period, and the gain or loss is recognized in our consolidated statements of earnings. 

 

(P) Recent Accounting Pronouncements

 

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The Company adopted this pronouncement for the three months ended August 31, 2014.

 

F-9
 

  

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation ( Topic 718 ); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.  We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

NOTE 2 PROPERTY AND EQUIPMENT

  

     November 30,
2014		   May 31,
2014		   Estimated
Useful
Life
  Furniture and Fixtures   7,415    7,415   5 years
  Leasehold Improvements   22,414    22,414   5 years
  Computer Equipment   15,798    15,798   3 years
  Office Equipment   5,591    5,591   3 years
      51,218    51,218    
  Less: Accumulated Depreciation   (19,058)   (4,652)   
  Property and Equipment, Net  $32,160   $46,566    

 

Depreciation expense was $14,426 for the six months ended November 30, 2014.

 

F-10
 

   

NOTE 3 CONVERTIBLE NOTES PAYABLE

 

The Company has nine convertible notes equaling net of discount $438,475. The notes are convertible at between 50% and 58% of the market price of the stock. The Company has calculated a derivative liability as detailed in note 8.

 

NOTE 4 CONVERTIBLE NOTES PAYABLE - RELATED PARTY

 

On March 14, 2014, the Company issued a convertible promissory note in the amount of $225,000 to a foreign corporation which is controlled by the Company’s Chief Executive Officer. The note is non-interest bearing and due on June 14, 2014. The note was amended to extend the maturity date to December 14, 2014 . The note can be converted into shares of Common Stock of the Company at a conversion price of $0.25 per share. The convertible promissory note is currently in default.

 

As of March 27, 2014, a foreign corporation which is controlled by the Company’s Chief Executive Officer paid operating expenses on behalf of the Company totaling $515,600. On March 27, 2014, this amount was converted into a convertible note payable. The note is non-interest bearing and due on demand. The note can be converted into the Company’s common stock at a conversion price of the lesser of $0.10 per share or 50% of the average trading price of the Company’s common stock on the OTCQB Markets for the five days preceding the date of conversion.

 

F-11
 

 

NOTE 5 NOTE PAYABLE - RELATED PARTY

 

As of March 27, 2014, a foreign corporation which is controlled by the Company’s Chief Executive Officer paid operating expenses on behalf of the Company totaling $231,000 Canadian Dollars. On March 27, 2014, this amount was converted into a note payable for $207,232 using the conversion rate from CAD to USD on the date of the note. The note bears interest at a rate of 5% per annum and is due on July 1, 2014. On July 1, 2014, the note holder extended the maturity date to January 1, 2015. As of February 28, 2015, the fair value of note payable was $212,797 which includes $5,565 of gain on foreign exchange rate. The Company accrued interest.

 

NOTE 6 LOAN PAYABLE - RELATED PARTY

 

For the period from October 17, 2013 (inception) to May 31, 2014, a foreign corporation which is controlled by the Company’s Chief Executive Officer paid operating expenses totaling $2,000 on behalf of the Company. The amount is treated as loan payable - related party, which is non-interest bearing and due on demand (see Note 11). The loan payable - related party balance was $2,000 as of August 31, 2014. From September 1, 2014 to February 28, 2015 an additional $2,379 was incurred. At February 28, 2015 $4,379 was owed.

 

For the period from October 17, 2013 (inception) to May 31, 2014, the Officer of the Company paid operating expenses totaling $24,544 on behalf of the Company. The amount is treated as loan payable - related party, which is non-interest bearing and due on demand (see Note 11). As of February 28. 2015, the amount was repaid in full.

 

NOTE 7 DEBT DISCOUNT

 

As of November 30, 2014, the Company recorded debt discounts totaling $1,228,181.

 

The Company amortized $817,128 for the period from October 17, 2013 (inception) to May 31, 2014.

 

The Company amortized $113,653 during the three months ended August 31, 2014, and then amortized $186,650 to November 30, 2014 and then $75,391 to February 28, 2015.

 

     August 31,
2014		   May 31,
2014		 
           
  Debt discount  $1,228,181   $850,758 
  Accumulated amortization of debt discount   (1,192,822)   (817,128)
  Debt discount – Net  $35,359   $33,630 

 

NOTE 8 DERIVATIVE LIABILITIES

 

The Company identified conversion features embedded within convertible debt issued. The Company has determined that the features associated with the embedded conversion option, in the form a ratchet provision, should be accounted for at fair value, as a derivative liability. The Company has elected to account for these instruments together with fixed conversion price instruments as derivative liabilities as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.

 

F-12
 

 

The fair value of the conversion feature is summarized as follows:

 

  Derivative Liability as of October 17, 2013 (inception)  $- 
  Fair value at the commitment date for convertible instruments   40,824,258 
  Change in fair value of embedded derivative liability   487,755 
  Adjustment of derivative liability through gain on extinguishment   (20,423,321)
  Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability   (8,752,500)
  Derivative Liability as of May 31, 2014   12,136,192 
        
  Fair value at the commitment date for convertible instruments   629,681 
  Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability   (1,087,515)
  Change in fair value of embedded derivative liability   (10,618,906)
  Derivative Liability as of February 28, 2015  $1,059,452 

 

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of February 28 , 2015:

 

     Commitment
Date		   Re-measurement
Date		 
  Expected dividends:   0%   0%
  Expected volatility:   147.99% - 278.79%   227.66% - 229.58%
  Expected term:   0 - 1 Year    0 - 0.95 Year 
  Risk free interest rate:   0.02% - 0.12%   0.02% - 0.09%

 

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of February 28, 2015:

 

     Commitment
Date		   Re-measurement
Date		 
  Expected dividends:   0%   0%
  Expected volatility:   204.42% - 278.79%   247.89% - 278.79%
  Expected term:   1 Year     1 Year  
  Risk free interest rate:   0% - 0.11%   0.05% - 0.11%

 

NOTE 9 STOCKHOLDERS’ EQUITY

 

(A) Preferred Stock

 

The Company’s Articles of Incorporation authorize 10,000,000 shares of preferred stock with a par value of $.0001 with rights and preferences to be determined by the Board of Directors.

 

(B) Common Stock Issued for Cash and Services

 

During the three months ended November 30, 2014 the Company issued 18,900,000 shares for services equaling $179,625 of which $6,250 is yet to be earned. The Compay also issued 1,568,627 shares for a reduction of convertible debt of $8,000.

 

During the three months ended February 28, 2015 157,682,807 shares were issued 50,000,000 for accounts payable reduction of $125,284 and a financing cost of $12,110. The balance of the shares of 127,682,807 for convertible debt reduction of $47,598.

 

During the three months ended August 31, 2014, the Company issued 2,850,000 shares of common stock for services having a fair value of $132,370 (See Note 10).

 

For the period from October 17, 2013 (inception) to May 31, 2014, the Company issued 2,500 shares of common stock to a former director for services with a fair value of $2,500 (See Note 11).

  

For the period from October 17, 2013 (inception) to May 31, 2014, the Company issued 2,300,000 shares of common stock to unrelated parties for services with a fair value of $815,000.

 

F-13
 

  

On October 17, 2013, the Company issued 125,000,000 shares of common stock to the founder of the Company for services having a fair value of $10 (See Note 11).

 

(C) In Kind Contribution of Services and Interest

 

For the three months ended August 31, 2014, the Officer of the Company contributed services having a fair value of $124,658 (See Note 11).

 

For the three months ended August 31, 2014, a total of $12,915 in imputed interest relating to certain convertible notes payable and convertible notes payable -related parties was recorded as an in-kind contribution of interest (see Notes 3 and 4).

 

For the period from October 17, 2013 (inception) to May 31, 2014, a total of $13,899 in imputed interest relating to certain convertible notes payable and convertible notes payable -related parties was recorded as an in-kind contribution of interest (see Notes 3 and 4).

 

For the period from October 17, 2013 (inception) to May 31, 2014, the Officer of the Company contributed services having a fair value of $309,590 (See Note 11).

 

(D) Amended to the Articles of Incorporation

 

On November 26, 2013 the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized capital stock increased to 500,000,000 common shares at a par value of $0.0001 per share, with class and series designations, voting rights, and relative rights and preferences to be determined by the Board of Directors of the Company from time to time.

 

(E) Stock Split

 

On November 15, 2013, the Company declared a 1 for 10 reverse common stock split effective to stockholders of record on January 9, 2014. Per share and weighted average amounts have been retroactively restated in the accompanying financial statements and related notes to reflect this stock split.

 

(F) Common Stock Issued for Acquisition of an Entity Under Common Control

 

On January 9, 2014, the Company entered into a Stock Purchase and Share Exchange agreement with il2m, Inc. The Company was deemed to have issued 709,000 shares of common stock to the shareholders of il2m International Corporation. The Company has accounted for the transaction as a combination of entities under common control and accordingly, recorded the merger at historical cost of ($6,014,552) (See Note 11).

 

(G) Common Stock Issued for Convertible Note

 

On January 20, 2014, the Company issued 52,500,000 shares to settle a convertible note payable of $52,500.

  

NOTE 10 COMMITMENTS AND CONTINGENCIES

 

During the three months ended August 31, 2014, the Company entered into advisory board agreements with two unrelated parties. The agreements shall commence on the effective date of the agreements and continue for a period of three years. Upon signing of the agreement, the Company issued 100,000 shares of the company’s common stock to each individual having a fair value of $58,000 (See note 9(B)). For ten hours of services through the first six months, and $2,500 for the duration of three-year Advisory Board Agreement thereafter.

 

The Company leases approximately 3,300 square feet of space under a 4-year lease executed on October 2, 2013. The lease commenced on February 1, 2014. The Company occupied the lease space on October 15, 2013 through January 31, 2014 free of charge. These months were included as part of the monthly straight-line rent expense calculation.

 

F-14
 

 

Future minimum lease commitments are as follows:

 

  Year   Amount 
       
  2015   150,313 
  2016   154,821 
  2017   174,002 
  2018   14,535 
     $493,671 

 

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

 

NOTE 11 RELATED PARTY TRANSACTIONS

 

On March 14, 2014, the Company issued a convertible promissory note in the amount of $225,000 to a foreign corporation which is controlled by the Company’s Chief Executive Officer. The note is non-interest bearing and due on June 14, 2014. The note was amended to extend the maturity date to September 14, 2014. The note can be converted into shares of Common Stock of the Company at a conversion price of $0.25 per share. The Company recorded a debt discount of $99,000 for the fair value of beneficial conversion feature. As of May 31, 2014, the Company amortized $99,000 of debt discount (See Note 4). For the nine months ended February 28, 2015, the Company recorded an imputed interest of $3,435 as an in-kind contribution of interest.

 

As of March 27, 2014, a foreign corporation which is controlled by the Company’s Chief Executive Officer paid operating expenses on behalf of the Company totaling $515,600. On March 27, 2014, this amount was converted into a convertible note payable. The note is non-interest bearing and due on demand. The note can be converted into the Company’s common stock at a conversion price of the lesser of $0.10 per share or 50% of the average trading price of the Company’s common stock on the OTCQB Markets for the five days preceding the date of conversion. The Company recorded a debt discount of $515,600 for the fair value of derivative liability. As of May 31, 2014, the Company amortized $515,600 of debt discount (See Note 4). For the nine months ended Feuaryy 28, 2015 the Company recorded an imputed interest of $7,856 as an in-kind contribution of interest.

 

As of March 27, 2014, a foreign corporation which is controlled by the Company’s Chief Executive Officer paid operating expenses on behalf of the Company totaling $231,000 Canadian Dollars. On March 27, 2014, this amount was converted into a note payable for $207,232 using the conversion rate from CAD to USD on the date of the note. The note bears interest at a rate of 5% per annum and is due on July 1, 2014. On July 1, 2014, the note holder extended the maturity date to October 1, 2014. As of February 28,2015, the fair value of note payable was $212,797 which includes $5,565 of gain on foreign exchange rate. The Company accrued interest of $4,589 (See Note 5).

 

F-15
 

 

On January 9, 2014, the Company entered into a Stock Purchase and Share Exchange agreement with il2m, Inc. The Company was deemed to have issued 709,000 shares of common stock to the shareholders of il2m International Corporation. The Company has accounted for the transaction as a combination of entities under common control and accordingly, recorded the merger at historical cost of ($6,014,552) (See Note 9(F)).

 

For the period from October 17, 2013 (inception) to May 31, 2014, a foreign corporation (the “Foreign Corporation”) which is a Company controlled by the Company’s Chief Executive Officer paid operating expenses totaling $2,000 on behalf of the Company. The amount is treated as loan payable - related party, which is non-interest bearing and due on demand (See Note 6). The loan payable - related party balance was $2,000 as of August 31, 2014. From September to February 28, 2015 anothr$2,379 was incurred.

 

For the period from October 17, 2013 (inception) to May 31, 2014, the Officer of the Company paid operating expenses totaling $24,544 on behalf of the Company. The amount is treated as loan payable - related party, which is non-interest bearing and due on demand (See Note 6). As of August 31, 2014, the amount was repaid in full.

 

For the nine months ended February 28, 2015, the Officer of the Company contributed services having a fair value of $124,658 (See Note 9(C)).

 

For the period from October 17, 2013 to May 31, 2014, the Officer of the Company contributed services having a fair value of $309,590 (See Note 9(C)).

 

For the period from October 17, 2013 to May 31, 2014, the Company issued 2,500 shares of common stock to a former director of the Company for services with a fair value of $2,500 (See Note 9(B)).

 

On October 17, 2013, the Company issued 125,000,000 shares of common stock to the founder of the Company for services having a fair value of $10 (See Note 9(B)).

 

NOTE 12 GOING CONCERN

 

As reflected in the accompanying financial statements, the Company has minimal operations, has negative working capital a stockholders’ deficit and no revenue. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

NOTE 13 SUBSEQUENT EVENTS

 

Management has evaluated it subsequent events and has determined that none existed.

 

F-16
 

 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

GENERAL

 

il2m International Corp. was incorporated under the laws of the State of Nevada on June 8, 2010 under the name "Dynamic Nutra Enterprises Holdings Inc." to market and sell a brewer’s yeast product called Beta Glucan™ and other nutraceuticals. Effective November 15, 2013, our Board of Directors and the majority shareholders of the Company approved an amendment to our articles of incorporation to change our name from "Dynamic Nutra Enterprises Holdings Inc." to "il2m International Corp." (the “Name Change Amendment”). The Name Change Amendment was filed with the Secretary of State of Nevada on November 26, 2013 changing the name of the Company to "il2m International Corp." (the "Name Change"). The Name Change was effected to better reflect the future business operations of the Company.

 

On October 17, 2013, il2m Inc. was incorporated under the laws of State of Nevada. On January 9, 2014, il2m Inc. entered into a Stock Purchase and Share Exchange agreement with il2m International Corporation. The transaction has been accounted for the transaction as a combination of entities under common control (see Note 10(F)). For accounting purposes, this transaction is being accounted for as a merger of entities under common control and has been treated as a recapitalization of il2m, International Corporation with il2m, Inc. as the accounting acquirer. The historical financial statements of the accounting acquirer became the financial statements of the registrant. We did not recognize goodwill or any intangible assets in connection with the transaction. The 125,000,000 shares issued to the shareholder of il2m Inc. in conjunction with the share exchange transaction has been presented as outstanding for all periods. The historical financial statements include the operations of the accounting acquirer for all periods presented and the accounting acquiree for the period from January 9, 2014 through May 31, 2014.

 

Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company", or "il2m International Corp." refers to il2m International Corp.

 

3(a) (10) SETTLEMENT AGREEMENTS

2010 Settlement Agreement

 

On January 14, 2015, our Board of Directors authorized the execution of that certain settlement agreement and stipulation dated January 13, 2015 (the "Settlement Agreement") with IBC Funds LLC, a Nevada limited liability company ("IBC Funds").

 

We had certain payables outstanding due and owing to creditors aggregating $125,284.00 (collectively, the "Payables"). IBC Funds purchased the Payables from their respective holders and subsequently filed a claim against us in the Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida (the "Circuit Court"), Case No. 2015 CA 000208 NC (the "Claim"), for the payment of the Payables. Thus, we and IBC Funds desired to resolve and settle the Payables and entered into the Settlement Agreement. In accordance with the terms and provisions of the Settlement Agreement, we and IBC Funds agreed to submit the Settlement Agreement to the Circuit Court for a hearing on fairness of such terms and conditions and the issuance of settlement shares exempt from registration. In settlement of the Claims, we shall initially issue and deliver to IBC Funds in one or more traunches shares of our common stock sufficient to satisfy the compromised amount at a 45% discount to market based on the market price during the valuation period and further issue to IBC Funds 2,500,000 free-trading shares as a settlement fee (collectively, the "Settlement Shares").

 

1
 

 

The Circuit Court Judge, Honorable Rochelle T. Curley, issued an Order dated January 14, 2015 reflecting that a hearing was held as to the fairness of the terms and conditions of the Settlement Agreement and order that the resale of the Settlement Shares by IBC Funds will be exempt from registration under the Securities Act of 1933, as amended (the "Securities "Act"), in reliance upon Section 3(a)(1) of the Securities Act.

 

The Board of Directors determined it was in our best interests and our shareholders to enter into the Settlement Agreement and resulting 3(a)(10) issuance of Settlement Shares in order to ensure the acceleration of generation of revenue from multiple sources.

 

As of April 20, 2015, IBC has converted the respective amounts of Payables into issuance of shares of common stock as follows:

 

DATE  CLAIM $   SHARES 
         
01/15/15  $12,787.50    10,000,000 
01/23/15  $8,250    10,000,000 
02/03/15  $3,300    10,000,000 
02/09/15  $2,200    10,000,000 
02/13/15  $1,650    10,000,000 
02/13/15  $1,100    10,000,000 
03/05/15  $4,620    84,000,000 
03/12/15  $4,448.40    80,880,000 

 

2014 Settlement Agreement

 

On June 13, 2014, our Board of Directors authorized the execution of that certain settlement agreement and stipulation dated June 13, 2014 (the "Settlement Agreement") with IBC Funds LLC. We had certain payables outstanding due and owing to creditors aggregating $108,535 as follows: (i) $19,030 owed to Berman & Company P.A.; (ii) $14,505 owed to Liggett, Vogt & Webb P.A.; (iii) $65,000 owed to No Sleep Til Productions; and (iv) $10,000 owed to Epoch Financial Group Inc. (collectively, the "Payables"). IBC Funds purchased the Payables from their respective holders and subsequently filed a claim against us in the Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida, Case No. 2014 CA 2928 (the "Claim") for the payment of the Payables. Thus, we desired to resolve and settle the Payables and entered into the Settlement Agreement with IBC Funds. On June 13, 2014, the court order granted an approval of Settlement Agreement and stipulation. According to the Settlement Agreement, we shall issue and deliver shares of our common stock to IBC Funds in one or more tranches subject to adjustment and ownership limitations to satisfy the settlement amount. The shares should be valued at 45% discount to market based on the market price during the valuation period. We recorded a loss on debt extinguishment of $110,903.

 

Subsequent to June 13, 2014, IBC Funds delivered a conversion notice to us (the "Conversion Notice") proposing a full conversion of the Settlement Agreement into 3,601,810 shares of common stock. The shares of common stock will be exempt from registration under the Securities Act of 1933, as amended, in reliance upon Section 3(a)(10). The Board of Directors determined it was in our best interests and our shareholders to enter into the Settlement Agreement and resulting 3(a)(10) issuance of shares in order to ensure the successful launch of its two websites within the next month and accelerate the possibility of generation of revenue from multiple sources.

 

As of August 31, 2014, IBC Funds fully converted the settlement amount into 3,601,810 shares of common stock.

 

2
 

 

CURRENT OPERATIONS

 

Our business operations have changed to that of developing, creating and marketing a social media platform called Ilink2music.com. Management believes that Ilink2music.com is an unparalleled social media platform that will allow users to unify their personal digital-mobile lifestyle while simultaneously providing exclusive international music entertainment content, networking, events, products, services; featuring a unique internet radio station and exceptional co-creation content aiming at facilitating and revolutionizing the management of your on-line “way of life”. Our platform is a Horizontal - adaptable business model based on the strategic use of Multi-Sensory Branding, Co-Creation, Product Placement, Immersion User Experience Applications, ROI Relationship/Currency with Economy and Licensing Structures. It is built to adapt and to embrace the monumental shifts and disruptive technologies that are changing every facet of business. Management believes that Ilink2music.com is positioned to leverage and facilitate change in the global end user driven digital/ mobile content/product placement eco system.

 

iLink2Music.com is based on user experience sensory aesthetics. It is optimally designed around end users’ perceptions and creates the milieu that allows end users to act as lead designers, co-creators and actual tastemakers of lifestyle brands, products and services in a rapidly changing market. Our paradigmatic approach provides for a people-generated, user-driven structure. In this new environment (“Ecosystem”), the very concept of “producer” is blurred because anyone can broadcast to any number of people anywhere, from their loved ones to the entire planet. We believe that both of these will be “emergent properties” if there is a serious effort to broaden the use and applications whereby this symbiosis of human creativity and technology is combined. We are focusing our efforts on bringing the symbiosis to the music production, social media, digital, and mobile landscape consumer consumption and distribution sub-Ecosystem.

 

Ilink2music.com will enable the user to create a profile in the music entertainment zone that displays his/her talents or expertise, whether they are a musician, composer, songwriter, vocalist, performer, conductor, arranger, instrumentalist, dancer, choreographer, DJ, music video producer and/or director, booking agent, recording studio, audio engineer, record label, events planner, music venue, music broadcaster, music educator, music publisher, road crew, talent manager, entertainment lawyer, etc. The user can also simply be a music fan that enjoys listening to music, socializing or following and supporting others. Each member will be able to network within our community in order to find what they’re looking for: a singer for a band, an event planner for a nightclub, a DJ for a party, a violinist or pianist for an orchestra, a choreographer for your dance crew, and a music venue for an event.

 

RESULTS OF OPERATIONS

 

The Share Exchange Agreement results in the treatment of the Company and its wholly-owned subsidiary as entities under common control, which reflects il2m Inc. and il2m International Corp., our wholly-owned subsidiary for the nine months ended February 28, 2015. The prior operations for accounting purposes is deemed to be those of the accounting acquirer, which differs from the legal acquirer.

 

The following table presents the statement of operations for the nine months ended February 28, 2015.

 

   For Nine   Months Ended February 28, 2015 
Revenues  $- 
Total Operating Expenses   1,346,804 
Total Other Income (Expense)   10,416,696 
Net Income  $9,069,892 
Net income per share - basic and diluted  $0.03 

 

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For the Nine Months Ended February 28, 2015

 

Total Revenues. For the nine months ended February 28, 2015, we did not generate any revenue.

 

Operating Expenses. During the nine months ended February 28, 2015, we incurred operating expenses in the amount of $1,346,804 as follows: (i) consulting expense of $67,000; and (ii) general and administrative expenses of $1.279,804. General and administrative expenses generally consisted of: (i) professional fees of $1,279; (ii) stock for services valued at $240,750; (iii) derivative of $509,252; and (iv) payroll of $87,030. Operating expenses substantially increased due to the increases in consulting expense and general and administrative based on the increased scope and scale of our business operations, including the commencement of construction on our commercial radio station and the engagement of consultants.

 

Other Income (Expenses).  Other income for the nine months ended February 28, 2015 were $10,416,696. Other income consisted of change in fair value of embedded derivative liability and expense of $11,003,160, which was offset by other expenses of: (a) $110,903 in loss on debt extinguishment; (b) $430,417 in amortization of debt issued costs; (c) $43,959 in interest expense; and (d) $1,185 in foreign currency.

 

Net Income. Therefore, our net income for the nine months ended February 28, 2015 was $9,069,892 or per share of $0.03. Net income generally increased primarily due to the recording of the change in fair value of embedded derivative liability of $11,003,160.

 

The weighted average number of shares outstanding during the nine months ended February 28, 2015 was 146,635,674.

 

For the Three Months Ended February 28, 2015

 

Total Revenues. For the three months ended February 28, 2015, we did not generate any revenue.

 

Operating Expenses. During the three months ended February 28, 2015, we incurred operating expenses in the amount of $517,639 consisting of general and administrative expenses of $358,981. General and administrative expenses consisted of: (i) derivative of $154,246; (ii) stock for services valued at $240,750; (iii) rent of $36,000; and (iv) professional fees of $35,000. Operating expenses substantially increased due to the increases in consulting expense and general and administrative based on the increased scope and scale of our business operations, including the commencement of construction on our commercial radio station and the engagement of consultants.

 

Other Income (Expenses).  Other expense for the three months ended February 28, 2015 were $396,746. Other expense consisted of: (i) change in fair value of embedded derivative liability and expense of $509,252, which was offset by: (i) $91,408 in amortization of debt issued costs; and (ii) $21,098 in interest.

 

Net Income. Therefore, our net loss for the three months ended February 28, 2015 was $120,093 or per share of $0.00. Net income generally increased primarily due to the recording of the change in fair value of embedded derivative liability of $509,252.

 

The weighted average number of shares outstanding during the three months ended February 28, 2015 was 286,273,341.

 

CAPITAL RESOURCES AND LIQUIDITY

 

As of February 28, 2015, our current assets were $73 and our current liabilities were $2,558,800, which resulted in a working capital deficit of $2,558,727.

 

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As of February 28, 2015, our current assets were comprised of $73 in cash. As of February 28, 2015, our total assets were $49,536 comprised of: (i) current assets of $73; (ii) $32,160 in fixed assets - net; and (iii) other assets of $17,303.

 

As of February 28, 2015, our current liabilities were comprised of: (i) $74,662 in accounts payable and accrued expenses; (ii) $28,435 in accrued interest; (iii) $212,797 in note payable - related party; (iv) $4,379 in loan payable - related party; (v) $438,475 in convertible notes payable, net of debt discount; (vi) $740,600 in convertible notes payable - related party; and (vii) $1,059,452 in derivative liability.

 

As of February 28, 2015, our total liabilities were $2,558,800 comprised of current liabilities of $2,558,800. The decrease in total liabilities was primarily due to the decrease in recording of the derivative liability of $11,076,740.

 

Stockholders’ deficit was ($8,433,946) as of November 30, 2014.

 

Cash Flows from Operating Activities. We have not generated positive cash flows from operating activities due to a lack of a source of revenues. For the nine month period ended February 28, 2015, net cash flows used in operating activities was $458,383. Net cash flows used in operating activities consisted primarily of net income of $9,069,892, which was adjusted by: (i) $14,406 in depreciation expense; (ii) $311,995 in stock issued for services; (iii) $137,573 in in-kind contribution of services; (iv) $430,417 in amortization; (v) ($10,618,906) in change in fair value of derivative and derivative expense; and (vi) $110,903 in loss on debt extinguishment.

 

Net cash flows used in operating activities was further changed by an increase in accounts payable of $74,662, an increase in accrued interest of $26,590, a decrease in deferred rent of ($1,606) and an increase in other assets of $14,309.

 

Cash Flows from Investing Activities. For the nine months ended February 28, 2015, net cash flows used in investing activities was $-0-.

 

Cash Flows from Financing Activities. We have financed our operations primarily from debt or the issuance of equity instruments. For the nine months ended February 28, 2015, net cash flows provided from financing activities was $457,622 consisting of $482,166 in proceeds from notes net of discounts, which was offset by $24,544 in repayments of loan payable.

 

Plan Of Operation and Funding

 

We expect that working capital requirements will continue to be funded through a combination of our existing funds and future generation of revenues. Our working capital requirements are expected to increase in line with the growth of our business. Our principal demands for liquidity are to increase capacity, marketing, and general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to the purchase of equipment and/or inventory, and the expansion of our business, through cash flow provided by operations and funds raised through proceeds from the issuance of debt or equity. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. We may finance expenses with further issuances of securities and debt issuances. Any additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all.

 

MATERIAL COMMITMENTS

 

Convertible Notes

 

On January 9, 2014, we issued a convertible promissory note in the amount of $22,500. The note is non-interest bearing and due on demand. The note can be converted into shares of our common stock at a conversion price to $0.0001 per share. The price per share was subsequently adjusted to $0.001 per share to reflect the 1 for 10 reverse common stock split effectuated on January 9, 2014. We recorded a debt discount of $22,500 for the fair value of derivative liability.

 

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On May 2, 2014, we issued a convertible promissory note in the amount of $37,500. The note bears interest at a rate of 8% per annum and is due on February 7, 2015. The note can be converted into shares of our common stock at a conversion price of fifty-eight percent (58%) of the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion. We received $37,500 less $2,500 of debt issuance costs pursuant to the terms of this convertible note. We recorded a debt discount of $37,500 for the fair value of derivative liability.

 

On June 6, 2014, we issued a convertible promissory note in the amount of $62,750. The note bears interest at a rate of 8% per annum and is due on March 6, 2015. The note can be converted into shares of our common stock at a conversion price of fifty-five percent (55%) of the market price, which is the average of the lowest two (2) trading prices for the common stock during the twenty-five (25) trading day period prior to the conversion. We received $62,750 less $2,750 of debt issuance costs pursuant to the terms of this convertible note. We recorded a debt discount of $62,750 for the fair value of derivative liability.

 

On June 19, 2014, we issued a convertible promissory note in the amount of $100,000. The note bears interest at a rate of 12% per annum and is due on December 19, 2014. The note can be converted into shares of our common stock at a conversion price of fifty percent (50%) of the market price, which is the average of the lowest three (3) trading prices for the common stock during the twenty (20) trading day period prior to the conversion. We received $100,000 pursuant to the terms of this convertible note. We recorded a debt discount of $100,000 for the fair value of derivative liability.

 

On June 24, 2014, we issued a convertible promissory note in the amount of $37,500. The note bears interest at a rate of 8% per annum and is due on March 26, 2015. The note can be converted into shares of our common stock at a conversion price of fifty-eight percent (58%) of the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period prior to the conversion. We received $37,500 less $2,500 of debt issuance costs pursuant to the terms of this convertible note. We recorded a debt discount of $24,020 for the fair value of derivative liability.

 

On June 30, 2014, we issued a convertible promissory note in the amount of $85,000. The note is non-interest bearing and due on demand. The convertible note can be converted into shares of our common stock at a conversion price of the lesser of $0.10 per share or 50% of the average trading price of our common stock on the OTCQB Markets for the five days preceding the date of conversion. We recorded a debt discount of $85,000 for the fair value of derivative liability.

 

On August 4, 2014, we issued a convertible promissory note in the amount of $100,000. The note bears interest at a rate of 5% per annum and is due on January 31, 2015. The note can be converted into shares of our common stock at a conversion price of fifty percent (50%) of the market price, which is the lowest trading price for the common stock during the twenty (20) trading day period prior to the conversion. We received $100,000 less and original issue discount of $10,000 and less $5,000 of debt issuance costs pursuant to the terms of this convertible note. We recorded a debt discount of $90,000 for the fair value of derivative liability.

 

We have amortized $817,128 for the period from October 17, 2013 (inception) to May 31, 2014. We amortized $113,653 during the three months ended August 31, 2014 and subsequently amortized $186,650 to November 30, 2014 and $75,391 to February 28, 2015.

 

Certain of these notes have been partially converted. See "Part II. Item 2. Unregistered Sales of Securities and Use of Proceeds."

 

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Securities Purchase Agreement

 

On June 26, 2014, we entered into a Securities Purchase Agreement with an unrelated party under which we agreed to issue two 8% convertible redeemable notes in the principal amount of $60,000 each for an aggregate principal amount of $120,000 in exchange for (i) $60,000 in cash for the front end note; and (ii) for the back end note, a $60,000 promissory note issued by the note holder to us which is due on June 26, 2015, bears interest at the rate of 8% per annum and is secured by a pledge of the front end note. The two convertible redeemable notes are due and payable on June 26, 2015. The note can be converted into shares of our common stock at a conversion price of fifty-four percent (54%) of the market price, which is the lowest trading price for the common stock during the fifteen (15) trading day period prior to the conversion. We received $60,000 less $3,000 of debt issuance costs pursuant to the terms of this convertible note. We recorded a debt discount of $60,000 for the fair value of derivative liability. As of August 31, 2014, we amortized $10,849 of debt discount, $542 of debt issuance costs and accrued interest of $856. In connection with this funding, we paid additional debt issue costs of $6,000 of which $1,085 was amortized as of August 31, 2014. As a result of the terms of the agreement, there are no assurances we will receive the additional $60,000 proceeds from the back end note. The back end note can be converted after the full cash payment of additional funding in the amount $60,000 by the note holder simultaneously with the issuance of the $60,000 promissory note by us.

 

On August 14, 2014, we entered into a Securities Purchase Agreement with an unrelated party under which we agreed to issue two 8% convertible redeemable notes in the principal amount of $40,000 each for an aggregate principal amount of $80,000 in exchange for (i) $40,000 in cash for the front end note; and (ii) for the back end note, a $40,000 promissory note issued by the note holder to us which is due on August 14, 2015, bears interest at the rate of 8% per annum and is secured by a pledge of the front end note. The two convertible redeemable notes are due and payable on August 14, 2015. The note can be converted into shares of our common stock at a conversion price of fifty percent (50%) of the market price, which is the average of the three (3) lowest trading price for the common stock during the twenty (20) trading day period prior to the conversion. We received $40,000 less $6,000 of debt issuance costs pursuant to the terms of this convertible note. We recorded a debt discount of $30,652 for the fair value of derivative liability. As of August 31, 2014, we amortized $1,428 of debt discount, $279 of debt issuance costs and accrued interest of $149. As a result of the terms of the agreement, there are no assurances we will receive the additional $60,000 proceeds from the back end note. The back end note can be converted after the full cash payment of additional funding in the amount $40,000 by the note holder simultaneously with the issuance of the $40,000 promissory note by us.

 

Convertible Notes - Related Party

 

On March 14, 2014, we issued a convertible promissory note in the amount of $225,000 to a foreign corporation which is controlled by our Chief Executive Officer. The note is non-interest bearing and due on June 14, 2014. The note was amended to extend the maturity date to September 14, 2014. The note can be converted into shares of our common stock at a conversion price of $0.25 per share. We recorded a debt discount of $99,000 for the fair value of beneficial conversion feature. The convertible promissory note is currently in default.

 

Note Payable - Related Party

 

As of March 27, 2014, a foreign corporation which is controlled by our Chief Executive Officer paid operating expenses on our behalf totaling $515,600. On March 27, 2014, this amount was converted into a convertible note payable. The note is non-interest bearing and due on demand. The note can be converted into shares of our common stock at a conversion price of the lesser of $0.10 per share or 50% of the average trading price of our common stock on the OTCQB Markets for the five days preceding the date of conversion. We recorded a debt discount of $515,600 for the fair value of derivative liability. As of May 31, 2014, we amortized $515,600 of debt discount. For the three months ended August 31, 2014, we recorded an imputed interest of $7,856 as an in-kind contribution of interest.

 

As of March 27, 2014, a foreign corporation which is controlled by our Chief Executive Officer paid operating expenses on our behalf totaling $231,000 Canadian Dollars. On March 27, 2014, this amount was converted into a note payable for $207,232 using the conversion rate from CAD to USD on the date of the note. The note bears interest at a rate of 5% per annum and is due on July 1, 2014. On July 1, 2014, the note holder extended the maturity date to January 1, 2015. As of February 28, 2015, the fair value of note payable was $212,797 which includes $5,565 of gain on foreign exchange rate.

 

7
 

 

Loan Payable - Related Party

 

For the period from October 17, 2013 (inception) to May 31, 2014, a foreign corporation which is controlled by our Chief Executive Officer paid operating expenses totaling $2,000 on our behalf. The amount is treated as loan payable - related party, which is non-interest bearing and due on demand. The loan payable - related party balance was $2,000 as of August 31, 2014. From September 1, 2014 to February 28, 2015, an additional $2,379 was incurred. At February 28, 2015, $4,379 was owed.

 

The debt holders are entitled, at their option, to convert all or part of the principal and accrued interest into shares of our common stock at the conversion prices and terms discussed above. We classified embedded conversion features in these notes as a derivative liability due to management’s assessment that we may not have sufficient authorized number of shares of common stock required to net-share settle. We identified conversion features embedded within convertible debt. We have determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability as we could not determine if a sufficient number of shares would be available to settle all transactions.

  

The fair value of the conversion feature is summarized as follows:

 

Derivative Liability as of October 17, 2013 (inception)  $- 
Fair value at the commitment date for convertible instruments   40,824,258 
Change in fair value of embedded derivative liability   487,755 
Adjustment of derivative liability through gain on extinguishment   (20,423,321)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability   (8,752,500)
Derivative Liability as of May 31, 2014   12,136,192 
      
Fair value at the commitment date for convertible instruments   629,681 
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability   (1,087,515)
Change in fair value of embedded derivative liability   (10,618,906)
Derivative Liability as of February 28, 2015  $1,059,452 

 

8
 

 

Settlement Agreement

 

On March 1, 2015, our Board of Directors authorized the execution of that certain settlement agreement dated March 1, 2015 (the "Settlement Agreement") with Sarkis Tsaoussian, our President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and sole member of the Board of Directors. From September 1, 2014 through February 28, 2015, Tsaoussian has incurred substantial time in providing services to us, which have advanced us and our business operations including, but not limited to: (i) establishing us and obtaining our trading symbol and platform on OTC Markets; (ii) dedication and devotion to the continued operation, maintenance and our growth; (iii) establishing and maintaining public and investor relations; (iv) establishing procedures to ensure compliance with accounting standards, rules and regulations relating to a public company; (v) preparation and filing of associated quarterly and annual reports and coordination of edgar filings; and (vi) negotiating and managing all consultants and personnel required for the our operations (collectively, the "Services"). We had a verbal agreement with Tsaoussian commencing September 1, 2014 that Tsaoussian would be paid a monthly fee of $50,000 as compensation for rendering of such Services. Therefore, on March 1, 2015, we entered into the Settlement Agreement with Tsaoussian pursuant to which we agreed to settle the amount due and owing of $300,000 for September 1, 2014 through February 28, 2015 (the "Debt") by the issuance of our shares of restricted common stock at a per share price of $0.0002 to TSASA Holdings Ltd., the consulting company through which Tsaoussian provided services ("TSASA"). See "Part II. Item 2. Unregistered Sales of Securities and Use of Proceeds" below.

 

Purchase of Significant Equipment

 

We do not intend to purchase any significant equipment during the next twelve months.

 

Off-Balance Sheet Arrangements

 

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Going Concern

 

The independent auditors' report accompanying our May 31, 2013 and May 31, 2012 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements for the three months ended August 31, 2014 reference in note 12 our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. We have suffered recurring losses from operations, have a working capital deficit and are currently in default of the payment terms of certain note agreements. These factors raise substantial doubt about our ability to continue as a going concern.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Evaluation of disclosure controls and procedures. We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.

 

Management’s report on internal control over financial reporting. Our chief executive officer and our chief financial officer are responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

●

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; 

 

9
 

●

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and 

   
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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.

  

Based on our assessment, our chief executive officer and our chief financial officer believe that, as of February 28, 2015, our internal control over financial reporting is not effective based on those criteria, due to the following:

 

● Deficiencies in Segregation of Duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel.

 

● Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.

 

In light of this conclusion and as part of the preparation of this report, we have applied compensating procedures and processes as necessary to ensure the reliability of our financial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the period covered by this report, and (2) the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows for the periods then ended.

 

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this report.

 

Changes in internal control over financial reporting.

 

There were no significant changes in our internal control over financial reporting during the third quarter ended February 28, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

AUDIT COMMITTEE

 

Our board of directors has not established an audit committee. The respective role of an audit committee has been conducted by our board of directors. We intend to establish an audit committee during the fiscal year 2015. When established, the audit committee's primary function will be to provide advice with respect to our financial matters and to assist our board of directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee's primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.

 

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PART II – OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS.

 

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

ITEM 1A. RISK FACTORS

 

Not required for smaller reporting companies.

 

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

 

Conversion of Convertible Notes

 

Asia Capital

 

During January and February 2015, we issued an aggregate of 20,400,000 shares of our common stock to two entities in connection with the conversion of debt in the amount of $2,040. The debt is evidenced by that certain 3% convertible promissory note dated May 17, 2013 in the principal amount of $52,500 (the "Convertible Note") issued by us to Asia Capital Markets Limited LLC ("Asia Capital"). The Convertible Note was subsequently acquired by Gatehouse Financial Limited ("Gatehouse") from Asia Capital in accordance with the terms and provisions of that certain debt purchase agreement dated November 15, 2013 between Asia Capital and Gatehouse (the "Debt Purchase Agreement") as part of a transaction involving acquisition of and change in control of the Corporation. Subsequently, in accordance with the terms and provisions of that certain assignment of convertible note dated January 20, 2014 (the "Assignment"), Gatehouse sold and assigned a portion of its right, title and interest in and to the Convertible Note to separate assignees, which assignees all paid consideration to Gatehouse for the purchase of their respective interest. We received those certain notices of conversion and the Board of Directors authorized the issuance of the aggregate 20,400,000 shares of common stock to four of the assignees at a per share price of $0.0001. The shares were issued to four non-United States residents in reliance on Regulation S promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The assignees acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

LG Capital Funding LLC

 

During February 2015, we issued an aggregate of 15,642,592 shares of our common stock to LG Capital Funding LLC ("LG Capital") in connection with the conversion of debt in the amount of $805.00 in principal and $39.70 in accrued interest. The debt is evidenced by that certain 8% convertible promissory note dated June 26, 2014 in the principal amount of $60,000.00 (the "8% Convertible Note") issued by us to LG Capital. We received that certain notice of conversion and the Board of Directors authorized the issuance of the aggregate 15,642,592 shares of common stock to LG Capital at a per share price of $0.000054. The shares were issued to LG Capital as a United States resident in reliance on Section 4(2) promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. LG Capital acknowledged that the securities to be issued have not been registered under the Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

11
 

 

KBM Worldwide Inc.

 

During January and February 2015, we issued an aggregate of 13,484,654 shares of our common stock to KBM Worldwide Inc. ("KBM Worldwide") in connection with the conversion of debt in the amount of $10,000.00 and $2,425.00, respective, in principal. The debt is evidenced by that certain convertible promissory note dated May 2, 2014 in the principal amount of $37,500.00 (the "KBM Convertible Note") issued by us to KBM Worldwide. We received those two certain notices of conversion and the Board of Directors authorized the issuance of 10,543,478 shares of common stock at a per share price of $0.00023 and 2,941,176 shares of common stock at a per share price of $0.0034, respectively, to KBM Worldwide. The shares were issued to KBM Worldwide as a United States resident in reliance on Section 4(2) promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. KBM Worldwide acknowledged that the securities to be issued have not been registered under the Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

Auctus Private Equity Fund LLC

 

During February 2015, we issued an aggregate of 10,564,000 shares of our common stock to Auctus Private Equity Fund LLC ("Auctus Private Equity") in connection with the conversion of debt in the amount of $1,901.52 in accrued interest. The debt is evidenced by that certain convertible promissory note dated June 6, 2014 in the principal amount of $62,750.00 (the "Auctus Convertible Note") issued by us to Auctus Private Equity. We received that certain notice of conversion and the Board of Directors authorized the issuance of the aggregate 10,564,000 shares of common stock to Auctus Private Equity at a per share price of $0.00018. The shares were issued to Auctus Private Equity as a United States residents in reliance on Section 4(2) promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. Auctus Private Equity acknowledged that the securities to be issued have not been registered under the Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

JMJ Financial

 

During February 2015, we issued an aggregate of 10,500,000 shares of our common stock to JMJ Financial ("JMJ Financial") in connection with the conversion of debt in the amount of $2,520.00 in principal. The debt is evidenced by that certain convertible note dated July 31, 2014 in the principal amount of $250,000.00 (the "JMJ Convertible Note") issued by us to JMJ Financial. We received that certain notice of conversion and the Board of Directors authorized the issuance of the aggregate 10,500,000 shares of common stock to JMJ Financial at a per share price of $0.000240. The shares were issued to JMJ Financial as a United States resident in reliance on Section 4(2) promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. JMJ Financial acknowledged that the securities to be issued have not been registered under the Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

12
 

 

JSJ Investments

 

During January 2015, we issued an aggregate of 13,707,561 shares of our common stock to JSJ Investments ("JSJ Investments") in connection with the conversion of debt in the amount of $15,705.83 in principal. The debt is evidenced by that certain convertible promissory note dated June 19, 2014 in the principal amount of $100,000.00 (the "JSJ Convertible Note") issued by us to JSJ Investments. We received those two certain notices of conversion and the Board of Directors authorized the issuance of the aggregate 3,333,333 shares of common stock at a per share price of $0.003 and 10,374,228 shares of common stock at a per share price of $00055 to JSJ Investments. The shares were issued to JSJ Investments as a United States resident in reliance on Section 4(2) promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. JSJ Investments acknowledged that the securities to be issued have not been registered under the Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

Advisory Board Agreements

 

Our Board of Directors previously appointed certain members to our Advisory Board (collectively, the "Advisory Board Members") in accordance with the terms and provisions of those certain advisory board agreements dated from March 1, 2014 through June 8, 2014 (collectively, the "Advisory Board Agreements"). Effective October 1, 2014, our Board of Directors and the Advisory Board Members agreed to amend the Advisory Board Agreements to provide for: (i) a reduction in hours of monthly service from ten to six; (ii) remove monthly compensation of $2,500; (iii) increase issuance of shares of common stock from 100,000 to 250,000 shares; and (iv) provide for a 2% commission regarding executed sponsorship or advertising agreement (collectively, the “Amended Advisory Board Agreements”). As of August 31, 2014, we issued 500,000 shares of our common stock with a fair value of $172,970. Therefore, in accordance with the terms and provisions of the Amended Advisory Board Agreements, we issued to each Advisory Board Member 250,000 shares of our restricted common stock at fair value. The shares were issued in a private transaction to five United States residents in reliance on Regulation D promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The Advisory Board Members acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

Consultant/Employment Agreements

 

On June 1, 2014, we entered into three certain consultant agreements and four certain employment agreement (collectively, the “Agreements”), pursuant to which our Board of Directors authorized the issuance of an aggregate 2,650,000 shares of our restricted common stock effective October 1, 2014 with a fair value of $74,370. The shares were issued in a private transaction to five United States residents and two non-U.S. residents in reliance on Regulation D and Regulation S, respectively, promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The consultants/employees acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

13
 

 

Services Rendered by Chief Executive Officer

 

Effective October 1, 2014, our Board of Directors authorized the issuance of 15,000,000 shares of our restricted common stock to Sarkis Tsaoussian, our President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and sole member of the Board of Directors (“Tsaoussian”) at fair value. Tsaoussian had incurred substantial time in providing services to us from approximately September 2013 through August 2014, which have advanced us and our business operations including, but not limited to: (i) establishing us and obtaining our trading symbol and platform on OTC Markets; (ii) dedication and devotion to our continued operation, maintenance and growth; (iii) establishing and maintaining public and investor relations; (iv) establishing procedures to ensure compliance with accounting standards, rules and regulations relating to a public company; (v) preparation and filing of associated quarterly and annual reports and coordination of edgar filings; and (vi) negotiating and managing all consultants and personnel required for our operations. The shares were issued in a private transaction to one non United States resident in reliance on Regulation S promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements.

 

Settlement Agreement

 

On March 1, 2015, our Board of Directors authorized the issuance of 1,500,000,000 shares of restricted common stock at a per share price of $0.0002 to TSASA in accordance with the terms and provisions of the Settlement Agreement and as full and complete satisfaction of the Debt. The shares of common stock were issued to TSASA in reliance on Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. TSASA acknowledged that the securities to be issued have not been registered under the Securities Act and that it understood the economic risk of an investment in the securities.

 

IBC Funds

 

During the nine month period ended February 28, 2015, we issued an aggregate 1,568,627 shares of common stock to IBC in connection with the Settlement Agreement. The shares were issued in a private transaction to IBC in reliance on Section 3(a)(10) promulgated under the Securities Act. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. IBC acknowledged that the securities to be issued have not been registered under the Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

14
 

 

ITEM 6. EXHIBITS

 

Exhibit
No.		   Description
     
10.01   Share Exchange Agreement dated January 9, 2014 among il2m International Corp., formerly known as Dynamic Nutra Enterprises Holdings Inc., il2m Inc. and il2m International Ltd. , which is incorporated by reference to Exhibit 10.01 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2014.
10.02   Convertible Note dated March 14, 2014 between il2m International Corp. and il2m Global Ltd. in the amount of $100,000.00.  
10.03   Convertible Note dated March 14, 2014 between il2m International Corp. and il2m Global Ltd. in the amount of $125,000.00.
10.04   Convertible Note dated March 14, 2014 between il2m International Corp. and Tsasa Holdings Inc. in the amount of $231,000.00 Canadian Dollars.
10.05   Convertible Note dated March 27, 2014 between il2m International Corp. and Tsasa Holdings Inc. in the amount of $515,600.00.
10.06   Settlement Agreement dated March 1, 2015 between il2m International Corp. and Sarkis Tsaoussian, which is incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2015.      
31.1   Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1   Certification of Principal Executive Officer and Principal Financial, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Schema
101.CAL   XBRL Taxonomy Calculation Linkbase
101.DEF   XBRL Taxonomy Definition Linkbase
101.LAB   XBRL Taxonomy Label Linkbase
101.PRE   XBRL Taxonomy Presentation Linkbase

 

15
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: April 20, 2015

 

Il2m International Corp.

  
   
/s/ Sarkis Tsaoussian  

Name: Sarkis Tsaoussian

Chief Executive Officer/President,  

Chief Financial Officer/Treasurer

  

 

 

 

16

 

 



Exhibit 10.02

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

il2m INTERNATIONAL CORP.

CONVERTIBLE PROMISSORY NOTE

 

$100,000 USD March 14, 2014  
 

Burbank, California

  

 

1. Principal and Interest.

 

1.1 il2m International Corp., a publicly traded Nevada corporation (the “Company”), for value received, hereby promises to pay to the order of il2m Global Ltd., a Belize corporation (the “Holder”) the sum of One Hundred Thousand Dollars ($100,000.00 USD), which amount represents the amounts advanced by the Holder to the Company on approximately March 14, 2014 for working capital purposes, and as reflected on the Company’s records and its financial statements as due and owing to Holder at the time and in the manner hereinafter provided.

 

1.2 This Convertible Promissory Note (the “Note”) shall not bear any interest from the date of issuance of this Note. This Note shall be payable June 14, 2014 (“Payment. Date”). After the Payment Date, all principal hereunder shall be payable by the Company upon demand made by the Holder.

 

1.3 Upon payment in full of the principal, this Note shall be surrendered to the Company for cancellation.

 

1.4 The principal of this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from time to time designate.

 

2. Attorney’s Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys’ fees and costs incurred by the Holder.

 

 
 

 

3. Conversion.

 

3.1 Voluntary Conversion. In the event the Company cannot repay the principal on the Demand Date, the Holder shall have the right, exercisable in whole or in part, to convert the outstanding principal into a number of fully paid and nonassessable whole shares of the Company’s $0.001 par value common stock (“Common Stock”) determined in accordance with Section 3.2 below.

 

3.2 Shares Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (“Conversion Shares”) shall be at a per share price of 50.25 per share (the “Conversion Price”).

 

3.3 Notice and Conversion Procedures. After receipt of demand for repayment, the Company agrees to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note. If the Holder or Sure Investment elect to convert this Note, the Holder or Sure Investment shall provide the Company with a written notice of conversion setting forth the amount to be converted. The notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company shall deliver to the Holder or Sure Investment, as appropriate, certificate(s) for the Common Stock issuable upon such conversion and, if the entire principal amount and accrued interest hereunder was not so converted, a new note representing such balance.

 

3.4 Other Conversion Provisions.

 

(a) Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company’s issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately increasing the Note Conversion Price on the date that such subdivision shall become effective. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company’s issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately decreasing the Note Conversion Price on the date that such subdivision shall become effective.

 

(b) Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock, the term “Common Stock” shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of the Company.

 

3.5 No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay to the Holder the amount of outstanding principal hereunder that is not so converted.

 

-2-
 

 

4. Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants with the Holder as follows:

 

(a) Authorization; Enforceability. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b) Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company’s valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the “1933 Act”), or such filings as may be required under applicable state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.

 

(c) No Violation. The execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby will not result in a violation of its Certificate of Incorporation or Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

 

5. Representations and Covenants of the Holder. The Company has entered into this Note in reliance upon the following representations and covenants of the Holder:

 

(a) Investment Purpose. This Note is acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b) Private Issue. The Holder understands (i) that this Note is not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations set forth in this Section 7.

 

-3-
 

 

(c) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

 

(d) Risk of No Registration. The Holder understands that any sale of the Note which might be made by it in reliance upon Rule 144 under the Securities Act of 1933 Act, as amended, may be made only in accordance with the terms and conditions of that Rule.

 

6. Assignment. Subject to the restrictions on transfer described in Section 9 below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

7. Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.

 

8. Transfer of This Note. With respect to any offer, sale or other disposition of this Note, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company’s ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

9. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid, and addressed as follows:

 

  If to Holder:  

Il2m Global Ltd.

Caye Financial Center,

Cur. Coconut Drive & Hurricane Way, 3rd Floor,

San Pedro, Ambergris Caye, Belize, Central America

       
  If to Company:  

Il2m International Corp.

3500 West Olive Avenue

Suite 810

Burbank, California 91505

 

-4-
 

 

Each of the above addressees may change its address for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.

 

10. Governing Law. This Note is being delivered in and shall be construed in accordance with the laws of the State of Nevada, without regard to the conflicts of laws provisions thereof.

 

11. Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.

 

12. Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

13. Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.

 

14. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.

 

15. No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Note against impairment.

 

IN WITNESS WHEREOF, il2m international Corp. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered, all on the date first above written.

 

  il2m INTERNATIONAL CORP.
     
Date: April __, 2014 By:  /s/ Sarkis Tsaoussiian,
    President
     
  HOLDER
   
  il2m Global LTD.
     
Date: April __, 2014 By: /s/ Sarkis Tsaoussiian,
    President

 

-5- 

 

 



Exhibit 10.03

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

il2m INTERNATIONAL CORP.
CONVERTIBLE PROMISSORY NOTE

 

$125,000 USD March 14, 2014
  Burbank, California

 

1. Principal and Interest.

 

1.1 il2m International Corp., a publicly traded Nevada corporation (the “Company”), for value received, hereby promises to pay to the order of il2m Global Ltd., a Belize corporation (the “Holder”) the sum of One Hundred Twenty Five Thousand Dollars ($125,000.00 USD), which amount represents the amounts advanced by the Holder to the Company on approximately March 14, 2014 for working capital purposes, and as reflected on the Company’s records and its financial statements as due and owing to Holder at the time and in the manner hereinafter provided.

 

1.2 This Convertible Promissory Note (the “Note”) shall not bear any interest from the date of issuance of this Note. This Note shall be payable June 14.2014 (“Payment Date”). After the Payment Date, all principal hereunder shall be payable by the Company upon demand made by the Holder.

 

1.3 Upon payment in full of the principal, this Note shall be surrendered to the Company for cancellation.

 

1.4 The principal of this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from time in time designate.

 

2. Attorney’s Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys’ fees and costs incurred by the Holder.

 

 
 

 

3. Conversion.

 

3.1 Voluntary Conversion. In the event the Company cannot repay the principal on the Demand Date, the Holder shall have the right, exercisable in whole or in part, to convert the outstanding principal into a number of fully paid and nonassessable whole shares of the Company’s $0.001 par value common stock (“Common Stock”) determined in accordance with Section 3.2 below.

 

3.2 Shares Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (“Conversion Shares”) shall be at a per share price of $0.25 per share (the “Conversion Price”).

 

3.3 Notice and Conversion Procedures. After receipt of demand for repayment, the Company agrees to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note. If the Holder or Sure Investment elect to convert this Note, the Holder or Sure Investment shall provide the Company with a written notice of conversion setting forth the amount to be converted. The notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company shall deliver to the Holder or Sure Investment, as appropriate, certificate(s) for the Common Stock issuable upon such conversion and, if the entire principal amount and accrued interest hereunder was not so converted, a new note representing such balance.

 

3.4 Other Conversion Provisions.

 

(a) Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company’s issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately increasing the Note Conversion Price on the date that such subdivision shall become effective, In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company’s issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately decreasing the Note Conversion Price on the date that such subdivision shall become effective.

 

(b) Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock, the term “Common Stock” shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of the Company.

 

3.5 No Fractional Share. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay to the Holder the amount of outstanding principal hereunder that is not so converted.

 

-1-
 

 

4. Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants with the Holder as follows:

 

(a) Authorization; Enforceability. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b) Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company’s valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933. as amended (the “1933 Act”), or such filings as may be required under applicable state securities laws, which. if applicable, will be timely filed within the applicable periods therefor.

 

(c) No Violation. The execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby will not result in a violation of its Certificate of Incorporation or Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

 

5. Representations and Covenants of the Holder. The Company has entered into this Note in reliance upon the following representations and covenants of the Holder:

 

(a) Investment Purpose. This Note is acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b) Private Issue. The Holder understands (i) that this Note is not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations set forth in this Section 7.

 

-2-
 

 

(c) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

 

(d) Risk of No Registration. The Holder understands that any sale of the Note which might be made by it in reliance upon Rule 144 under the Securities Act of 1933 Act, as amended, may be made only in accordance with the terms and conditions of that Rule.

 

6. Assignment. Subject to the restrictions on transfer described in Section 9 below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

7. Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.

 

8. Transfer of This Note. With respect to any offer, sale or other disposition of this Note, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company’s ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

9. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid, and addressed as follows:

 

  If to Holder:  

Il2m Global Ltd.

Caye Financial Center,

Cur. Coconut Drive & Hurricane Way, 3rd Floor,

San Pedro, Ambergris Caye, Belize, Central America

       
  If to Company:  

Il2m International Corp.

3500 West Olive Avenue

Suite 810

Burbank, California 91505

 

Each of the above addressees may change its address for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.

 

-3-
 

 

10. Governing Law. This Note is being delivered in and shall be construed in accordance with the laws of the State of Nevada, without regard to the conflicts of laws provisions thereof.

 

11. Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.

 

12. Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

13. Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.

 

14. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.

 

15. No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Note against impairment.

 

IN WITNESS WHEREOF, il2m international Corp. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered, all on the date first above written.

 

  il2m INTERNATIONAL CORP.
     
Date: April 8, 2014 By: /s/ Sarkis Tsaoussiian
    President
     
  HOLDER
   
  il2m Global LTD.
     
Date: April 8, 2014 By: /s/ Sarkis Tsaoussiian
    President

 

-5-

 

 



Exhibit 10.04

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

il2m INTERNATIONAL CORP.

PROMISSORY NOTE

 

$231,000.00 CD March 27, 2014
  Burbank, California

 

1. Principal and Interest.

 

1.1 il2m International Corp., a publicly traded Nevada corporation (the "Company"), for value received, hereby promises to pay to the order of TSASA Holdings Inc., a Canadian Federal Incorporation (the "Holder") the sum of Two Hundred Thirty One Thousand Canadian Dollars ($231,000.00 CD), which amount represents the amounts advanced by the Holder to the Company on approximately March 27, 2014 for working capital purposes, and as reflected on the Company's records and its financial statements as due and owing to Holder at the time and in the manner hereinafter provided.

 

1.2 This Promissory Note (the "Note") shall bear interest at the rate of 5% annually from the date of issuance of this Note. This Note shall be payable July 1, 2014 ("Payment Date"). After the Payment Date, all principal and accrued interest hereunder shall be payable by the Company upon demand made by the Holder.

 

1.3 Upon payment in full of the principal and accrued interest hereof, this Note shall be surrendered to the Company for cancellation.

 

1.4 The principal and accrued interest of this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from time to time designate.

 

2. Attorney's Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys' fees and costs incurred by the Holder.

 

 
 

 

3. Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants with the Holder as follows:

 

(a) Authorization; Enforceability. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b) Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company's valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the "1933 Act"), or such filings as may be required under applicable state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.

 

(c) No Violation. The execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby will not result in a violation of its Certificate of Incorporation or Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is hound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

 

4. Representations and Covenants of the Holder. The Company has entered into this Note in reliance upon the following representations and covenants of the Holder:

 

(a) Investment Purpose. This Note is acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b) Private Issue. The Holder understands (i) that this Note is not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations set forth in this Section 7.

 

-2-
 

 

(c) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

 

(d) Risk of No Registration. The Holder understands that any sale of the Note which might be made by it in reliance upon Rule 144 under the Securities Act of 1933 Act, as amended, may be made only in accordance with the terms and conditions of that Rule.

 

5. Assignment. Subject to the restrictions on transfer described in Section 9 below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

6. Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.

 

7. Transfer of This Note. With respect to any offer, sale or other disposition of this Note, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company's ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act. unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

8. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall he deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid, and addressed as follows:

 

 

If to Holder:

 

 

TSASA Holdings Inc.

800C Chomedey Blvd., Ste. 450

Laval, Quebec,

Canada, H7V-3Y4

     
  It to Company:

Il2m International Corp.

3500 West Olive Avenue

Suite 810

Burbank, California 91505

 

-3-
 

 

Each of the above addressees may change its address for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.

 

9. Governing Law. This Note is being delivered in and shall be construed in accordance with the laws of the State of Nevada, without regard to the conflicts of laws provisions thereof.

 

10. Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.

 

11. Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

12. Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.

 

13. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.

 

14. No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Note against impairment

 

IN WITNESS WHEREOF, il2m International Corp. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered, all on the date first above written.

 

  il2m INTERNATIONAL CORP.
     
Date: March 27, 2014 By /s/ Sarkis Tsaoussian
    President
   
  HOLDER
   
  TSASA HOLDINGS INC.
     
Date: March 27, 2014 By: /s/ Sarkis Tsaoussian 
    President

 

 

 

-4-

 

 



Exhibit 10.05

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

il2m INTERNATIONAL CORP.
CONVERTIBLE PROMISSORY NOTE

 

$515,600.00 USD March 27, 2014
  Burbank, California

 

1. Principal and Interest.

 

1.1 il2m International Corp., a publicly traded Nevada corporation (the "Company"), for value received, hereby promises to pay to the order of TSASA Holdings Inc., a Canadian Federal Incorporation (the "Holder") the sum of Five Hundred Fifteen Six Hundred Dollars ($515,600.00), which amount represents the amounts advanced by the Holder to the Company on approximately March 27, 2014 for working capital purposes, and as reflected on the Company's records and its financial statements as due and owing to Holder at the time and in the manner hereinafter provided. The Holder is also party to that certain promissory note dated March 27, 2014 issued to Sure Investment in the principal amount of $515,600, which represents those funds evidenced by this Note (the "TSASA Holdings Note"), and which further provides the right of Sure Investment and/or the Holder to elect to convert the principal due and owing into shares of common stock of the Company.

 

1.2 This Convertible Promissory Note (the "Note") shall not bear any interest from the date of issuance of this Note. This Note shall be payable upon demand ("Demand Date"). Upon the Demand Date, all principal shall be payable by the Company upon demand made by the Holder.

 

1.3 Upon payment in full of the principal hereof, this Note shall be surrendered to the Company for cancellation.

 

1.4 The principal of this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from time to time designate.

 

2. Attorney's Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys' fees and costs incurred by the Holder.

 

 

 

3. Conversion.

 

3.1 Voluntary Conversion. The Holder and/or Sure Investment shall have the right, exercisable in whole or in part, to convert the outstanding principal into a number of fully paid and non-assessable whole shares of the Company's $0.001 par value common stock ("Common Stock") determined in accordance with Section 3.2 below.

 

3.2 Shares Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted ("Conversion Shares") shall be determined by dividing the aggregate principal amount borrowed by the lowest of either (i) $0.10 per share: or (ii) 50% of the average trading price of the Company's common stock on the OTCQB Markets for the five days preceding the date of conversion $0.01 (the "Note Conversion Price").

 

3.3 Notice and Conversion Procedures. After receipt of demand for repayment, the Company agrees to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note. If the Holder or Sure Investment elect to convert this Note, the Holder or Sure Investment shall provide the Company with a written notice of conversion setting forth the amount to be converted. The notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company shall deliver to the Holder or Sure Investment, as appropriate, certificate(s) for the Common Stock issuable upon such conversion and, if the entire principal amount and accrued interest hereunder was not so converted, a new note representing such balance.

 

3.4 Other Conversion Provisions.

 

(a) Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company's issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately increasing the Note Conversion Price on the date that such subdivision shall become effective. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company's issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately decreasing the Note Conversion Price on the date that such subdivision shall become effective.

 

(b) Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock, the term "Common Stock" shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of the Company.

 

3.5 No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay to the Holder the amount of outstanding principal hereunder that is not so converted.

 

-2-
 

 

4. Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants with the Holder as follows:

 

(a) Authorization; Enforceability. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b) Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company's valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the "1933 Act"), or such filings as may be required under applicable state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.

 

(c) No Violation. The execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby will not result in a violation of its Certificate of Incorporation or Bylaws, in any material respect of any provision of ally mortgage, agreement, instrument or contract to which it is a party or by which it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or be in material conflict with or constitute. with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

 

5. Representations and Covenants of the Holder. The Company has entered into this Note in reliance upon the following representations and covenants of the Holder:

 

(a) Investment Purpose. This Note is acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b) Private Issue. The Holder understands (i) that this Note is not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations set forth in this Section 7.

 

-3-
 

 

(c) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to he capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

 

(d) Risk of No Registration. The Holder understands that any sale of the Note which might be made by it in reliance upon Rule 144 under the Securities Act of 1933 Act, as amended, may be made only in accordance with the terms and conditions of that Rule.

 

6. Assignment. Subject to the restrictions on transfer described in Section 9 below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

7. Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder,

 

8. Transfer of This Note. With respect to any offer, sale or other disposition of this Note, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company's ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

9. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid, and addressed as follows:

 

If to Holder:

 

 

 

If to Company:

TSASA Holdings Inc. 

800C Chomedey Blvd., Ste. 450
Laval, Quebec, Canada, H7V-3Y4

 

il2m International Corp.
3500 West Olive Avenue
Suite 810

Burbank, California 91505

  

Each of the above addressees may change its address for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.

 

10. Governing Law. This Note is being delivered in and shall be construed in accordance with the laws of the State of Nevada. without regard to the conflicts of laws provisions thereof.

 

-4-
 

 

11. Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.

 

12. Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

13. Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.

 

14. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.

 

15. No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Note against impairment.

 

IN WITNESS WHEREOF, il2m International Corp. has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered, all on the date first above written.

 

  il2m INTERNATIONAL CORP.
     
Date: March 27, 2014 By: /s/ Sarkis Tsaoussiian
    President
     
  HOLDER
   
  TSASA HOLDINGS INC.
     
Date: March 27, 2014 By: /s/ Sarkis Tsaoussiian
    President

 

 

-5-

 

 

 



Exhibit 31.1

 

 

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant To Section 302 of

The Sarbanes-Oxley Act of 2002

 

 

I, Sarkis Tsaoussian, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of il2m Iinternational Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

 

Dated: April 20, 2015 /s/ Sarkis Tsaoussian
  Chief Executive Officer
  (Principal Executive Officer and Principal Financial Officer)

 

 

 

 



Exhibit 32.1

 

 

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant To Section 906 of

The Sarbanes-Oxley Act of 2002

 

 

In connection with the accompanying quarterly report on Form 10-Q of il2m International Inc. for the quarter ended February 28, 2015, I, Sarkis Tsaoussian, Principal Executive Officer and Principal Financial Officer of il2m International Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

 

1. Such quarterly report of Form 10-Q for the quarter ended February 28, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2. The information contained in such quarterly report of Form 10-Q for the quarter ended February 28, 2015, fairly represents in all material respects, the financial condition and results of operations of il2m International Inc.

 

 

Dated:  April 20, 2015 /s/ Sarkis Tsaoussian
  Chief Executive Officer
  (Principal Executive Officer and Principal Financial Officer)

 

 

 

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