Item 1. Financial Statements.
FINANCIAL STATEMENTS
Viva Entertainment Group Inc. (formerly Black River Petroleum
Corp.)
January 31, 2016
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Viva Entertainment Group Inc. (F/K/A Black River Petroleum Corp.)
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Condensed Balance Sheets
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January 31, 2016 and October 31, 2015
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January 31, 2016
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October 31, 2015
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(Unaudited)
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(Audited)
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ASSETS
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Current Assets
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Cash
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$
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20
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$
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62
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Total Assets
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$
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20
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$
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62
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
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Current Liabilities
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Accounts Payable and Accrued Liabilities
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$
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37,598
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$
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35,023
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Due to Directors
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132,854
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102,854
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Total Liabilities
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170,452
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137,877
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Stockholders’ Equity (Deficit)
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Common Stock (2,475,000,000 shares authorized, par value 0.00001, 73,231,067 and 73,231,067 shares issued and outstanding) at January 31, 2016 and October 31, 2015, respectively
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732
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732
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Additional paid-in capital
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1,943,926
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1,939,959
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Stock payable
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3,390,000
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2,900,856
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Accumulated deficit
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(5,505,090
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)
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(4,979,362
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)
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Total Stockholders’ Equity (Deficit)
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(170,432
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)
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(137,815
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)
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Total Liabilities and Stockholders’ Equity (Deficit)
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$
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20
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$
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62
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The Accompanying Notes are an Integral Part of These Financial Statements
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Viva Entertainment Group Inc. (F/K/A Black River Petroleum Corp.)
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Condensed Statements of Operations
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For the Three Months Ended January 31, 2016 and 2015
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(Unaudited)
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For the Three Months Ended
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For the Three Months Ended
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January 31, 2016
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January 31, 2015
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Operating Expenses
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Consulting services
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$
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30,000
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$
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20,000
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Rent
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750
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4,497
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General and administrative
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3,367
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8,532
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Wages
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489,144
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112,500
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Loss from operations
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523,261
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145,529
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Other expense
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Interest expense
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2,467
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93
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Total other expense
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2,467
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93
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Net Loss
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$
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(525,728
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$
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(145,622
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Net Loss Per Common Share – Basic and Diluted
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$
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(0.00
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$
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(0.00
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Weighted Average Number of Common Shares Outstanding
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73,231,067
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73,231,067
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The Accompanying Notes are an Integral Part of These Financial Statements
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Viva Entertainment Group Inc. (F/K/A Black River Petroleum Corp.)
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Condensed Statements of Cash Flows
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For the Three Months Ended January 31, 2016 and 2015
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For the Three Months Ended
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For the Three Months Ended
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January 31, 2016
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January 31, 2015
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Operating Activities
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Net loss
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$
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(525,728
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$
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(145,622
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Adjustments to reconcile net loss to cash used in operating activities:
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Donated capital, consulting services and rent
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1,500
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1,500
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Imputed Interest
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2,467
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93
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Stock based compensation
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489,144
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112,500
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Changes in operating assets and liabilities:
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Accounts payable and accrued liabilities
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2,575
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4,322
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Net Cash Used in Operating Activities
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(30,042
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(27,207
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Financing Activities
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Borrowing on debt
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30,000
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20,000
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Principle rapayments on debt
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—
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(6,086
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Net Cash Provided by Financing Activities
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30,000
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13,914
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Increase (Decrease) in Cash
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(42
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(13,293
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Cash - Beginning of Period
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62
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14,586
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Cash - End of Period
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$
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20
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$
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1,293
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Supplemental Disclosure of Cash Flow Information
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Interest
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$
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—
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$
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—
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Income taxes
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$
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—
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$
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—
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The Accompanying Notes are an Integral Part of These Financial Statements
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NOTE
1 – NATURE OF OPERATIONS
DESCRIPTION
OF BUSINESS AND HISTORY
The
Company was incorporated on October 26, 2009 in the State of Nevada. The Company is an exploration stage corporation and is engaged
in the search mineral deposits or reserves which are not in the development or production stage. The Company intends to explore
for oil and gas on its mining property.
The
Company does not have any revenues and has incurred losses since inception. Currently, the Company has no operations, has been
issued a going concern opinion and relies upon the sale of our securities and loans from its sole officer and director to fund
operations.
GOING
CONCERN - These financial statements have been prepared on a going concern basis, which implies Viva Entertainment Group, Inc.
(F/K/A Black River Petroleum Corp.) will continue to meet its obligations and continue its operations for the next fiscal year. Realization
value may be substantially different from carrying values as shown and these financial statements do not include any adjustments
to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should
Viva Entertainment Group, Inc. (F/K/A Black River Petroleum Corp.) be unable to continue as a going concern. As at
January 31, 2016 and October 31, 2015, Viva Entertainment Group, Inc. (F/K/A Black River Petroleum Corp.) has a working capital
deficiency, has an accumulated deficit of $5,505,090 and $4,979,362, respectively. The continuation of Viva Entertainment
Group, Inc. (F/K/A Black River Petroleum Corp.) as a going concern is dependent upon the continued financial support from its
shareholders, the ability of Viva Entertainment Group, Inc. (F/K/A Black River Petroleum Corp.) to obtain necessary equity financing
to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding
the Viva Entertainment Group, Inc. (F/K/A Black River Petroleum Corp.) ability to continue as a going concern.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS
OF PRESENTATION - The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim information Regulation S-K. Accordingly, they do not
include all of the information and footnotes required by accounting principles generally accepted in the United States for complete
financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary
for a fair presentation have been included. Operating results for the three-month period ended January 31, 2016 may not necessarily
be indicative of the results that may be expected for the year ending October 31, 2016.
USE
OF ESTIMATES - The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and
assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax
asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors
that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual
results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences
between our estimates and the actual results, our future results of operations will be affected.
CASH
AND CASH EQUIVALENTS - The Company considers all highly liquid instruments with original maturities of three months or less when
acquired, to be cash equivalents. We had no cash equivalents at January 31, 2016 and October 31, 2015.
IMPUTED
INTEREST – The Company calculates imputed interest at a rate of 8% per annum. There was $2,467 and $93 imputed interest
recorded as donated capital for the three months ended January 31, 2016 and 2015, respectively.
INCOME TAXES -
The Company
accounts for income taxes under the provisions issued by the FASB which requires recognition of deferred tax liabilities and assets
for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. The Company computes tax asset benefits for net operating losses carried forward. The potential benefit of net operating
losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not
it will utilize the net operating losses carried forward in future years.
MINERAL
CLAIM EXPENDITURES – The Company capitalizes all direct costs related to the acquisition and exploration of specific mining
properties as incurred. These costs will be amortized against the income generated from the property. If the property is abandoned
or impaired, an appropriate impairment charge will be made.
LOSS
PER COMMON SHARE
-
The Company reports net loss per share in accordance with provisions of the FASB. The
provisions require dual presentation of basic and diluted loss per share. Basic net loss per share excludes the impact of common
stock equivalents. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method
in determining common stock equivalents. As of January 31, 2016 and October 31, 2015, there were no common stock equivalents outstanding.
FAIR
VALUE OF FINANCIAL INSTRUMENTS - Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is
required to estimate the fair value of all financial instruments included on its balance sheet as of January 31, 2016 and October
31, 2015. The Company’s financial instruments consist of cash. The Company considers the carrying value of such
amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.
RECENTLY
ISSUED ACCOUNTING STANDARDS –
In
July 2015, FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely
align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS).
The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory
method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO)
or average cost. An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value.
Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of
completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail
inventory method. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2016, including
interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December
15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied
prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. 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 2015, FASB issued ASU No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”
defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities,
and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December
15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual
reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other
entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim
reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance
in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods
within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting
period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after
the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. 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
3 – FAIR VALUE MEASUREMENTS
The
Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial
liabilities.
ASC
820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the
United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply
to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited
exceptions.
ASC
820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair
value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources
(observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based
on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad
levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are
described below:
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Level
1
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Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
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•
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Level
2
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Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets
or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability
(e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
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•
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Level
3
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Inputs
that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions
about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed
based on the best information available in the circumstances and July include the Company's own data.)
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The
following presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring
basis as of January 31, 2016 and October 31, 2015:
Level
1: None
Level
2: None
Level
3: None
Total
Gain (Losses): None
NOTE 4
- RELATED PARTY TRANSACTIONS
During three months ended January 31,
2016 and 2015 the Company recognized a total of $1,500 and $1,500 respectively for rent. These transactions are recorded at the
exchange amount which is the amount agreed to by the transacting parties.
On December 1, 2013, the Company entered
into an employment agreement with Alexander Stanbury, the Company’s President, Chief Executive Officer, Secretary, Treasurer,
Chief Financial Officer and sole member of the Board of Directors (the “Employment Agreement”).
Pursuant to the Employment Agreement,
Mr. Stanbury will receive annual base compensation of $120,000, which may be increased but not decreased from time to time as determined
by the Board of Directors of the Company. Mr. Stanbury is entitled to receive 3,000,000 shares (the “Employment Shares”)
of the Company’s Common Stock, 1,000,000 to vest on the date of the Employment Agreement, 1,000,000 to vest on the first anniversary
of the Employment Agreement, and 1,000,000 to vest on the second anniversary of the Employment Agreement. The Employment Agreement
also provides for bonus awards, as well as a benefit package, including medical, disability, and other equity programs. The term
of the Employment Agreement is three (3) years and shall automatically be renewed for successive one (1) year terms thereafter,
unless otherwise notified in writing three (3) months prior to the termination of the agreement. Per the terms of the employment
agreement, on 12/1/2015 the agreement was renewed for an additional year through 12/1/2016 on which date Alex Stanbury is entitled
to receive 1,000,000 shares of the Companies stock which vested immediately as of that date. As of January 31, 2016 and October
31, 2015, 4,000,000 and 2,915,068 shares have been vested. During the three months ended January 31, 2016 and 2015 compensation
expense of $489,144 and $112,500, respectively was recorded based on the closing price of the shares on the date of grant.
The Employment Agreement may be terminated
by the Company and by Mr. Stanbury. Should the Employment Agreement be terminated by the Company without cause, by Mr. Stanbury
for good reason, or pursuant to a change of control, Mr. Stanbury is entitled to receive one times his base salary and other benefits
at the time of termination (including any bonus); any earned but unpaid base salary, and accrued but unpaid vacation time. Should
the Employment Agreement be terminated by the Company for cause or by Mr. Stanbury other than for good reason, Mr. Stanbury is
entitled to receive any earned but unpaid base salary, including any bonus and accrued but unpaid vacation time.
During the three months ended January
31, 2015 the Company’s President and Director advanced the Company a total of $20,000 to fund operations and repaid a total
of $6,086. As of October 31, 2015 the Company owes him a total of $102,854. This amount is included on the accompanying Condensed
Balance Sheets at October 31, 2015 as “Due to Directors”.
During the three months
ended January 31, 2016 the Company’s President and Director advanced the Company a total of $30,000 to fund operations. As
of January 31, 2016 the Company owes him a total of $132,854. This amount is included on the accompanying Condensed Balance Sheets
at January 31, 2016 as “Due to Directors”.
NOTE 5
- COMMON STOCK
As
of January 31, 2016 and October 31, 2015, Black River Petroleum Corp. (formerly American Copper Corp.) has issued 73,231,067 and
73,231,067, respectively common shares.
Included in the
accompanying condensed statements of operations for the three months ending January 31, 2016 and 2015 is $489,144 and
$112,500 of wages expense common shares that are payable to Alex Stanbury as part
of his employment agreement.
Per the terms of
the employment agreement, on 12/1/2015 the agreement was renewed for an additional year through 12/1/2016 on which date Alex
Stanbury is entitled to receive 1,000,000 shares of the Companies stock which vested immediately as of 12/1/2015.
NOTE 6
– SUBSEQUENT EVENTS
On
April 5, 2016 The Company completed the purchase from EMS Find, Inc. (“EMS”) of Viva Entertainment Group, Inc. (“Viva
Entertainment”), a Delaware corporation and a subsidiary of EMS, pursuant to a stock purchase agreement (“Stock Purchase
Agreement”), and Viva Entertainment’s Chief Executive Officer, Johnny Falcones, resigned from all positions at EMS
and has been elected as our sole director and President and Chief Executive Officer to manage the development and marketing of
Viva Entertainment’s over the top (IPTV/OTT ) application for connected tv’s, desktop computers, tablets, and smart
phones.
The
above mentioned stock exchange transaction will be accounted for as a reverse acquisition and recapitalization of the Company
whereby Viva Entertainment Group, Inc. (F/K/A Black River Petroleum Corp.) is deemed to be the accounting acquirer (legal acquiree)
and the Company to be the accounting acquiree (legal acquirer). The financial statements are in substance those of Viva Entertainment
Group, Inc., with the assets and liabilities, and revenues and expenses, of Viva Entertainment Group, Inc., will be included effective
from the date of stock exchange transaction. Viva Entertainment Group, Inc., is deemed to be a continuation of the business. Accordingly,
the financial statements will include the following:
(1)
The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting
acquiree at historical cost;
(2)
the financial position, results of operations, and cash flows of the acquirer for all periods presented as if the recapitalization
had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of
stock exchange transaction.
Pursuant
to the Stock Purchase Agreement, the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the
purchase from the Seller by the Purchaser of all 800 outstanding shares of stock of Viva Entertainment to the Company in exchange
for the issuance to EMS of a 10% promissory note in the principal amount of $100,000, due six months from the Closing (the “EMS
Note”), which represents the purchase price paid by the Company for Viva Entertainment. In connection with the closing,
Alexander Stanbury, our former President and Chief Executive Officer, transferred to Johnny Falcones 26,629,371 shares of restricted
common stock of the Company from the shares of common stock owned by Mr. Stanbury in exchange for payment of $93,625 from the
$135,000 of financing arranged with Essex Global Investment Corp. for the acquisition of the Company (the “Acquisition Financing
Facility”).
On
April 6, 2016, the Company closed on the $135,000 Acquisition Financing Facility pursuant to a securities purchase agreement,
dated April 6, 2016 (the "Essex Securities Purchase Agreement"), with Essex Global Investment Corp, a Nevada corporation
("Essex"), for the sale of a convertible promissory note (the "Essex Note") in the principal amount of $145,000,
with an original issue discount of $10,000.
The
Essex Note, which is due on March 30, 2017, bears interest at the rate of 10% per annum. All principal and accrued interest on
the Note is convertible at any time into shares of the Company's common stock at the election of Essex at a conversion price for
each share of Common Stock equal to 55%
of the lowest reported trading price of the Company’s common stock for the
twenty prior
trading days including the day upon which the conversion notice is received by the Company or its transfer
agent. The conversion price discount will be decreased to 45% if the Company experiences a DTC "chill" on its shares.
If the Company is not current within 90 days from the date of the Note, the conversion discount will increase by 20%,
so that the conversion price would be 35% of the trading price as calculated above.
The
Company has the right to prepay the Essex Note during the first six months following the date of issuance of the Essex Note with
a premium of up to 135% of all amounts owed to Essex, including default interest, depending upon when the prepayment is effectuated.
The Essex Note may not be redeemed after 180 days.
The
Essex Note contains default events which, if triggered and not timely cured, will result in default interest and penalties.
On
April 8, 2016, in connection with the purchase of Viva Entertainment Group, Inc., our Board of Directors authorized the issuance
of an aggregate of 37,820,629 shares of common stock, comprised of 22,000,000 issued to our Founder and Chief Executive Officer
(5,000,000 of which are registered in name of the wife of the CEO), 13,820,629 as common shares for consulting services to various
consultants and 2,000,000 common shares as consideration for an investor entering into a share purchase agreement. An additional
500,000 common shares was issued for general corporate purposes.
During the month of May, 2016, we issued
14,350,000 shares of our common stock for services rendered by employees, directors, officers, subcontractors and legal services.
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Cautionary Notice Regarding Forward Looking Statements
The information contained in Item
2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Actual results
may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set
forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking
statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual
results will not be different from expectations expressed in this report.
This filing contains a number of
forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies,
products, future results and events, and financial performance. All statements made in this filing other than statements of historical
fact, including statements addressing operating performance, events, or developments which management expects or anticipates will
or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products,
adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information,
are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,”
“estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements,
but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking.
These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results,
performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied
by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any
future events or circumstances.
Readers should not place undue reliance
on these forward-looking statements, which are based on management’s current expectations and projections about future events,
are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below),
and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences
include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other
communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors
which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
Overview
Viva Entertainment Group Inc.
(F/K/A Black River Petroleum Corp.) (the “Company”) is a business that develops and markets Viva Entertainment’s
over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones. The Company is based
in Briarwood, New York.
We were incorporated in the State of
Nevada on October 26, 2009. From inception, we were originally engaged in the development of a website and also the design and
development of a catalogue to sell over the counter and prescription medications, and supplements. In 2012, we undertook a change
in our focus to the natural resources sector where it was engaged in the acquisition and exploration of base metals and mineral
mining properties. After an unsuccessful exploration program on our mineral properties we decided to enter the market for over
the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones.
On April 5, 2016, we completed
the purchase from EMS Find, Inc. (“EMS”) of Viva Entertainment Group, Inc. (“Viva Entertainment”), a Delaware
corporation and a subsidiary of EMS, pursuant to a stock purchase agreement (“Stock Purchase Agreement”), and Viva
Entertainment’s Chief Executive Officer, Johnny Falcones, resigned from all positions at EMS and has been elected as our
sole director and President and Chief Executive Officer to manage the development and marketing of Viva Entertainment’s over
the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones.
This purchase represents a new business
and industry which we operate in. Therefore, since the 8-K was recently filed with the SEC and we are now filing this 10-K among
other SEC documents to be filed with the SEC subsequent thereto, we accordingly discuss the old and new operations herein as follows.
References herein to oil and gas exploration are our older business operations and references to Viva Entertainment represent our
new business operations.
Pursuant to the Stock Purchase
Agreement, the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the purchase from the Seller
by the Purchaser of all 800 outstanding shares of stock of Viva Entertainment to the Company in exchange for the issuance to EMS
of a 10% promissory note in the principal amount of $100,000, due six months from the Closing (the “EMS Note”), which
represents the purchase price paid by us for Viva Entertainment. In connection with the closing, Alexander Stanbury, our
former President and Chief Executive Officer, transferred to Johnny Falcones 26,629,371 shares of restricted common stock of the
Company from the shares of common stock owned by Mr. Stanbury in exchange for payment of $93,625 from the $135,000 of financing
arranged with Essex Global Investment Corp. for the acquisition of the Company (the “Acquisition Financing Facility”).
On April 6, 2016, we closed on the $135,000
Acquisition Financing Facility pursuant to a securities purchase agreement, dated April 6, 2016 (the "Essex Securities Purchase
Agreement"), with Essex Global Investment Corp, a Nevada corporation ("Essex"), for the sale of a convertible promissory
note (the "Essex Note") in the principal amount of $145,000, with an original issue discount of $10,000.
The Essex Note, which is due on March
30, 2017, bears interest at the rate of 10% per annum. All principal and accrued interest on the Note is convertible at any time
into shares of our common stock at the election of Essex at a conversion price for each share of Common Stock equal to 55%
of
the lowest reported trading price of the Company’s common stock for the twenty prior trading days including the day upon
which the conversion notice is received us or our transfer agent. The conversion price discount will be decreased to 45% if the
Company experiences a DTC "chill" on its shares. If we are not current within ninety days from the date of
the Note, the conversion discount will increase by 20%, so that the conversion price would be 35% of the trading price as calculated
above.
We have the right to prepay the Essex
Note during the first six months following the date of issuance of the Essex Note with a premium of up to 135% of all amounts owed
to Essex, including default interest, depending upon when the prepayment is effectuated. The Essex Note may not be redeemed after
180 days.
The Essex Note contains default events
which, if triggered and not timely cured, will result in default interest and penalties.
On April 8, 2016, in connection with
the purchase of Viva Entertainment Group, Inc., our Board of Directors authorized the issuance of an aggregate of 37,820,629 shares
of common stock, comprised of 22,000,000 issued to our Founder and Chief Executive Officer (5,000,000 of which are registered in
name of the wife of the CEO), 13,820,629 as common shares for consulting services to various consultants and 2,000,000 common shares
as consideration for an investor entering into a share purchase agreement. An additional 500,000 common shares was issued for general
corporate purposes.
During the month of May, 2016, we issued
14,350,000 shares of our common stock for services rendered by employees, directors, officers, subcontractors and legal services.
Plan of Operation
As at January 31, 2016 we had a working
capital deficiency, have not generated revenues and have an accumulated deficit of $5,505,090.
Our auditors have issued a going concern
opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues or profits.
We have only four officers and directors.
They are responsible for our managerial and organizational structure which will include preparation of disclosure and accounting
controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, they will be responsible for the administration
of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing the controls which
may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment.
Limited Operating History
There is no historical financial information
about us upon which to base an evaluation of our performance. We have not generated any revenues to date. We cannot guarantee we
will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business
enterprise, including limited capital resources.
Results of Operations
Revenues
As of the date of this report, we have
yet to generate any revenues from our business operations.
Operating Expenses
For the three months ended January
31, 2016 and 2015
For the three months ended January 31,
2016 and 2015, we incurred operating expenses in the amounts of $523,261 and $145,529 respectively. Our operating expenses were
comprised of: (i) consulting services expenses of $30,000 and $20,000 for the quarters ended January 31, 2016 and 2015, respectively
(ii) rent expenses of $750 and $4,497 for the quarters ended January 31, 2016 and 2015, respectively, (iii) general and administrative
expenses of $3,367 and $8,532 for the quarters ended January 31, 2016 and 2015, respectively, and (iv) wage expenses of $489,144 and
$112,500 for the quarters ended January 31, 2016 and 2015, respectively.
Net Loss
Our net loss for the three months ended
January 31, 2016 and 2015 was $525,728 and $145,622, respectively. The decrease in net loss was the result of the decrease in compensation
in an effort to reduce and control wages.
Liquidity and Capital Resources
As of January 31, 2016, we had cash
and cash equivalents of $20. As of October 31, 2015, we had cash and cash equivalents of $62.
Net cash used in operating activities
was $(30,042) for the three months ended January 31, 2016, which was comparable to the net cash used in operating activities of
$(27,207) for the three months ended January 31, 2015. The net cash usages in operations was principally attributable to net losses
of $(525,728) and $(145,622) during the three months ended January 31, 2016 and 2015, respectively, offset principally by stock
based compensation of $489,144 and $112,500 in such same periods, respectively.
Cash flows used for investing activities
were $-0- and $-0- for the three months ended January 31, 2016 and 2015, respectively.
Cash flows provided by financing activities
were $30,000 for the three months ended January 31, 2016, which compares to cash flows provided by financing activities of $13,914
for the three months ended January 31, 2015. These cash flows were principally related to borrowings on related party debt
of $30,000 and $20,000 during the three months ending January 31, 2016 and 2015, respectively less principal payments on related
party debt in the amounts of $-0- and $6,086 during the three months ending January 31, 2016 and 2015, respectively.
Currently we have no operations and
have four salaried employees including Johnny Falcones, our officer and director. We currently require very limited resources but
intend to hire employees and consultants in the latter part of 2016 for the Viva Entertainment operations. In due course, should
we require capital for these operations, we will need to raise additional capital. There is no guarantee that we will be able to
raise further capital. At present, we have not made any arrangements to raise additional capital but are diligently working on
this.
If we need additional capital and cannot
raise it we will either have to suspend operations until we do raise the capital or cease operations entirely. Other than as described
in this paragraph, we have no other financing plans.
As of the date of this report, we have
yet to generate any revenues.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Recent Accounting Pronouncements
In July 2015, FASB issued ASU No. 2015-11,
“Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely align the measurement of inventory in
GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The amendments in this ASU
do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply
to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should
measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated
selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities,
this ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.
For all other entities, this ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal
years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively with earlier application permitted
as of the beginning of an interim or annual reporting period. 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 2015, FASB issued ASU No.2015-14,
“Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” defers the effective date ASU No.
2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans
should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting
periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December
15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update
2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods
beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting
period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities
also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim
reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first
applies the guidance in ASU No. 2014-09. 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.