As
filed with the Securities and Exchange Commission on March 2, 2010
Registration
No. 33-________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________________
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
__________________________
Gold
Entertainment Group, Inc.
(Exact
name of registrant as specified in its charter)
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Florida
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7841
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98-0206212
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
Number)
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23150
Sandalfoot Plaza Dr., Suite C,
Boca Raton, Florida
33428
(
647-477-2215 )
(Address,
Including Zip Code and Telephone Number,
Including
Area Code, of Registrant’s Principal Executive Offices)
__________________________
Hamon
Francis Fytton
President
2805
E. Oakland Park Blvd. PMB363
Ft.
Lauderdale, FL 33306
(
647-477-2215 )
(Name,
Address, Including Zip Code and Telephone Number,
Including
Area Code, of Agent for Service)
Copy
to:
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Guy
M. Jean-Pierre, Esq.
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Jean-Pierre
& Jean-Pierre LLP
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23150C
Sandalfoot Plaza Drive
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Boca
Raton, Florida 33428
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(305)
929-3652
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Approximate date of comm
e
ncement of proposed sale to the
public
: From time to time after the effective date of this Registration
Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
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 12b2 of the Exchange Act.
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer
o
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Smaller
reporting company
x
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(Do
not check if a smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Securities to be Registered
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Amount
to be Registered
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Proposed
Maximum Offering Price
Per
Share
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Proposed
Maximum Aggregate Offering Price
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Amount
of Registration Fee
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Common
stock, par value $0.001 per share
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6,898,426,636
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$
.0001(1)
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$689,843(2)
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$
49.19
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Total
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6,898,426,636
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$
.0001
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$689,843
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$
49.19
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(1) On
January 31, 2010, the closing price of our common stock was $.0001 per
share.
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to
Rule 457(c) under the Securities Act of 1933, the aggregate offering price is
based upon the January 31, 2010 closing price of our common stock as traded on
the Pink OTC Markets Inc.
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(A), MAY DETERMINE.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Subject
To Completion, Dated March ___, 2010
PRELIMINARY
PROSPECTUS
Gold
Entertainment Group, Inc.
6,898,426,636
Shares of Common Stock
__________________________
This
prospectus covers the resale by selling stockholders named on page
13
of up to
6,898,426,636
shares of our common stock, par value $0.0001 per share.
This
offering is not being underwritten. All of the shares being sold by the selling
stockholders are described on page 13 of this prospectus. These securities will
be offered for sale by the selling stockholders identified in this prospectus in
accordance with the methods and terms described in the section of this
prospectus entitled “Plan of Distribution.” We will not receive any of the
proceeds from the sale of these shares. We will pay all expenses incurred in
connection with the offering described in this prospectus, with the exception of
the brokerage expenses, fees, discounts and commissions which will all be paid
by the selling stockholders. Our common stock is more fully described in the
section of this prospectus titled “Description of Securities.”
The
prices at which the selling stockholders may sell the shares of common stock
that are part of this offering will be determined by the prevailing market price
for the shares at the time the shares are sold, a price related to the
prevailing market price, at negotiated prices or prices determined, from time to
time by the selling stockholders. See “Plan of Distribution.”
Our
common stock is currently listed on the Pink OTC Markets Inc. under the symbol
“GEGP”. On January 31, 2010, the closing price of our common stock was $0.0001
per share.
AN
INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING AT PAGE
6
.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
You
should rely only on the information contained in this prospectus to make your
investment decision. We have not authorized anyone to provide you with
different information. This prospectus may be used only where it is legal
to sell these securities. You should not assume that the information in
this prospectus is accurate as of any date other than the date on the front page
of this prospectus.
The
following table of contents has been designed to help you find important
information contained in this prospectus. We encourage you to read the
entire prospectus carefully.
The date
of this prospectus is
March 2,
2010
Table
of Contents
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Page
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4
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6
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13
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25
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F-1
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Neither
the selling stockholders nor we have authorized anyone to provide you with
information different from that contained in this prospectus. These securities
may be sold only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the effective
date of this offering, regardless of the time of delivery of this prospectus or
of any sale of the securities. You must not consider that the delivery of this
prospectus or any sale of the securities covered by this prospectus implies that
there has been no change in our affairs since the effective date of this
offering or that the information contained in this prospectus is current or
complete as of any time after the effective date of this offering.
Neither
the selling stockholders nor we are making an offer to sell the securities in
any jurisdiction where the offer or sale is not permitted. No action is being
taken in any jurisdiction outside the United States to permit a public offering
of our securities or the possession or distribution of this prospectus in any
such jurisdiction. Persons who come into possession of this prospectus in
jurisdictions outside of the United States are required to inform themselves
about and to observe any restrictions as to this offering and the distribution
of this prospectus applicable in that jurisdiction.
PROSPECTUS SUMMARY
This
summary highlights the information contained elsewhere in this prospectus. It is
not complete and does not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, including the section entitled “Risk Factors” and our
financial statements and the related notes. In this prospectus, we refer to Gold
Entertainment Group, Inc. as “Gold Entertainment”, “our company”, “we”, “us” and
“our”.
Our
Company
Since
April, 2005, the Company has been inactive with no revenues and is currently
seeking an acquisition or merger to bring an operating entity into the
Company. The Company does not propose to restrict its search for a
business opportunity to any particular industry or geographical area and may,
therefore, engage in essentially any business in any industry. The
Company has unrestricted discretion in seeking and participating in a business
opportunity, subject to the availability of such opportunities, economic
conditions, and other factors.
History
Gold
Entertainment Group, Inc. was originally incorporated in the State of Nevada on
March 3,
1999 as a C
corporation under the name ADVANCED MEDICAL TECHNOLOGIES
INC. /
CANADA.
The fiscal
year end is January 31st
.
On April 5,
2002, the Stock Exchange and Merger Agreement entered into between Gold
Entertainment
Group, Inc. and Advanced Medical Technologies, Inc., was filed with the
Nevada
Secretary of
State. Advanced Medical Technologies, Inc., amended its name to Gold
Entertainment
Group, Inc.
On August 28,
2007 the state of incorporation was changed from Nevada to Florida.
Our
executive offices are located at 23150 Sandalfoot Plaza Drive, Suite C, Boca
Raton, Florida 33428. Our corporate website is
www.goldentertainment.com
. Information
contained on our website shall not be deemed to be part of this
prospectus.
Risks
Related to Our Business
Our
business is subject to a number of risks, which you should be aware of before
making an investment decision. These risks are discussed more fully in the
section of this prospectus titled “Risk Factors.”
The
Offering
We are
registering 6,898,426,636 shares of our common stock for sale by the selling
stockholders identified in the section of this prospectus entitled “Selling
Security Holders.”
The
shares of common stock offered under this prospectus may be sold by the selling
security holders on the public market, in negotiated transactions with a
broker-dealer or market maker as principal or agent, or in privately negotiated
transactions not involving a broker or dealer. Information regarding the selling
security holders, the common shares they are offering to sell under this
prospectus, and the times and manner in which they may offer and sell those
shares is provided in the sections of this prospectus captioned “Selling
Security Holders” and “Plan of Distribution”. We will not receive any of the
proceeds from those sales. The registration of common shares pursuant to this
prospectus does not necessarily mean that any of those shares will ultimately be
offered or sold by the selling stockholders.
Stock
Issuances and Stock Splits
The
following issuances and splits follow the change of ownership and name change to
Gold Entertainment Group, Inc.
As of
March 26, 2002, as the result of a 25:1 reverse split, 1,161,892 shares were
issued and
outstanding
prior to the current management taking control.
As a
result of the merger described in this document, as of Sept 17, 2002, 10,170,540
shares were issued
and
outstanding.
As of
October 4, 2002, a 2.5:1 forward split resulted in 10,426,352 shares being
issued and
outstanding.
The president, Hamon Francis Fytton, returned 6,000,000 shares immediately prior
to the forward split so he retained the same amount of shares as
before.
On March
23, 2004, a 10:1 reverse split resulted in 1,042,650 shares being issued
and
outstanding.
On March
15, 2004 Quality of Life Marketing Inc, a Canadian corporation, was acquired as
a
wholly
owned subsidiary. As a result, a further 48,000,000 million new shares were
issued to existing management.
On March
29, 2004 a new issuance resulted in a further 12,093,853 shares were issued and
are being registered as part of this offering.
On
January 28, 2005, an issue of 1,845,000 shares was made as part of a Founding
Distributor
Stock Option
Plan in conjunction with the existing plan.
On
January 28, 2005, the company issued 57,000,000 shares to the officers,
directors, and key
employees.
As of
January 31, 2005, the fiscal year-end, there were 130,761,513 shares issued
and
outstanding.
As of
January 31, 2006, the fiscal year-end, there were 144,884,784 shares issued
and
outstanding.
As of
January 31, 2007, the fiscal year-end, there were 151,386,513 shares issued
and
outstanding.
On March
5, 2007, $70,000 of the principal balance of convertible note payable was
converted into 1,400,000,000 common shares.
On March
7, 2007, the Company’s current President (also a principal stockholder) and an
entity owned 100% by this individual (collectively, the “related party”)
converted $10,980 of amounts due from the Company into 3,250,000,000 common
shares.
On March
7, 2007, the Company issued 500,000,000 common shares to a consultant for
services rendered.
On March
7, 2007, the Company issued 250,000,000 common shares to the Company’s Chief
Executive Officer for services rendered.
On March
29, 2007, $20,000 of the principal balance of convertible note payable was
converted into 400,000,000 common shares.
On April
17, 2007, $29,500 of the principal balance of convertible note payable was
converted into 590,000,000 common shares.
On August
31, 2007, the Company issued 114,285,714 common shares in exchange for $10,000
cash.
On August
31, 2007, the Company issued 585,714,286 common shares as compensation for
$58,571 of services rendered under a consulting
agreement.
On
November 29, 2007, the Company issued 700,000,000 common shares as compensation
for $70,000 of services rendered under a consulting
agreement.
On
January 3, 2008, $52,500 of the principal balance of the convertible note
payable was converted into 1,050,000,000 common shares.
As of
January 31, 2008, the fiscal year-end, there were 8,981,501,513 shares issued
and
outstanding.
As of
January 31, 2009, the fiscal year-end, there were 8,981,501,513 shares issued
and
outstanding.
As of
October 31, 2009, the filing period, there were 8,981,501,513 shares issued
and
outstanding.
As of
January 31, 2010, the fiscal year-end, there were 8,981,501,513 shares issued
and
outstanding.
On
February 26, 2010, the Company returned to treasury 9,885,000 common shares as
the balance of a Founding Distributor
Stock Option
Plan, which has not been in effect since 2005.
As of the
filing date there are 8,981,501,513 common shares issued and
outstanding.
RISK
FACTORS
You
should carefully consider the risks described below before making an investment
decision. Our business could be harmed by any of these risks. The
trading price of our common stock could decline due to any of these risks, and
you may lose all or part of your investment. In assessing these risks, you
should also refer to the other information contained in this prospectus,
including our financial statements and related notes.
Risks
Related to Our Business
We
are an early-stage company and our lack of operating history makes evaluating
our business and profitability highly speculative.
DESCRIPTION
OF BUSINESS – SHELL
Since
January 31, 2008, the Company has been engaged in organizational
efforts. At the end of 2008, the Company decided to conduct an audit
of the Company’s Consolidated Financial Statements to prepare for whatever
possible opportunities might arise. Accordingly, the Company
completed audited consolidated financial statements for the periods ended
January 31, 2009 and 2008 and unaudited Consolidated Financial Statements for
the nine months ended October 31, 2009. Since the completion of the
referenced Consolidated Financial Statements in November 2009, the Company’s
sole activities have been limited to pursuing a business combination; however,
the Company has not conducted negotiations or entered into a letter of intent
concerning any target business. The current business purpose of the
Company is to seek the acquisition of, or merger with, an existing company.
Management does not intend to undertake any efforts to cause a market to develop
in our securities, either debt or equity, until we have successfully concluded a
business combination.
RISKS
An
investment in the Company is highly speculative in nature and involves an
extremely high degree of risk.
There may
be conflicts of interest between our management and our non-management
stockholders.
Conflicts
of interest create the risk that management may have an incentive to act
adversely to the interests of other investors. A conflict of interest
may arise between our management's personal pecuniary interest and its fiduciary
duty to our stockholders. Further, our management's own pecuniary
interest may at some point compromise its fiduciary duty to our stockholders. In
addition, our current or future officers and directors may in the future be
involved with other public companies and conflicts in the pursuit of business
combinations with such other public companies with which they and other members
of our management may in the future be affiliated with may arise. If
we and any other public company, including one or more blank check
companies
,
that our officers and directors become affiliated with, if any, desire to take
advantage of the same opportunity, then those officers and directors that are
affiliated with both companies would abstain from voting upon the opportunity.
In the event of identical officers and directors, the officers and directors
will arbitrarily determine the company that will be entitled to proceed with the
proposed transaction. We cannot assure you that conflicts of interest
among us and our stockholders will not develop.
Our
business is difficult to evaluate because we have no recent operating
history.
As the
Company has no current operating history or revenue and only minimal assets,
there is a risk that we will be unable to continue as a going concern and
consummate a business combination. The Company has had no recent
operating history nor any revenues or earnings from operations since 2005
.
We
have no significant assets or financial resources. We will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until the consummation of a business combination. This may result in our
incurring a net operating loss that will increase continuously until we can
consummate a business combination with a profitable business
opportunity. We cannot assure you that we can identify a suitable
business opportunity and consummate a business combination.
Future
success is highly dependent on the ability of management to locate and attract a
suitable acquisition.
The
nature of our operations is highly speculative and there is a consequent risk of
loss of your investment. The success of our plan of operation will
depend to a great extent on the operations, financial condition and management
of the identified business opportunity. While management intends to
seek business combination(s) with entities having established operating
histories, we cannot assure you that we will be successful in locating
candidates meeting that criterion. In the event we complete a
business combination, the success of our operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond our control.
We cannot
assure you that following a business combination with an operating business, our
common stock will be listed on NASDAQ or any other securities
exchange.
Following
a business combination, we may seek the listing of our common stock on NASDAQ or
the American Stock Exchange. However, we cannot assure you that
following such a transaction, we will be able to meet the initial listing
standards of either of those or any other stock exchange, or that we will be
able to maintain a listing of our common stock on either of those or any other
stock exchange. After completing a business combination, until our
common stock is listed on the NASDAQ or another stock exchange, we expect that
our common stock would be eligible to trade on the OTC Bulletin Board, another
over-the-counter quotation system, or on the "pink sheets," where our
stockholders may find it more difficult to dispose of shares or obtain accurate
quotations as to the market value of our common stock. In addition,
we would be subject to an SEC rule that, if it failed to meet the criteria set
forth in such rule, imposes various practice requirements on broker-dealers who
sell securities governed by the rule to persons other than established customers
and accredited investors. Consequently, such rule may deter
broker-dealers from recommending or selling our common stock, which may further
affect its liquidity. This would also make it more difficult for us
to raise additional capital following a business combination.
Risks Associated with Equity
Ownership of our Securities and Our Capital Structure
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Insiders
have substantial control over the company, and they could delay or prevent
a change in our corporate control, even if our other stockholders wanted
such a change to occur.
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Our executive
officers, directors, and principal stockholders who hold 5% or more of the
outstanding common stock and their affiliates beneficially owned as of January
31, 2010, in the aggregate, approximately 3,600,000,000 shares of our
outstanding common stock and all 5,000,000 shares of the Preferred stock of the
Company currently outstanding (issued on March 1, 2010). These
stockholders will be able to exercise significant control over all matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. This could delay or prevent an
outside party from acquiring or merging with us even if our other stockholders
wanted it to occur.
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Our common stock does
not have a vigorous trading market and you may not be able to sell your
securities when desired.
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We have a
limited active public market for our common shares. We cannot assure
you that a more active public market will ever develop, allowing you to sell
large quantities of shares or all of your holdings. Consequently, you
may not be able to liquidate your investment in the event of an emergency or for
any other reason.
Our compliance with the
Sarbanes-Oxley Act and SEC rules concerning internal controls may be time
consuming, difficult and costly for us.
It may be
time consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley
Act. We may need to hire additional financial reporting, internal
controls and other finance staff in order to develop and implement appropriate
internal controls and reporting procedures. If we are unable to
comply with the internal controls requirements of the Sarbanes-Oxley Act, we may
not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires publicly-traded companies to obtain.
We do not have a written
stock option plan in place, which may create potential conflicts of interest for
our management and may dilute or diminish the value of our common
stock
.
The
options to purchase common stock that are outstanding or that may be issued in
the future are not and may not be issued in accordance with a comprehensive
written option plan. Management presents proposed grants of stock
options to our Board of Directors for approval, and the terms of the options we
grant are contracted between each recipient and the Company on a case-by-case
basis. Therefore, our board may issue options on terms and in amounts
not yet determined. These circumstances may create a conflict of
interest with respect stock option recipients serving on the board. Furthermore,
if more stock options are granted, the eventual exercise of those options will
dilute the holdings of the current stockholders, and significant sales of stock
issued upon the exercise of options could have a negative effect on our stock
price.
Authorization
of Preferred Stock
.
Our
Certificate of Incorporation authorizes the issuance of up to 50 million
(50,000,000) shares of preferred stock with designations, rights and preferences
determined from time to time by its Board of
Directors. Currently
,
the Company has
designated Series A of Preferred Stock. The Series A Preferred has
25,000,000 shares authorized and 5,000,000 shares were issued on March 1,
2010.
Series
A Preferred stock has the following voting rights:
The
holders of shares of Series A Preferred Stock shall have the right to one vote
for each share of Common Stock into which such Series A Preferred Stock could
then be converted.
Series A
Preferred Stock also carries a conversion provision such that for each share of
Series A Preferred Stock shall be convertible into five thousand (5,000) shares
of common stock. Accordingly the five million shares of Series A Preferred Stock
issued have the majority voting rights of the corporation.
Accordingly,
our Board of Directors is empowered, without stockholder approval, to issue
additional preferred stock with dividend, liquidation, conversion, voting, or
other rights which could adversely affect the voting power or other rights of
the holders of the common stock. In the event of issuance, the preferred stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company. Although we have no
present intention to issue any additional shares of its authorized preferred
stock, there can be no assurance that the Company will not do so in the future.
Control by management.
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Management
currently owns approximately 40% of all the issued and outstanding common
stock of the Company and 100% of the preferred stock issued and
outstanding
.
The
preferred stock issued to management has super majority voting
rights. Consequently, management has the ability to influence
control of the operations of the Company and, acting together, will have
the ability to influence or control substantially all matters submitted to
stockholders for approval,
including:
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Election
of the board of directors;
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Removal
of any directors;
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Amendment
of the Company's articles of incorporation or bylaws;
and
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Adoption
of measures that could delay or prevent a change in control or impede a merger,
takeover or other business combination.
These
stockholders will thus have substantial influence over our management and
affairs and other stockholders of the Company possess no practical ability to
remove management or effect the operations of the business of the Company.
Accordingly, this concentration of ownership by itself may have the effect of
impeding a merger, consolidation, takeover or other business consolidation, or
discouraging a potential acquirer from making a tender offer for the common
stock.
THIS
REGISTRATION STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION
RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES.
These
forward-looking statements are based on the beliefs of our management, as well
as assumptions made by and information currently available to our management.
When used in this prospectus, the words "estimate," "project," "believe,"
"anticipate," "intend," "expect" and similar expressions are intended to
identify forward-looking statements. These statements reflect our current views
with respect to future events and are subject to risks and uncertainties that
may cause our actual results to differ materially from those contemplated in our
forward-looking statements. We caution you not to place undue reliance on these
forward-looking statements, which speak only as of the date of this prospectus.
We do not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated
events.
We have a
history of net losses. We incurred net income for the year ended January 31,
2009 in the amount of $553,477 (due to the gain on termination of debt and the
gain on settlement of accrued liabilities) and for the year ended January 31,
2008 a net loss of $1,429,700 and a net loss of $69,798 for the nine months
ended October 31, 2009. We anticipate continuing to incur such losses in the
foreseeable future, which can result in uncertainty as to the achievement or
maintenance of future profitability.
We
may require significant additional external financing to implement business
plan.
Upon the
acquisition of any new business, we may require significant additional external
financing to sustain our operations, support our expansion, achieve
profitability, or continue as a going concern. There can be no assurance that we
will be able to secure any such additional external financing, or, if we are
able to secure such external financing, that it will be on terms favorable, or
even acceptable, to us. Any inability to achieve profitability or otherwise
secure additional external financing would have a material adverse
effect.
The
nature of any newly-acquired business (es) may be such that we may not be able
to obtain sufficient external financing to support the operations of such new
business, thereby raising substantial doubts as to our ability to continue as a
going concern, and we may ultimately be forced to seek protection from creditors
under the bankruptcy laws or cease operations, which may result in a substantial
or complete loss of your invested capital.
Our
future indebtedness could adversely affect our financial health.
We may
incur a significant amount of indebtedness to finance our operations and growth.
Any such indebtedness could result in negative consequences to us,
including:
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increasing
our vulnerability to general adverse economic and industry
conditions;
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requiring
that a portion of our cash flow from operations be used for the payment of
interest on our debt, thereby reducing our ability to use our cash flow to
fund working capital, capital expenditures and general corporate
requirements;
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limiting
our ability to obtain additional financing to fund future working capital,
capital expenditures and general corporate
requirements;
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limiting
our flexibility in planning for, or reacting to, changes in our business;
and
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placing
us at a competitive disadvantage to competitors who have less
indebtedness.
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We
may incur costs and compliance risks as a result of the Sarbanes-Oxley Act of
2002 and if we fail to maintain effective internal controls, we may not be able
to accurately report our financial results or prevent fraud and our business may
be harmed.
Regardless
of the type of business (es) that we acquire, we anticipate that we will incur
costs related to compliance with the Sarbanes-Oxley Act of 2002 (“the
Sarbanes-Oxley Act”). Section 404 of the Sarbanes-Oxley Act requires
management to currently evaluate and assess the effectiveness of a company’s
internal controls over financial reporting and our independent registered public
accounting firm to attest to the effectiveness of such internal controls
starting with fiscal years ending after June 15, 2010. We expect compliance with
Section 404 of the Sarbanes-Oxley Act to be time-consuming and to increase our
legal and financial compliance costs. We cannot predict or estimate the amount
of additional costs we may incur or the timing of such costs.
Effective
internal controls are essential in providing reliable financial reports
effectively preventing fraud. Our inability to provide reliable financial
reports or to prevent fraud could harm our business. In order to comply
with the requirements of Section 404 of the Sarbanes-Oxley Act, we are required
to continuously evaluate and, where appropriate, enhance our policies,
procedures and internal controls. If we fail to maintain the adequacy of our
internal controls, we could be subject to litigation, regulatory scrutiny and
reputational harm. We cannot ensure that we will always be able to fully
comply with the requirements of the Sarbanes-Oxley Act or that management will
conclude that our internal control over financial reporting is effective. Any
failure to implement effectively new or improved internal controls, or to
resolve difficulties encountered in their implementation, could harm our
operating results, cause us to fail to meet reporting obligations or result in
management being required to give a qualified assessment of our internal
controls over financial reporting or our independent auditors providing an
adverse opinion regarding management’s assessment. Any such result could cause
investors to lose confidence in our reported financial information, which could
have a material adverse effect on our stock price.
We
may become subject to legal proceedings, claims and litigation in the ordinary
course of business, which could materially adversely affect our
business.
From time
to time, we may become subject to legal proceedings, claims and litigation
arising in the ordinary course of business. We cannot assure you that the
outcome of such potential litigation will be in our favor. Such litigation may
be costly and may divert management’s attention as well as expend our other
resources away from our business. An adverse determination in any such
litigation may harm our business, prospects and reputation. We are not currently
a party to any material legal proceedings, nor are we aware of any other pending
or threatened litigation that would have a material adverse effect on our
business, operating results, cash flows or financial condition should such
litigation be resolved unfavorably.
Risks
Related to Ownership of our Common Stock
Our
stock price is likely to be volatile.
Our
common stock has been publicly traded since April 2002 as Gold Entertainment
Group, Inc. The market price of our common stock has been and will likely
continue to be subject to fluctuations. In addition, the stock market in general
and the market for technology companies in particular, have from time to time
experienced significant price and volume fluctuations that have been often
unrelated or disproportionate to the operating performance of such companies.
These broad market and industry factors may cause our common stock to materially
decline, regardless of our operating performance. In the past, following periods
of volatility in the stock market and the market price of a particular company’s
securities, securities class action litigation has often been instituted against
that company. Litigation of this type could result in substantial legal fees and
other costs, potential liabilities and a diversion of management’s attention and
resources.
We
have not and do not intend to pay dividends on our common stock.
The
payment of dividends upon our capital stock is solely within the discretion of
our board of directors and dependent upon our financial condition, results of
operations, capital requirements, restrictions contained in our future financing
instruments and any other factors our board of directors may deem relevant. We
have never declared or paid a dividend on our common stock and, because we have
very limited resources, we do not anticipate declaring or paying any dividends
on our common stock in the foreseeable future. Rather, we intend to retain any
future earnings for the continued operation and expansion of our business. It is
unlikely, therefore, that the holders of our common stock will have an
opportunity to profit from anything other than potential appreciation in the
value of our common shares held by them. If you require dividend income, you
should not rely on an investment in our common stock.
We
are controlled by a small number of existing stockholders, who may make
decisions with which our stockholders may disagree.
Our
majority stockholder, Mr. Fytton owns approximately 36.807% of our outstanding
shares of common stock and will continue to beneficially own approximately
36.807% of our outstanding shares of common stock following the completion of
this offering. Additionally, Mr. Fytton beneficially owns all of the outstanding
shares of Series A Preferred Stock, which carries super-majority voting
rights. Accordingly Mr. Fytton has effective control of the company.
The interests of this stockholder may differ from the interests of our other
stockholders. This stockholder could exercise significant influence over our
operations and business strategy and will have sufficient voting power to
influence all matters requiring approval by our stockholders, including the
ability to elect or remove directors, to approve or reject mergers or other
business combination transactions, the raising of future capital and the
amendment of our certificate of incorporation, which govern the rights attached
to our shares of common stock. In addition, this concentration of ownership may
delay, prevent or deter a change in control, or deprive other stockholders of a
possible premium for their shares of common stock as part of a sale of our
company.
Future
sales of our common stock could reduce our stock price.
We have
agreed to register 6,898,426,636
shares of our common
stock for certain of our stockholders in this registration statement.
Sales of common stock by these stockholders, or the perception that such
sales may occur in the future, could materially and adversely affect the market
price of our common stock. The shares of common stock the selling stockholders
are offering for sale in this prospectus will be freely tradable immediately
following this offering and the market price of our common stock could drop
significantly if the holders of these shares sell them or are perceived by the
market as intending to sell them.
As
a company quoted on the Pink OTC Markets, Inc. we are not subject to any minimum
listing criteria or other eligibility requirements.
Companies
that are listed on a national securities exchange, such as the NASDAQ Stock
Market, American Stock Exchange or New York Stock Exchange, must meet certain
qualitative and quantitative listing criteria, for example, they must meet
requirements with respect to operating results, net asset thresholds, corporate
governance, trading price and minimums for their public float. Companies
that are quoted on the OTC Bulletin Board, while not subject to listing
requirements per se, must be registered with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and must remain current in their reporting requirements in order to
remain eligible for quotation.
In
contrast, companies quoted on the Pink OTC Markets, Inc. do not have to meet
minimum listing criteria nor do they have to be registered with the Securities
and Exchange Commission under the Exchange Act or current in any reporting
requirements. As we are quoted on the Pink OTC Markets, Inc., and not subject to
any minimum listing criteria or other eligibility requirements, there may be
limited or no information available regarding us, our financial condition,
business or operations, and you may find it more difficult to obtain accurate
quotations as to the price of our securities or dispose of securities which you
own.
Our
securities are characterized as “microcap stock”, and as such are subject to a
number of unique risks.
The term
“microcap stock” applies to companies with low or “micro” capitalizations,
meaning the total value of the company’s stock. Microcap stocks are
subject to a number of unique risks. Many microcap companies tend to be
new and have no proven track record. Some of these companies have limited or no
assets or operations. Others have products and services that are still in
development or have yet to be tested in the market. Another risk that pertains
to microcap stocks involves the low volumes of trades. Because microcap stocks
trade in low volumes, any size of trade can have a large percentage impact on
the price of the stock. While all investments involve risk, microcap stocks can
be among the most risky.
Unless
an active trading market develops for our securities, stockholders may have
difficulty or be unable to sell their shares of common stock.
Our
common stock is quoted on the Pink OTC Markets, Inc. under the symbol “GEGP”,
however, there is not currently an active trading market for our common stock,
meaning that the number of persons interested in purchasing shares of our common
stock at or near ask prices at any given time may be relatively small or
non-existent, and there can be no assurance that an active trading market may
ever develop or, if developed, that it will be maintained. There are a number of
factors that contribute to this situation, including, without limitation, the
fact that we are a small early-stage company that is relatively unknown to stock
analysts, stock brokers, institutional investors and others in the investment
community that generate or influence sales volume, and that even if we came to
the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven, early-stage company such as ours or purchase or
recommend the purchase of shares of our common stock until such time as we
became more seasoned and viable.
As a
consequence, the Pink OTC Markets, Inc. is characterized by a lack of liquidity,
sporadic trading, larger spreads between bid and ask quotations, and other
conditions that may affect stockholders’ ability to re-sell our securities.
Moreover, there may be periods of several days or more when trading
activity in our shares is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that will
generally support continuous sales without an adverse effect on share price.
Unless an active trading market for our common stock is developed and
maintained, stockholders may be unable to sell their common stock and any
attempted sale of such shares may have the affect of lowering the market price
of our common stock and a stockholder’s investment could be a partial or
complete loss.
Since
our common stock is thinly traded it is more susceptible to extreme rises or
declines in price, and stockholders may not be able to sell their shares at or
above the price paid.
Since our
common stock is thinly traded its trading price is likely to be highly volatile
and could be subject to extreme fluctuations in response to various factors,
many of which are beyond our control, including:
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new
products or services introduced or announced by our competitors; or
us
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actual
or anticipated variations in quarterly operating
results;
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conditions
or trends in our business
industries;
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announcements
by us of significant contracts, acquisitions, strategic partnerships,
joint ventures or capital
commitments;
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additions
or departures of key personnel;
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sales
of our common stock; and
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general
stock market price and volume fluctuations of publicly quoted, and
particularly microcap, companies.
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Stockholders
may have difficulty reselling shares of our common stock, either at or above the
price paid, or even at fair market value. The stock markets often experience
significant price and volume changes that are not related to the operating
performance of individual companies, and because our common stock is thinly
traded it is particularly susceptible to such changes. These broad market
changes may cause the market price of our common stock to decline regardless of
how well we perform as a company. In addition, and as noted below, our shares
are currently traded on the Pink OTC Markets, Inc. and, further, are subject to
the penny stock regulations. Price fluctuations in such shares are particularly
volatile and subject to manipulation by market-makers, short-sellers and option
traders.
Our
common stock is subject to the “penny stock” regulations, which are likely to
make it more difficult to sell.
Our
common stock is considered a “penny stock,” which generally is a stock trading
under $5.00 and not registered on a national securities exchange or quoted on
the NASDAQ Stock Market. The Securities and Exchange Commission has adopted
rules that regulate broker-dealer practices in connection with transactions in
penny stocks. These rules generally have the result of reducing trading in such
stocks, restricting the pool of potential investors for such stocks, and making
it more difficult for investors to sell their shares once acquired. Prior to a
transaction in a penny stock, a broker-dealer is required to:
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deliver
to a prospective investor a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks
in the penny stock market;
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provide
the prospective investor with current bid and ask quotations for the penny
stock;
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explain
to the prospective investor the compensation of the broker-dealer and its
salesperson in the transaction;
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provide
investors monthly account statements showing the market value of each
penny stock held in their account;
and
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make
a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement
to the transaction.
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These
requirements may have the effect of reducing the level of trading activity in
the secondary market for a stock that is subject to the penny stock rules. Since
our common stock is subject to the penny stock rules, investors in our common
stock may find it more difficult to sell their shares.
Future
issuances by us or sales of our common stock by our officers or directors may
dilute stockholder interest or depress our stock price.
We may
issue additional shares of our common stock in future financings or grant stock
options under our equity incentive plan to our employees, officers, directors
and consultants. Any such issuances could have the effect of depressing the
market price of our common stock and, in any case, would dilute the interests of
our existing stockholders. Such a depression in the value of our common stock
could reduce or eliminate amounts that would otherwise have been available to
pay dividends on our common stock (which is unlikely in any event) or to make
distributions upon our liquidation.
Furthermore,
shares owned by our officers or directors which are registered in a registration
statement, or which otherwise may be transferred without registration pursuant
to applicable exemptions under the Securities Act may be sold. Because of the
perception by the investing public that a sale by such insiders may be
reflective of their own lack of confidence in our prospects, the market price of
our common stock could decline as a result of a sell-off following sales of
substantial amounts of common stock by our officers and directors into the
public market, or the mere perception that these sales could occur.
FORWARD-LOO
KING
INFORMATION
This
prospectus, including the sections titled “Prospectus Summary,” “Risk Factors,”
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Description of Business,” contains forward-looking
statements.
Forward-looking
statements include, but are not limited to, statements about:
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our
projected profitability;
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anticipated
trends in our industry;
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our
future financial results;
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our
ability to market our products and
services;
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our
ability to attract and retain consumers;
and
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implementation
of our business model.
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These
statements relate to future events or our future financial performance, and
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. These
risks and other factors include those listed under “Risk Factors” and elsewhere
in this prospectus. In some cases, you can identify forward-looking statements
by terminology such as “may,” “could” “expects,” “intends,” “plans,”
“anticipates,” “believes,” “potential,” “continue” or the negative of these
terms or other comparable terminology. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. We do not
intend to update any of the forward-looking statements after the date of this
prospectus or to conform these statements to actual results. Neither the Private
Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act
of 1933, as amended, provides any protection for statements made in this
prospectus.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the shares by the selling
stockholders. All proceeds from the sale of the shares offered hereby will be
for the account of the selling stockholders, as described below in the sections
titled “Selling Security Holders” and “Plan of Distribution.” With the exception
of any brokerage fees and commissions which are the obligation of the selling
stockholders, we are responsible for the fees, costs and expenses of this
offering which are estimated to be $50,000.00, inclusive of our legal, audit and
accounting fees, printing costs and filing and other miscellaneous fees and
expenses.
DETERMINATION OF OFFERING
PRICE
The
prices at which the shares of common stock covered in this prospectus may
actually be sold will be determined by the prevailing public market price for
our shares of common stock or by negotiations in private
transactions.
SELLING
SEC
URITY
HOLDERS
The
following table sets forth the names of the selling stockholders who may sell
their shares under this prospectus from time to time. Each of the selling
stockholders has within the past three years had a material relationship with
us. Hamon Fytton served as President from February 2002 to present
except during a period in 2007 when Brian Stetten, the current CEO also served
as President.
The
following table also provides certain information with respect to the selling
stockholders’ ownership of our securities as of January 31, 2010, the total
number of securities they may sell under this prospectus from time to time, and
the number of securities they will own thereafter assuming no other acquisitions
or dispositions of our securities. The selling stockholders can offer all, some
or none of their securities, thus we have no way of determining the number they
will hold after this offering. Therefore, we have prepared the table below on
the assumption that the selling stockholders will sell all shares covered by
this prospectus.
Some of
the selling stockholders may distribute their shares, from time to time, to
their limited and/or general partners or managers, who may sell shares pursuant
to this prospectus. Each selling stockholder may also transfer shares owned by
him or her by gift and upon any such transfer the done would have the same right
of sale as the selling stockholder.
A
discussion of the material terms of this offering is included in the section of
this prospectus titled “Prospectus Summary - The Offering” at page 1, We may
amend or supplement this prospectus from time to time to update the disclosure
set forth herein.
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Name
of Selling Stockholder
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Number
of Shares Owned Before Offering
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Number
of Shares Being Offered
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Number
of Shares Owned After Offering
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Percentage
Owned After Offering
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ALL
SHAREHOLDERS EXCLUDING CEDE & CO.(1)
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6,898,426,636
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6,898,426,636
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0
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0
%
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TOTAL
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6,898,426,636
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6,898,426,636
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0
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0
%
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(1) The
company is registering all of its issued and outstanding shares of common stock,
not including stock deposited with CEDE & CO. The intent is to
ensure that all issued and outstanding shares are free trading. The details
regarding the specific shareholders and the number of shares owned by each
shareholder are included in the certified shareholder list, which included as
part of this registered statement.
PLAN
OF DISTRIBUTION
We are
registering shares of our common stock for resale by the selling stockholders
identified in the section above entitled “Selling Security Holders.” We will
receive none of the proceeds from the sale of these shares by the selling
stockholders. The common stock may be sold from time to time to
purchasers:
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through
the Pink OTC Markets Inc. or other stock exchange or stock quotation
service upon which our common stock is traded, at prevailing market
prices; or
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through
underwriters, broker dealers or agents who may receive compensation in the
form of discounts, concessions or commissions from the selling
stockholders or the purchasers of the common
stock.
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The
selling security holders may use any one or more of the following methods when
selling shares:
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
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purchases
by a broker dealer as principal and resale by the broker dealer for its
account;
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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privately
negotiated transactions;
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settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
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broker
dealers may agree with the selling stockholders to sell a specified number
of such shares at a stipulated price per
share;
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through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
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a
combination of any such methods of sale;
or
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any
other method permitted pursuant to applicable
law.
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The
selling stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended, if available, rather than under this
prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other broker dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with
FINRA Rule 2440, and in the case of a principal transaction a markup or markdown
in compliance with FINRA IM-2440. The maximum commission or discount to be
received by any Financial Industry Regulatory Authority (“FINRA”) member or
independent broker-dealer will not be greater than 8% for the sale of any
securities included in the registration statement of which this prospectus is a
part.
In
connection with the sale of the common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities that require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares are deemed to be “underwriters” within the meaning of the
Securities Act of 1933, as amended, in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933, as amended. Each
selling stockholder has informed us that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute our common stock.
We
are required to pay certain fees and expenses incurred by us incident to the
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act of 1933, as amended.
Because
selling stockholders are deemed to be “underwriters” within the meaning of the
Securities Act of 1933, as amended, they will be subject to the prospectus
delivery requirements of the Securities Act of 1933, as amended, including Rule
172 thereunder. In addition, any securities covered by this prospectus that
qualify for sale pursuant to Rule 144 under the Securities Act of 1933, as
amended, may be sold under Rule 144 rather than under this prospectus. There is
no underwriter or coordinating broker acting in connection with the proposed
sale of the resale shares by the selling stockholders.
The
resale shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states, the resale shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied
with.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, as
amended, any person engaged in the distribution of the resale shares may not
simultaneously engage in market making activities with respect to the common
stock for the applicable restricted period, as defined in Regulation M, prior to
the commencement of the distribution. In addition, the selling stockholders will
be subject to applicable provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, including Regulation M, which
may limit the timing of purchases and sales of shares of the common stock by the
selling stockholders or any other person. We will make copies of this prospectus
available to the selling stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale (including by compliance with Rule 172 under the Securities Act of
1933, as amended).
DESCRIPTION OF SECURITIES
General
As
of October 31, 2009, our authorized capital stock consisted of 25,000,000,000
shares of common stock at a par value of $0.0001 per share and 50,000,000 shares
of undesignated preferred stock at no par value per share.
Common
Stock
We
currently have 8,981,501,513 shares of our common stock issued and outstanding
held by approximately 103 stockholders of record.
Holders
of our common stock are entitled to one vote for each share on all matters
submitted to a stockholder vote. Holders of common stock do not have cumulative
voting rights. Therefore, holders of a majority of the shares of common stock
voting for the election of directors can elect all of the directors. The
presence, in person or by proxy, of shareholders owning a majority of the issued
and outstanding shares of our capital stock is necessary to constitute a quorum
at any meeting of our stockholders. A vote by the holders of a majority of our
outstanding shares is required to effectuate certain fundamental corporate
changes such as liquidation, merger or an amendment to our articles of
incorporation.
Holders
of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of liquidation, dissolution or corporate wind up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock.
Holders
of our common stock have no pre-emptive rights, no conversion rights and there
are no redemption provisions applicable to our common stock.
Preferred
Stock
Our
Certificate of Incorporation authorizes the issuance of up to 50 million
(50,000,000) shares of preferred stock with designations, rights and preferences
determined from time to time by its Board of
Directors. Currently
,
the Company has
designated Series A of Preferred Stock. The Series A Preferred has
25,000,000 shares authorized and 5,000,000 shares were issued on March 1,
2010.
Series
A Preferred stock has the following voting rights:
The
holders of shares of Series A Preferred Stock shall have the right to one vote
for each share of Common Stock into which such Series A Preferred Stock could
then be converted.
Series A
Preferred Stock also carries a conversion provision such that for each share of
Series A Preferred Stock shall be convertible into five thousand (5,000) shares
of common stock. Accordingly the five million shares of Series A Preferred Stock
issued have the majority voting rights of the corporation.
Dividends
We
have never paid dividends on our common stock and we do not expect to pay
dividends in the near future. We anticipate that any future earnings
will be retained to support the development of our business. Our payment of any
future dividends will be at the discretion of our board of directors after
taking into account various factors, including but not limited to our financial
condition, operating results, cash needs, growth plans and the terms of any
credit agreements that we may be a party to at the time. In addition,
our ability to pay dividends on our common stock may be limited by Florida state
law. Accordingly, investors must rely on sales of their common stock after
price appreciation, which may never occur, as the only way to realize a return
on their investment. Investors seeking cash dividends should not purchase our
common stock.
Transfer
Agent
Our
transfer agent is Island Stock Transfer. Island Stock Transfer’s
address is 100 Second Avenue South, Suite 104N, St. Petersburg, Florida 33701
and their telephone number is (727) 289-0010.
LEGAL
MATTERS AND I
NTER
ESTS OF NAMED EXPERTS
Jean-Pierre
& Jean-Pierre LLC., corporate council, has given us an opinion relating to
the due issuance of the common stock being registered.
DESCRIPTION OF
BUSINESS
Our
Business
Since
January 31, 2008, the Company has had minimal operations and no revenue and is
currently seeking an acquisition or merger to bring an operating entity into the
Company. The Company does not propose to restrict its search for a
business opportunity to any particular industry or geographical area and may,
therefore, engage in essentially any business in any industry. The
Company has unrestricted discretion in seeking and participating in a business
opportunity, subject to the availability of such opportunities, economic
conditions, and other factors.
The
selection of a business opportunity in which to participate is complex and
risky. Additionally, as the Company has only limited resources and may find it
difficult to locate good opportunities. There can be no assurance
that the Company will be able to identify and acquire any business opportunity
which will ultimately prove to be beneficial to the Company and its
shareholders. The Company will select any potential business
opportunity based on management's business judgment.
The
activities of the Company are subject to several significant risks which arise
primarily as a result of the fact that we have no specific business and may
acquire or participate in a business opportunity based on the decision of
management which potentially could act without the consent, vote, or approval of
the Company's shareholders. The risks faced by the Company are further increased
as a result of its lack of resources and our inability to provide a prospective
business opportunity with significant capital.
Please
find below information regarding the Company’s various endeavours prior to
January 31, 2008 and its status as a development stage company.
Our
History
Gold
Entertainment Group, Inc. was originally incorporated in the State of Nevada on
February 3,
1999 as a C
corporation under the name ADVANCED MEDICAL TECHNOLOGIES
INC. /
CANADA.
The fiscal
year end is January 31st.
On April
5, 2002, the Stock Exchange and Merger Agreement entered into between Gold
Entertainment
Group, Inc. and Advanced Medical Technologies, Inc. was filed with the
Nevada
Secretary of
State. Advanced Medical Technologies, Inc., amended its name to Gold
Entertainment
Group, Inc.
On August 28,
2007 the state of incorporation was changed from Nevada to Florida.
Commencing
January 31, 2004, Gold Entertainment Group, Inc. was a developer and marketer of
a national multi-level, fixed- price DVD rental program, and sought to become a
leading home entertainment sales and rental company. Gold
Entertainment Group, Inc. marketed its products and programs exclusively through
an independent network of distributors whereby its distributors promoted the
company's DVD rental service with products shipped directly to
consumers. The Company maintains the web site:
www.GoldEntertainment.com.
At the
time, the Company had operations through its main office in Florida, and a
Canadian subsidiary in Toronto, Ontario.
The
company is not currently active. During its operations, it had 11
full time employees.
The
company had as a wholly owned subsidiary, Quality of Life Marketing Inc, a
Canadian corporation, operated from rental facilities in Toronto, Ontario,
Canada. It was intended to use this as a basis for its international
operations at a later date. Quality of Life Marketing Inc, has no
direct employees. The historical information for the subsidiary is
included in the consolidated financial statements attached to this
filing. The subsidiary was administratively dissolved on
September 25, 2009 with the State of Florida. It is no longer in
operation.
We do not
currently file reports with the Securities and Exchange Commission. Upon
the effectiveness of the registration statement of which this prospectus forms a
part, we will be subject to the information and periodic reporting requirements
of the Securities Exchange Act of 1934, as amended, and we intend to file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission.
Revenue
We have
no revenues for the years ended January 31, 2009 and 2008 and for the nine
months ended October 31, 2009 or through the date of this filing
Our
Strategy
Our
strategy is to seek an appropriate merger or acquisition candidate.
Employees
As of
January 31, 2010, we have no full-time employee. Management is
concurrently engaged in other endeavors and devotes as much time as it deems
necessary to handle the affairs of the Company with other services provided on a
contract basis.
DESCRIP
TION OF PROPERTY
Our
corporate office is located at 23150 Sandalfoot Plaza Drive, Suite C, Boca
Raton, Florida 33428.
LEGAL PROCEEDINGS
We do not
know of any material existing or pending legal proceedings against us, nor
are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial stockholder, is an
adverse party or has a material interest adverse to our company.
MARKET
FOR COMMON
EQUITY AND
RELATED STOCKHOLDER
MATTERS
Our
common stock is traded on the Pink OTC Markets Inc. under the symbol “GEGP”.
Prior thereto, when our common stock commenced trading on the Pink OTC
Markets Inc. from inception through April 10, 2002, we traded under the symbol
“ADMD”. The following table sets forth, for the periods indicated, the
high and low sales prices for our common stock as reported on the Pink OTC
Markets Inc. since we began trading on the Pink OTC Markets Inc. On
January 31, 2010, the closing price of our common stock was $0.0001 per
share.
Common
Stock
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
High Price
|
|
|
Low Price
|
|
|
|
|
|
|
|
|
|
|
January
31, 2010
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
October
31, 2009
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
July
31, 2009
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
April
30, 2009
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
January
31, 2009
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
October
31, 2008
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
July
31, 2008
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
April
30, 2008
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
January
31, 2008
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
|
|
|
|
|
|
|
|
|
|
|
January
31, 2007
|
|
$
|
0.0003
|
|
|
$
|
0.0001
|
|
|
April
30, 2007
|
|
$
|
0.0003
|
|
|
$
|
0.0001
|
|
|
July
31, 2007
|
|
$
|
0.0003
|
|
|
$
|
0.0001
|
|
|
October
31, 2007
|
|
$
|
0.0001
|
|
|
$
|
0.0001
|
|
Stockholders
As of
January 31, 2010, we have 103 stockholders of record of our issued and
outstanding common stock.
Dividends
We have
never declared or paid any cash dividends on our capital stock. We
currently intend to retain all available funds for use in our business, and do
not anticipate paying any cash dividends in the foreseeable
future. Any future determination relating to dividend policy will be
made at the discretion of our board of directors and will depend on a number of
factors, including future earnings, capital requirements, financial condition
and future prospects and other factors the board of directors may deem
relevant.
Securities
Authorized for Issuance under Equity Compensation Plans
As of
January 31, 2010, we did not have any securities authorized for issuance under
equity compensation plans.
MANAGEMENT’S
DISCUSSION AND
ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and the notes to those
statements included elsewhere in this prospectus. In addition to the
historical financial information, the following discussion and analysis contains
forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under “Risk Factors” and elsewhere in this prospectus.
PLAN OF
OPERATION
The
Company is in the process of investigating potential business ventures which, in
the opinion of management, will provide a source of eventual profit to the
Company. Such involvement may take many forms, including the
acquisition of an existing business or the acquisition of assets to establish
subsidiary businesses. The Company’s management does not expect to remain
involved as management of any acquired business.
As the
Company possesses limited funds, the Company will be extremely limited in its
attempts to locate potential business situations for
investigation. The Company intends to commence, on a limited basis,
the process of investigating possible merger and acquisition candidates, and
believes that the Company’s status as a publicly-held corporation will enhance
its ability to locate such potential business ventures. No assurance
can be given as to when the Company may locate suitable business opportunities
and such opportunities may be difficult to locate; however, the Company intends
to actively search for potential business ventures for the foreseeable future.
Business
opportunities, if any arise, are expected to become available to the Company
principally from the personal contacts of our officer and director. While it is
not expected that the Company will engage professional firms specializing in
business acquisitions or reorganizations, such firms may be retained if funds
become available in the future, and if deemed
advisable. Opportunities may thus become available from professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and other sources of unsolicited proposals. In
certain circumstances, the Company may agree to pay a finder’s fee or other form
of compensation, including perhaps one-time cash payments, payments based upon a
percentage of revenues or sales volume, and/or payments involving the issuance
of securities, for services provided by persons who submit a business
opportunity in which the Company shall decide to participate, although no
contracts or arrangements of this nature presently exist. The Company
is unable to predict at this time the cost of locating a suitable business
opportunity.
The
analysis of business opportunities will be undertaken by or under the
supervision of the Company’s management. Current management does not
have significant experience in evaluating potential mergers or acquisitions.
Among the factors which management will consider in analyzing potential business
opportunities are the available technical, financial and managerial resources;
working capital and financial requirements; the history of operation, if any;
future prospects; the nature of present and anticipated competition; potential
for further research, developments or exploration; growth and expansion
potential; the perceived public recognition or acceptance of products or
services; name identification, and other relevant factors.
It is not
possible at present to predict the exact matter in which the Company may
participate in a business opportunity. Specific business
opportunities will be reviewed and, based upon such review, the appropriate
legal structure or method of participation will be decided upon by
management. Such structures and methods may include, without
limitation, leases, purchase and sale agreements, licenses, joint ventures; and
may involve merger, consolidation or reorganization. The Company may
act directly or indirectly through an interest in a partnership, corporation or
reorganization. However, it is most likely that any acquisition of a
business venture the Company would make would be by conducting a reorganization
involving the issuance of the Company’s restricted securities. Such a
reorganization may involve a merger (or combination pursuant to state corporate
statutes, where one of the entities dissolves or is absorbed by the other), or
it may occur as a consolidation, where a new entity is formed and the Company
and such other entity combine assets in the new entity. A
reorganization may also occur, directly or indirectly, through subsidiaries, and
there is no assurance that the Company would be the surviving entity. Any such
reorganization could result in loss of control of a majority of the
shares. The Company’s present director may be required to resign in
connection with reorganization. Substantial dilution of percentage
equity ownership may result to the shareholders, in the discretion of
management.
The
Company may choose to enter into a venture involving the acquisition of or
merger with a company which does not need substantial additional capital but
desires to establish a public trading market of its securities. Such
a company may desire to consolidate its operations with the Company through a
merger, reorganization, asset acquisition, or other combination, in order to
avoid possible adverse consequences of undertaking its own public
offering. (Such consequences might include expense, time delays or
loss of voting control). In the event of such a merger, the Company
may be required to issue significant additional shares, and it may be
anticipated that control over the Company’s affairs may be transferred to
others.
As part
of their investigation of acquisition possibilities, the Company’s management
may meet with executive officers of the business and its personnel; inspect its
facilities; obtain independent analysis or verification of the information
provided, and conduct other reasonable measures, to the extent permitted by the
Company’s limited resources and management’s limited
expertise. Generally, the Company intends to analyze and make a
determination based upon all available information without reliance upon any
single factor as controlling.
In all
likelihood, the Company’s management will be inexperienced in the areas in which
potential businesses will be investigated and in which the Company may make an
acquisition or investment. Thus, it may become necessary for the
Company to retain consultants or outside professional firms to assist management
in evaluating potential investments, and to hire managers or outside
professional firms to assist management in evaluating potential investments, and
to hire managers to run or oversee the operations of its acquisitions of
investments. The Company can give no assurance that we will be able
to find suitable consultants or managers. The Company has no policy
regarding the use of consultants, however, if management, in its discretion,
determines that it is in the best interests of the Company, management may seek
consultants to review potential merger or acquisitions
candidates. There are currently no contracts or agreements between
any consultant and any companies that are searching for “shell” companies with
which to merge.
It may be
anticipated that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention,
and substantial costs for accountants, attorneys and others. Should a
decision thereafter be made not to participate in a specific business
opportunity, it is likely that costs already expended would not be
recoverable. It is likely, in the event a transaction should
eventually fail to be consummated, for any reason, that the costs incurred by
the Company would not be recoverable. The Company’s officer and
director are entitled to reimbursement for all expenses incurred in their
investigation of possible business ventures on behalf of the Company, and no
assurance can be given that if the Company has available funds they will not be
depleted by such expenses.
Based on
current economic and regulatory conditions, management believes that it is
possible, if not probable, for a company like the Company, without assets or
many liabilities, to negotiate a merger or acquisition with a viable private
company. The opportunity arises principally because of the high legal
and accounting fees and the length of time associated with the registration
process of “going public”. However, should any of these conditions
change, it is very possible that there would be little or no economic value for
anyone taking over control of the Company.
Management
of the Company believes the best chance to obtain value for the shareholders is
to seek a merger or acquisition with an existing business. At this
time, management has been unable to locate any potential mergers or
acquisitions.
Management
is not able to determine the time or resources that will be necessary to locate
and acquire or merge with a business prospect. There is no assurance
that the Company will be able to acquire an interest in any such prospects,
products or opportunities that may exist or that any activity of the Company,
regardless of the completion of any transaction, will be
profitable.
If and
when the Company locates a business opportunity, management of the Company will
give consideration to the dollar amount of that entity’s profitable operations
and the adequacy of its working capital in determining the terms and conditions
under which the Company would consummate such an
acquisition. Potential business opportunities, no matter which form
they may take, will most likely result in substantial dilution for the Company’s
shareholders due to the issuance of stock to acquire such an
opportunity.
The
following table provides our revenue, cost of revenue, gross loss, operating
expenses, loss from operations, other income and net loss information for each
of the periods indicated below.
|
|
|
|
|
|
|
|
|
|
|
For
the nine months ended October 31, 2009
|
|
|
For
the nine months ended October 31, 2008
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cost
of revenue
|
|
|
-
|
|
|
|
-
|
|
|
Gross
loss
|
|
|
-
|
|
|
|
-
|
|
|
Operating
expenses
|
|
|
59,525
|
|
|
|
7,656
|
|
|
Loss
from operations
|
|
|
(59,525
|
)
|
|
|
(7,656
|
)
|
|
Other
Income (Expense)
|
|
|
(10,273
|
)
|
|
|
(4,504
|
)
|
|
Net
Income (Loss)
|
|
$
|
(69,798
|
)
|
|
$
|
(12,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
For
the year ended January 31, 2009
|
|
|
For
the year
ended
January 31, 2008
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cost
of revenue
|
|
|
-
|
|
|
|
-
|
|
|
Gross
loss
|
|
|
-
|
|
|
|
-
|
|
|
Operating
expenses
|
|
|
(14,237
|
)
|
|
|
(1,352,593
|
)
|
|
Loss
from operations
|
|
|
(14,237
|
)
|
|
|
(1,352,593
|
)
|
|
Other
Income (Expense)
|
|
|
567,714
|
|
|
|
(77,107
|
)
|
|
Net
Income (Loss)
|
|
$
|
553,477
|
|
|
$
|
(1,429,700
|
)
|
Revenue
We
currently generate no revenue.
Cost
of Revenue
There is
no cost of revenue.
Operating
Expenses
General and Administrative
Expenses
.
General
and administrative expenses consist primarily of facility costs, administrative
compensation, travel, depreciation, legal and other professional services fees,
and other general overhead costs. For the year ending January 31, 2008, the
majority of general and administrative expenses involved stock based
compensation of $745,105 and consulting expenses of $608,709. The
general and administrative expenses for the year ending January 31, 2009 were
$14,237 and included no such costs. General and administrative
expenses for the nine months ended October 31, 2009 and 2008 were $59,525 and
$7,656 respectively. The majority of 2009 expenditures related to
account fees.
Loss
from Operations
Our
ability to continue is limited without additional debt or equity financing from
outside investors. These matters raise substantial doubt about our ability to
continue as a going concern. Management plans to fund operations by raising
additional capital through the issuance of equity securities. Our financial
statements do not include any adjustments relating to the recovery of the
recorded assets or the classification of the liabilities that might be necessary
should we be unable to continue as a going concern.
Other
Income (Loss)
In the
fiscal year ending January 31, 2009 the total other income was as a result of a
gain on termination of debt in the amount of $123,300, and a gain on settlement
of accrued liabilities in the amount of $461,429. For the year ending
January 31, 2008 the $77,107 for other expenses was related to $64,615 loss on
debt conversion and $12,492 of interest expense. The net difference
of other expenses for the nine months ended October 31, 2009 and 2008 related to
interest expense.
Going
Concern
Our
independent registered public accounting firm has added an explanatory paragraph
to their audit opinion issued in connection with the consolidated financial
statements of Gold Entertainment Group, Inc. for the years ending January 31,
2009 and 2008, with respect to their doubt about our ability to continue as a
going concern due to our lack of revenues, recurring losses from operations,
cash used in operations, working capital deficit, stockholder deficit and our
accumulated deficit.
As
reflected in the accompanying condensed consolidated financial statements, the
Company has a net loss of $69,798 and net cash used in operations of $13,451 for
the nine months ended October 31, 2009, and an accumulated deficit of
$2,938,066, stockholders’ deficiency of $177,162, and working capital deficit of
$103,264 at October 31, 2009. The Company has net cash used in
operations of $19,133 for the year ended January 31, 2009, and an accumulated
deficit of $2,868,268, stockholders’ deficiency of $107,364, and
working capital deficit of $57,364 at January 31, 2009, and for the year ended
January 31, 2008
,
had a net loss of
$1,429,700 and used cash in operations of $17,353 and an accumulated deficit of
$3,421,745, stockholders’ deficiency of $ 660,841, and working capital deficit
of $613,841 at January 31, 2008, and has been inactive with no revenues since
April 2005.
The
ability of the Company to continue as a going concern is dependent on the
Company’s ability to further implement its business plan and/or raise
capital. The Company plans to locate an operating company to merge
with or sell a controlling interest to a third party who would subsequently
merge an operating business into the Company. Management believes
that the actions presently being taken provide the opportunity for the Company
to continue as a going concern. The consolidated financial statements
do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.
Income
Tax Expense
The
Company has unused net operating loss carryforwards for income tax purposes
totaling approximately $2,440,000 and $2,990,000 at January 31, 2009 and 2008,
respectively, expiring through the year 2029 subject to the Internal Revenue
Code Section 382, which places a limitation on the amount of taxable income that
can be offset by net operating losses after a change in ownership. In
accordance with certain provisions of the Tax Reform Act of 1986 a change in
ownership of greater than fifty (50%) percent of a corporation within a three
(3) year period will place an annual limitation on the corporation’s
ability to utilize its existing tax benefit carryforwards. Such a
change in ownership may have occurred in connection with the private placement
of securities. Additionally, the Company’s utilization of its tax benefit
carryforwards may be restricted in the event of possible future changes in the
ownership of the Company from the exercise of options or other future issuances
of common stock.
Stock-Based
Compensation
There are
no stock options in effect at this time. There were options
outstanding for 10,000,000,000 shares of Common Stock which expired during
fiscal 2008.
Liquidity
and Capital Resources
As of
October 31, 2009, we had an accumulated deficit of $2,938,066 and cash in the
bank of $297. Since our inception, we have experienced negative cash flows
and have met our operating requirements by issuing shares of our common stock
and stock options as compensation for services provided. We have also
funded current operations by issuing shares of our common stock for cash.
From inception additional cash has been obtained from related parties in
the form of loans. Some of these loans have later been converted into shares of
common stock. Since January 2008, we relied primarily on these loans to meet our
cash requirements.
Litigation
From time
to time, we may become subject to legal proceedings, claims and litigation
arising in the ordinary course of business. We are not currently a party to any
material legal proceedings, nor are we aware of any other pending or threatened
litigation that would have a material adverse effect on our business, operating
results, cash flows or financial condition should such litigation be resolved
unfavorably.
Off-Balance
Sheet Arrangements
We do not
have off-balance sheet arrangements. As part of our ongoing business, we do not
participate in transactions that generate relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, often established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes.
Recently
Issued Accounting Standards
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair
Value Measurements” (“SFAS 157”)(ASC 820), which is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. SFAS 157 defines fair
value as used in numerous accounting pronouncements, establishes a framework for
measuring fair value and expands disclosure of fair value
measurements. In February 2008, the FASB issued a FASB Staff
Position, which delays the effective date of SFAS 157 for one year for certain
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). Excluded from the scope of SFAS 157 are
certain leasing transactions accounted for under SFAS No. 13 (ASC 840),
“Accounting for Leases.” The exclusion does not apply to fair value
measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
SFAS 157. The Company does not believe the adoption of SFAS 157, on
February 1, 2008, had a material impact on its consolidated financial position,
cash flows or results of operations.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements” (“SFAS 160”) (ASC 810), which is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. This Statement amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,”
to establish accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160
is required to be adopted simultaneously with SFAS 141R. The Company
does not currently have any non-controlling interests in its subsidiaries, and
accordingly, the Company does not believe the adoption of SFAS 160, effective
February 1, 2009, shall have a material impact on its consolidated financial
position, cash flows or results of operations.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities” (“SFAS 161”) (ASC 815), which is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. SFAS 161 requires enhanced disclosures about an entity’s
derivative and hedging activities and thereby improves the transparency of
financial reporting. It is intended to enhance the current disclosure
framework in SFAS 133 (ASC 815) by requiring that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. This disclosure better conveys the purpose of derivative
use in terms of the risks that the entity is intending to manage. The
Statement encourages, but does not require, comparative disclosures for earlier
periods at initial adoption. The Company does not believe the
adoption of SFAS 161, effective February 1, 2009, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In June
2008, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-5,
Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity’s Own Stock (“EITF 07-5”), which is effective for fiscal years ending
after December 15, 2008, with earlier application not permitted by entities that
has previously adopted an alternative accounting policy. The adoption of
EITF 07-5’s requirements will affect accounting for convertible instruments and
warrants with provisions that protect holders from declines in the stock price
(“round-down” provisions). Warrants with such provisions will no longer be
recorded in equity. EITF 07-5 guidance is to be applied to outstanding
instruments as of the beginning of the fiscal year in which the Issue is
applied. The cumulative effect of the change in accounting principle shall
be recognized as an adjustment to the opening balance of retained earnings (or
other appropriate components of equity) for that fiscal year, presented
separately. The cumulative-effect adjustment is the difference between the
amounts recognized in the statement of financial position before initial
application of this Issue and the amounts recognized in the statement of
financial position at initial application of this Issue. The amounts
recognized in the statement of financial position as a result of the initial
application of this Issue shall be determined based on the amounts that would
have been recognized if the guidance in this Issue had been applied from the
issuance date of the instrument. The Company implemented this standard on
February 1, 2008.
In May
2009, the FASB issued SFAS No. 165 “Subsequent Events” (“SFAS 165”) (ASC 855),
which is effective for interim or annual financial periods ending after June 15,
2009. SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS
165 sets forth (1) the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. The Company does not believe
the adoption of SFAS 165, effective August 1, 2009, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In June
2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“SFAS 166”) (ASC 860), which is
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009. SFAS 166 improves the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. The Company does not believe the
adoption of SFAS 166, effective February 1, 2010, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”) (ASC 860), which is effective as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15,
2009. SFAS 167 improves financial reporting by enterprises involved
with variable interest entities and to address (1) the effects on certain
provisions of FASB Interpretation No. 46 (revised December 2003), “Consolidation
of Variable Interest Entities”, as a result of the elimination of the qualifying
special-purpose entity concept in SFAS 166 and (2) constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprise’s involvement
in a variable interest entity. The Company does not believe the
adoption of SFAS 167, effective February 1, 2010, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In June
2009, the FASB issued SFAS No. 168 (ASC 105) “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162”, which is effective for financial
statements issued for interim and annual periods ending after September 15,
2009. The FASB Accounting Standards Codification (“Codification”)
will be the single source of authoritative nongovernmental U.S. generally
accepted accounting principles. Rules and interpretive releases of
the SEC under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. All existing accounting
standards are superseded as described in SFAS 168. All other
accounting literature not included in the Codification is
nonauthoritative. The Company does not believe the adoption of SFAS
168, effective August 1, 2009, shall have a material impact on its consolidated
financial position, cash flows or results of operations. The Company
has included the general code related to the prior FASB pronouncements along
with referencing the prior codifications to ease the transition.
Inflation
Inflation
was not a material factor in either revenue or operating expenses during the
years ended January 2009 and 2008.
Critical
Accounting Estimates
We apply
the following critical accounting policies in the preparation of our
consolidated financial statements:
Accounting
for Derivatives
The
Company evaluates its options, warrants or other contracts to determine if those
contracts or embedded components of those contracts qualify as derivatives to be
separately accounted for under Statement of Financial Accounting Standards 133
“Accounting for Derivative Instruments and Hedging Activities” and related
interpretations including EITF 00-19 “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”
(“EITF 00-19”) and EITF Issue No. 07-5, “Determining Whether an Instrument (or
Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”)
.
The
result of this accounting treatment is that the fair value of the derivative is
marked-to-market each balance sheet date and recorded as a liability. In
the event that the fair value is recorded as a liability, the change in fair
value is recorded in the statement of operations as other income (expense)
.
Upon
conversion or exercise of a derivative instrument, the instrument is marked to
fair value at the conversion date and then that fair value is reclassified to
equity. Equity instruments that are initially classified as equity
that become subject to reclassification under SFAS 133 are reclassified to
liability at the fair value of the instrument on the reclassification
date.
Income
taxes
Current
income taxes are based on the year’s taxable income for federal and state income
tax reporting purposes. Deferred income taxes are provided on a
liability basis whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax law and
rates on the date of enactment.
In June
2006, the FASB issued SFASB Interpretation No. 48, “Accounting for Uncertainty
in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN
48”). This statement clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48, which is effective for fiscal years beginning
after December 15, 2006, also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The Company believes its tax positions
are all highly certain of being upheld upon examination. As such, the
Company has not recorded a liability for unrecognized tax
benefits. As of January 31, 2009, the tax years 2006 through 2008
remain open for IRS audit. The Company has received no notice of
audit from the Internal Revenue Service for any of the open tax
years. The adoption of the provisions of FIN 48 did not have a
material impact on our financial position and results of
operations.
On May 2,
2007, the FASB issued FASB Staff Position FIN 48-1, Definition of Settlement in
FASB Interpretation No. 48, (“FSP FIN 48-1”). FSP FIN 48-1 amends FIN
48 to provide guidance on how an entity should determine whether a tax position
is effectively settled for the purpose of recognizing previously unrecognized
tax benefits. The term “effectively settled” replaces the term
“ultimately settled” when used to describe recognition, and the terms
“settlement” or “settled” replace the terms “ultimate settlement” or “ultimately
settled” when used to describe measurement of a tax position under FIN
48. FSP FIN 48-1 clarifies that a tax position can be effectively
settled upon the completion of an examination by a taxing authority without
being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the
tax position is not considered more likely than not to be sustained based solely
on the basis of its technical merits and the statute of limitations remains
open. The adoption of FSP FIN 48-1 did not have an impact on the
accompanying consolidated financial statements.
Stock-Based
Compensation
Compensation
expense associated with the granting of stock based awards to employees and
directors and non-employees is recognized in accordance with SFAS No.
123(R), “Share Based Payment” and related interpretations. SFAS No. 123(R)
requires companies to estimate and recognize the fair value of stock-based
awards to employees and directors. The value of the portion of an award that is
ultimately expected to vest is recognized as an expense over the requisite
service periods using the straight-line attribution method.
Contingencies
and Litigation
We
evaluate contingent liabilities including threatened or pending litigation in
accordance with SFAS No. 5, “Accounting for Contingencies” and record
accruals when the outcome of these matters is deemed probable and the liability
is reasonably estimable. We make these assessments based on the specific facts
and circumstances of each matter.
DIRECTORS
AND E
XECU
TIVE OFFICERS
The
following table sets forth the names, ages and positions of our directors and
executive officers.
|
Name
|
|
Age
|
|
Position
|
|
Brian
Stetten
|
|
46
|
|
Chief
Executive Officer and Director
|
|
Hamon
Fytton
|
|
56
|
|
President
and Director
|
Hamon
Fytton
has been our President and a director since January, 2008. Mr.
Fytton was the President and CEO upon acquisition 5 April 2002 when he obtained
controlling interest from the previous management. Mr. Fytton has served
continuously as a director of Gold Entertainment Group, Inc. since 5 April 2002
until the present. From 2007 to Jan 2008 Mr. Fytton resigned as an officer of
the company in order to focus on other activities. He is currently the President
and a Director of the company.
Brian
Stetten
has been our Chief Executive Officer and a Director since March
2007. Mr. Stetten also acted as President until January 2008 when Mr.
Fytton returned as President. Prior to joining Gold Entertainment, Mr. Stetten
has over 10 years experience in the securities field working for financial
services companies and as an independent consultant.
EXECUTIVE
COMPENSATION
Summary
of Compensation
The
following reflects all compensation awarded to, earned by or paid to our Chief
Executive Officer, and our President.
We
appointed Brian Stetten as our Chief Executive Officer and President on 26 March
2007. Mr. Stetten received 250,000,000 vested shares of common stock in
compensation for his services. Mr. Stetten remains as the Chief Executive
Officer at the time of this filing and is not entitled to further
compensation.
SECURITY
OWNERSHIP
OF OWNERS
AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our
common stock as of the date hereof. The information in this table provides
ownership information for:
|
·
|
each
person known by us to be the beneficial owner of 5% or more of our common
stock;
|
|
·
|
each
of our directors and executive officers;
and
|
|
·
|
all
of our directors and executive officers as a
group.
|
Beneficial
ownership has been determined in accordance with the rules and regulations of
the United States Securities and Exchange Commission (the “SEC”) and includes
voting or investment power with respect to our securities. A person (or group of
persons) is deemed to be the “beneficial owner” of our Securities if he or she,
directly or indirectly, has or shares the power to vote or to direct the voting
of, or to dispose or direct the disposition of such Securities. Accordingly,
more than one person may be deemed to be the beneficial owner of the same
security. Unless otherwise indicated, the persons named in the table below have
sole voting and/or investment power with respect to the number of shares of
common stock indicated as beneficially owned by them. A person is also deemed to
be a beneficial owner of any security, which that person has the right to
acquire within 60 days, such as options or warrants to purchase shares of our
common stock. Beneficial ownership and percentage ownership are based on
96,165,591 shares of common stock outstanding as of the date hereof. Unless
otherwise indicated, the address of each person listed is care of Gold
Entertainment Group, Inc.,
23150
Sandalfoot Plaza Dr., Suite C,
Boca Raton,
Florida 33428.
|
|
|
|
|
|
|
|
|
|
|
Amount
and Nature of Beneficial Ownership
|
|
|
Percent
of
Class
|
|
|
Name
of Beneficial Owner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hamon
Fytton (1)
|
|
|
3,309,500,000
|
|
|
|
36.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Stetten (2)
|
|
|
250,000,000
|
|
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Steve
Sperber (3)
|
|
|
800,005,000
|
|
|
|
15.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LEGENT
CLEARING, LLC (4)
|
|
|
1,400,000,000
|
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a group (2 persons)
|
|
|
3,559,500,000
|
|
|
|
39.6
|
%
|
|
(1)
|
Mr.
Fytton is the President and a Director of the company. Mr. Fytton also
owns all of the issued and outstanding preferred shares of the company,
which preferred carry super-majority voting rights thereby giving Mr.
Fytton effective control of the company.
|
|
|
|
|
(2)
|
Mr.
Stetten is CEO and a Director of the company.
|
|
|
|
|
(3)
|
Mr.
Sperber holds a convertible note of the company of approximately $73,898
including interest.
|
|
|
|
|
(4)
|
LEGENT
CLEARING, LLC is a clearinghouse that holds these shares for the account
of unknown beneficial holders. We have undertaken to identify
these shareholders, however LEGENT CLEARING does not participate in the
NOBO program. LEGENT CLEARING has however confirmed that these shares are
in fact dispersed to various
shareholders.
|
CERTAIN
RELATIONSHIPS AND
RELATED TRANSACTIONS
Other
than indebtedness of the company to certain parties, there are no transactions
(material or otherwise) between the company and members of management or 5% or
more shareholders of the company. Financial indebtedness of the
company is discussed in the financial statements accompanying the
prospectus.
CORPORATE
GOVERNANCE
Currently,
we have two active members of our board of directors, Brian Stetten (Chairman),
and Hamon Fytton (President), neither of which are independent, as defined in
NASDAQ Marketplace Rule 4200. Meetings are typically held at our corporate
office, which is located in Boca Raton, Florida. The regular attendees of the
meeting include our CEO and Director, Brian Stetten, President and Director,
Hamon Fytton. The meetings are held upon necessity and/or request by
the board of directors.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934
,
as amended, requires our
executive officers and directors, and persons who beneficially own more than 10%
of a registered class of our equity securities to file with the Securities and
Exchange Commission initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of our common
shares and other equity securities, on Forms 3, 4 and 5 respectively. Since
prior to this offering, we did not have a class of equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934
,
as amended, we were not
required to file such forms with the Securities and Exchange Commission. Once we
have a class of equity securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, we intend on filing all such forms
in a timely manner and if not, to disclose any untimely filings in accordance
with Item 405 Regulation S-K.
Code
of Ethics
We have
not adopted a code of ethics, but our board of directors’ plans to adopt a code
of ethics covering all of our officers, directors and employees
promptly.
EXP
ERT
S
The
consolidated financial statements appearing in this prospectus and registration
statement for the years ended January 31, 2009 and 2008 have been audited by
Salberg & Company, PA., an independent registered public accounting firm as
set forth in their report appearing elsewhere herein and are included in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
WHERE
YOU CAN
FIND MORE
INFORMATION
We have
filed with the Securities and Exchange Commission a registration statement on
Form S-1 under the Securities Act of 1933, as amended, with respect to the
common stock being offered in this offering. This prospectus does not contain
all of the information set forth in the registration statement and the exhibits
and schedules filed as part of the registration statement. For further
information with respect to us and our common stock, we refer you to the
registration statement and the exhibits and schedules filed as a part of the
registration statement. Statements contained in this prospectus concerning the
contents of any contract or any other documents are not necessarily complete. If
a contract or document has been filed as an exhibit to the registration
statement, we refer you to the copy of the contract or document that has been
filed. Each statement in this prospectus relating to a contract or document
filed as an exhibit is qualified in all respects by the filed exhibit. The
reports and other information we file with the Securities and Exchange
Commission can be read and copied at the Securities and Exchange Commission’s
Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Copies
of these materials can be obtained at prescribed rates from the Public Reference
Section of the Securities and Exchange Commission at the principal offices of
the Securities and Exchange Commission, 100 F Street, N.E., Washington D.C.
20549. You may obtain information regarding the operation of the public
reference room by calling 1(800) SEC-0330. The Securities and Exchange
Commission also maintains a website (
http://www.sec.gov
)
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Securities and Exchange
Commission.
Upon
the effectiveness of the registration statement of which this prospectus forms a
part,, we will be subject to the information and periodic reporting requirements
of the Securities Exchange Act of 1934, as amended, and we intend to file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED
FINANCIAL STATEMENTS
OCTOBER
31, 2009
|
|
INDEX
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
|
|
|
Condensed
Consolidated Balance Sheets as of October 31, 2009 (unaudited) and January
31, 2009
|
F-2
|
|
|
|
Condensed
Consolidated Statements of Operations for the nine months ended October
31, 2009 and 2008 (unaudited)
|
F-3
|
|
|
|
Condensed
Consolidated Statements of Changes in Stockholders’ Deficiency for the
nine months ended October 31, 2009 (unaudited)
|
F-4
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the nine months ended October
31, 2009 and 2008 (unaudited)
|
F-5
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
F-6
|
|
|
|
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
October
31, 2009
|
|
|
January
31, 2009
|
|
|
Assets
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
297
|
|
|
$
|
62
|
|
|
Prepaid
expenses
|
|
|
-
|
|
|
|
7,000
|
|
|
Total
current assets
|
|
|
297
|
|
|
|
7,062
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
297
|
|
|
$
|
7,062
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
41,051
|
|
|
$
|
19,510
|
|
|
Promissory
note guarantee liability
|
|
|
20,000
|
|
|
|
20,000
|
|
|
Embedded
conversion option liability
|
|
|
17,480
|
|
|
|
19,985
|
|
|
Due
to related party
|
|
|
15,030
|
|
|
|
1,344
|
|
|
Demand
note payable, net of debt discount of $0 and $9,889,
respectively
|
|
|
10,000
|
|
|
|
111
|
|
|
Accrued
liabilities - discontinued operations
|
|
|
-
|
|
|
|
3,476
|
|
|
Total
current liabilities
|
|
|
103,561
|
|
|
|
64,426
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
note payable
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Accrued
interest payable
|
|
|
23,898
|
|
|
|
-
|
|
|
Total
liabilities
|
|
|
177,459
|
|
|
|
114,426
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficiency:
|
|
|
|
|
|
|
|
|
|
Preferred
stock, no par value; 50,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
|
none
issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock, $0.0001 par value; 25,000,000,000 shares
authorized;
|
|
|
|
|
|
|
|
|
|
8,981,501,513
shares issued and outstanding
|
|
|
898,150
|
|
|
|
898,150
|
|
|
Additional
paid-in capital
|
|
|
1,862,754
|
|
|
|
1,862,754
|
|
|
Accumulated
deficit
|
|
|
(2,938,066
|
)
|
|
|
(2,868,268
|
)
|
|
Total
stockholders' deficiency
|
|
|
(177,162
|
)
|
|
|
(107,364
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' deficiency
|
|
$
|
297
|
|
|
$
|
7,062
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
For
the Nine
|
|
|
For
the Nine
|
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
|
|
October
31, 2009
|
|
|
October
31, 2008
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
59,525
|
|
|
|
7,656
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
59,525
|
|
|
|
7,656
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(59,525
|
)
|
|
|
(7,656
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Gain
on termination of debt
|
|
|
3,475
|
|
|
|
-
|
|
|
Interest
expense
|
|
|
(16,253
|
)
|
|
|
(4,504
|
)
|
|
Change
in embedded conversion option liability
|
|
|
2,505
|
|
|
|
-
|
|
|
Total
other income (expense)
|
|
|
(10,273
|
)
|
|
|
(4,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(69,798
|
)
|
|
$
|
(12,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share - basic and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic and diluted
|
|
|
8,981,501,513
|
|
|
|
8,981,501,513
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
FOR
THE NINE MONTHS ENDED OCTOBER 31, 2009 (UNAUDITED)
|
|
|
|
|
|
|
|
|
Additional
Paid-in
|
|
|
|
|
|
Total
Stockholders'
|
|
|
|
|
Common
Stock
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Par
Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficiency
|
|
|
Balance,
January 31, 2009
|
|
|
8,981,501,513
|
|
|
$
|
898,150
|
|
|
$
|
1,862,754
|
|
|
$
|
(2,868,268
|
)
|
|
$
|
(107,364
|
)
|
|
Net
loss, nine months ended October 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(69,798
|
)
|
|
|
(69,798
|
)
|
|
Balance,
October 31, 2009
|
|
|
8,981,501,513
|
|
|
$
|
898,150
|
|
|
$
|
1,862,754
|
|
|
$
|
(2,938,066
|
)
|
|
$
|
(177,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
For
the Nine
|
|
|
For
the Nine
|
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
|
|
October
31, 2009
|
|
|
October
31, 2008
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(69,798
|
)
|
|
$
|
(12,160
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
|
|
Amortization
of debt discount
|
|
|
9,889
|
|
|
|
-
|
|
|
Change
in embedded conversion option liability
|
|
|
(2,505
|
)
|
|
|
-
|
|
|
Gain
on termination of debt
|
|
|
(3,475
|
)
|
|
|
-
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Decrease
in prepaid expenses
|
|
|
7,000
|
|
|
|
-
|
|
|
Increase
in accounts payable and accrued expenses
|
|
|
45,438
|
|
|
|
3,508
|
|
|
Net
cash used in operating activities
|
|
|
(13,451
|
)
|
|
|
(8,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Repayments
received from related party
|
|
|
-
|
|
|
|
11,568
|
|
|
Advances
to related party
|
|
|
-
|
|
|
|
(6,054
|
)
|
|
Net
cash provided by investing activities
|
|
|
-
|
|
|
|
5,514
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Advances
received from related party
|
|
|
13,686
|
|
|
|
-
|
|
|
Net
cash provided by financing activities
|
|
|
13,686
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash
|
|
|
235
|
|
|
|
(3,138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- beginning of period
|
|
|
62
|
|
|
|
3,806
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- end of period
|
|
$
|
297
|
|
|
$
|
668
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income
taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
1 – NATURE OF ORGANIZATION AND BASIS OF PRESENTATION
Nature
of Organization
Gold
Entertainment Group, Inc. (the “Company”) was originally incorporated in the
State of Nevada on February 3, 1999 under the name Advanced Medical
Technologies, Inc. The Company was organized formerly for the purpose
of establishing a multimedia internet-based communication network between the
healthcare industry manufacturers and the key base managers in the medical field
to advertise and promote the manufacturers products. As a result of
the abandonment of its patent rights and termination of its previous consulting
agreements, as of March 26, 2002, the Company decided not to pursue its previous
business plan involving multimedia internet bases. On March 26, 2002,
pursuant to the "Stock Exchange and Merger Agreement", the Company consummated a
"reverse acquisition" and changed its name to Gold Entertainment Group,
Inc. On August 28, 2007, the Company filed a certificate of
domestication with the State of Florida whereby the Company became a Florida
corporation. Simultaneously, the Company’s capital structure was
increased to 25,000,000,000 common shares having a par value of $0.0001 per
share and 50,000,000 preferred shares having no par value per
share.
The
Company was previously presented as a development stage
company. During May 2004 through April 2005, the Company was a
marketer of a national multi-level, fixed-price DVD rental program marketing its
products and programs exclusively through an independent network of
distributors. Accordingly, the Company exited the development stage
in May 2004 when it began operating in the DVD rental program. The
Company ceased this business in April 2005.
On
October 11, 2005, the Company filed with the State of Florida Articles of
Incorporation for Quality of Life Marketing, Inc., which became a wholly-owned
subsidiary of the Company. This subsidiary became inactive and,
therefore, the Company elected not to incur the costs of maintaining this
entity. As a result, on September 25, 2009, this subsidiary was
dissolved by the State of Florida.
In 2007,
the Company attempted to reposition itself in the music entertainment market,
specifically showcasing emerging talent. Also in 2007, the Company
formed, with two other entities, World Riddim International Music, LLC in which
the Company held a one-third interest. As the other two entities
failed to perform as agreed, the LLC was dissolved on September 26,
2008.
The
Company’s current business plan is primarily to serve as a vehicle for the
acquisition of or merger or consolidation with another company (a “target
business”). The Company intends to use its capital stock, debt, or a
combination of these to effect a business combination with a target business
which management believes has significant growth potential.
Basis
of Presentation
The
interim condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion
of the Company’s management, all adjustments (consisting of normal recurring
adjustments and reclassifications and non-recurring adjustments) necessary to
present fairly our results of operations and cash flows for the nine months
ended October 31, 2009 and 2008 and our financial position as of October 31,
2009 have been made. The results of operations for such interim
periods are not necessarily indicative of the operating results to be expected
for the full year.
Certain
information and disclosures normally included in the notes to the annual
consolidated financial statements have been condensed or omitted from these
interim consolidated financial statements. Accordingly, these interim
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the fiscal year
ended January 31, 2009. The January 31, 2009 balance sheet is derived
from those statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
2 – GOING CONCERN
As
reflected in the accompanying condensed consolidated financial statements, the
Company has net cash used in operations of $13,451 for the nine months ended
October 31, 2009, and an accumulated deficit of $2,938,066, stockholders’
deficiency of $177,162, and working capital deficit of $103,264 at October 31,
2009 and has been inactive with no revenues since April 2005. The
ability of the Company to continue as a going concern is dependent on the
Company’s ability to further implement its business plan and/or raise
capital. The Company plans to locate an operating company to merge
with or sell a controlling interest to a third party who would subsequently
merge an operating business into the Company. Management believes
that the actions presently being taken provide the opportunity for the Company
to continue as a going concern. The consolidated financial statements
do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
Use
of estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities and assets at the date of
the condensed consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from these estimates. Significant estimates include the
valuation of stock-based compensation, the valuation of discount on debt, the
valuation of derivative instruments, the valuation of debt guarantees, and the
valuation allowance on deferred tax assets.
Principals
of Consolidation
The
condensed consolidated financial statements include the accounts of Gold
Entertainment Group, Inc. and its wholly-owned subsidiary Quality of Life
Marketing, Inc. through September 25, 2009, the date this subsidiary was
dissolved by the State of Florida. All inter-company balances and
transactions have been eliminated in consolidation.
Cash
and Cash Equivalents
The
Company considers all short-term highly liquid investments with an original
maturity at the date of purchase of three months or less to be cash equivalents.
There were no cash equivalents at October 31, 2009 or January 31, 2009,
respectively.
Fair
Value Measurements
On
February 1, 2008, the Company adopted the provisions of the predecessor to
Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and
Disclosures”. All references to Topic 820 include the
predecessor. ASC Topic 820 defines fair value as used in numerous
accounting pronouncements, establishes a framework for measuring fair value and
expands disclosure of fair value measurements. In February 2008,
ASC Topic 820 was amended in order to delay the effective date of ASC Topic 820
for one year for certain nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). Excluded from
the scope of ASC Topic 820 are certain leasing transactions accounted for under
ASC Topic 840, “Leases.” The exclusion does not apply to fair value
measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
ASC Topic 820.
Accounting
for Derivatives
The
Company evaluates its options, warrants or other contracts to determine if those
contracts or embedded components of those contracts qualify as derivatives to be
separately accounted for under ASC Topic 815, “Derivatives and
Hedging”. The result of this accounting treatment is that the fair
value of the derivative is marked-to-market each balance sheet date and recorded
as a liability. In the event that the fair value is recorded as a
liability, the change in fair value is recorded in the statement of operations
as other income (expense). Upon conversion or exercise of a derivative
instrument, the instrument is marked to fair value at the conversion date and
then that fair value is reclassified to equity. Equity instruments
that are initially classified as equity that become subject to reclassification
under ASC Topic 815 are reclassified to a liability at the fair value of the
instrument on the reclassification date.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income
taxes
Current
income taxes are based on the year’s taxable income for federal and state income
tax reporting purposes. Deferred income taxes are provided on a
liability basis whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax law and
rates on the date of enactment.
Stock-Based
Compensation
Compensation
expense associated with the granting of stock based awards to employees and
directors and non-employees is recognized in accordance with ASC Topic 718,
“Compensation – Stock Compensation”. ASC Topic 718 requires companies to
estimate and recognize the fair value of stock-based awards to employees and
directors. The value of the portion of an award that is ultimately expected to
vest is recognized as an expense over the requisite service periods using the
straight-line attribution method.
Basic
and Diluted Net Loss Per Common Share
Basic net
loss per share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period. Diluted net
loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding for the period and, if dilutive,
potential common shares outstanding during the period. Potentially
dilutive securities consist of the incremental common shares issuable upon
exercise of stock options (using the treasury stock method) and convertible debt
instruments. Potentially dilutive securities are excluded from the
computation if their effect is anti-dilutive. Accordingly,
potentially dilutive securities for all periods presented have not been included
in the calculation of diluted net loss per common share as such effect would
have been anti-dilutive. As a result, the basic and diluted per share
amounts for all periods presented are identical.
Convertible
debt of $50,000 (convertible into 200,000,000 common shares) was outstanding
during the nine months ended October 31, 2009 and 2008, but was not included in
the computation of diluted net loss per share because the effects would have
been anti-dilutive. Convertible debt of $10,000 was outstanding
during the nine months ended October 31, 2009, but was not included in the
computation of diluted earnings per share because the debt is not yet
convertible until January 25, 2010. The convertible debt may dilute
future earnings per share.
Concentrations
of Credit Risk
Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash. The Company has not experienced any
losses in such accounts and believes it is not exposed to any risks on its cash
in bank accounts.
Recently
Issued Accounting Standards
In May
2009, the Financial Accounting Standards Board (“FASB”) issued an accounting
standard that became part of ASC Topic 855, “Subsequent Events”. ASC
Topic 855 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. ASC Topic 855 sets forth
(1) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (2) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. ASC Topic 855 is effective for
interim or annual financial periods ending after June 15, 2009. The
adoption of ASC Topic 855 did not have a material effect on the Company’s
financial statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently
Issued Accounting Standards (Continued)
In June
2009, the FASB issued an accounting standard whereby the FASB Accounting
Standards Codification (“Codification”) will be the single source of
authoritative nongovernmental U.S. generally accepted accounting
principles. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. ASC Topic 105 is effective for interim and annual
periods ending after September 15, 2009. All existing accounting
standards are superseded as described in ASC Topic 105. All other
accounting literature not included in the Codification is
non-authoritative. The Codification is not expected to have a
significant impact on the Company’s financial statements.
NOTE
4 – RELATED PARTY TRANSACTIONS
Due
(To) Related Party
From time
to time during the nine months ended October 31, 2009 and 2008, advances were
made to and from the Company’s current President (also a significant
stockholder) and an entity owned 100% by this individual (collectively, the
“related party”). These advances are short-term in nature,
non-interest bearing and are the primary source of funding for the
Company. For the nine months ended October 31, 2009 and 2008, the
activity with the related party consisted of the following:
|
|
|
For
the Nine Months Ended
|
|
|
For
the Nine Months Ended
|
|
|
|
|
October 31,
2009
|
|
|
October 31,
2008
|
|
|
Balance
due from (to) related party - Beginning
|
|
$
|
(1,344
|
)
|
|
$
|
14,045
|
|
|
Advances
made to related party
|
|
|
-
|
|
|
|
6,054
|
|
|
Proceeds
received from related party
|
|
|
(13,686
|
)
|
|
|
(11,568
|
)
|
|
Balance
due from (to) related party - Ending
|
|
$
|
(15,030
|
)
|
|
$
|
8,531
|
|
NOTE
5 – CONVERTIBLE NOTE PAYABLE AND PROMISSORY NOTE GUARANTEE
LIABILITY
Convertible
Note Payable
At
January 31, 2007, the Company was indebted to an individual (the “consultant”),
pursuant to both a patent license agreement and a consulting agreement, in the
amount of $222,000 bearing interest at 12% per annum. On March 1,
2007, the Company entered into a Note Purchase Agreement, whereby the Company
consented to the sale of this $222,000 debt to a third party (the
“investor”). In connection with the Note Purchase Agreement, on March
1, 2007, the Company modified the debt whereby the debt became a convertible
note (the “Note”) in the amount of $222,000. The Note accrued
interest during the first two years and at the beginning of year three, on March
1, 2009, the Note was supposed to begin being amortized with monthly payments of
principal and interest required in order to repay the loan in full by February
28, 2011. As of March 1, 2009, the Company became delinquent with
regards to the amortizing provision of the Note. On November 24,
2009, the Company and the investor entered into an addendum to the Note whereby
the amortizing requirement of the Note was removed effective March 1, 2009,
thereby curing the default. The noteholder is entitled, at his
option, at any time and in whole or in part, to convert the outstanding
principal amount of the Note, or any portion of the principal amount thereof,
and any accrued interest, into common shares of the Company. Any
amounts the noteholder elects to convert will be converted into common shares at
a conversion price which is the higher of (i) $0.00005 per share or (ii) fifty
percent (50%) of the five (5) day average closing bid price immediately prior to
the delivery of a notice of conversion to the Company. The embedded
conversion option did not qualify for derivative treatment and there was no
beneficial conversion feature value as the minimum conversion rate of $0.00005
exceeded the fair value of the Company’s common stock on the note
date. As of October 31, 2009 and January 31, 2009, the remaining
principal balance of the convertible note payable was $50,000. During
the nine months ended October 31, 2009 and 2008, interest expense of $4,488 and
$4,504, respectively, was recognized.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
5 – CONVERTIBLE NOTE PAYABLE AND PROMISSORY NOTE GUARANTEE LIABILITY
(Continued)
Promissory
Note Guarantee Liability
In
connection with the aforementioned Note Purchase Agreement whereby the
consultant assigned his receivable from the Company to the investor, the Company
guaranteed the payment due from the investor to the consultant. The
guarantee consists of free-trading common shares of the Company with a trading
value of not less than $20,000. As the due date for payment from the
investor to the consultant under the Note Purchase Agreement was May 7, 2007,
and the investor had not yet fully paid the consultant at that time, a
promissory note guarantee liability of $20,000, which represents the fair value
of the guarantee, was recognized accordingly. As of the date of this
report, the investor has not yet paid in full the consultant and, therefore, the
liability remains.
NOTE
6 – NOTE PAYABLE AND EMBEDDED CONVERSION OPTION LIABILITY
Note
Payable
On April
19, 2007, the Company entered into a six-month Consulting Agreement (the
“Agreement”) whereby the Company received investor and marketing relations in
exchange for: (i) $600,000 payable at the rate of $100,000 per month in the form
of free trading common shares of the Company with the first and last month’s
compensation due at the inception of the Agreement and (ii) a six-month option
to purchase $1,000,000 worth of free trading common shares of the Company at a
50% discount to market of the five (5) day average closing bid
price. As the option was exercisable immediately, stock-based
compensation of $614,000 was recognized with a corresponding increase in
additional paid-in capital. As of September 19, 2007, the Company had
recognized $600,000 of expense under the Agreement. During August and
November 2007, the Company issued an aggregate of 1,285,714,286 common shares to
settle an aggregate of $128,571 of the accrued liability, with the remaining
balance of $471,429 included in accounts payable and accrued expenses in the
consolidated balance sheet at January 31, 2008.
On
January 30, 2009, the Company and the consultant entered in a Release Agreement
whereby the remaining liability of $471,429 was replaced with a $10,000
promissory note payable (the “Note”). Accordingly, the Company
recognized a gain on settlement of accrued liabilities of
$461,429. The Note bears interest at 5% per annum and is payable
within ten (10) days of demand after the 90
th
day
following the issuance date of the Note. In addition, the Note
requires a repayment percentage equal to 1.5% of the outstanding principal
amount of the Note for each month, or portion thereof, the Note is
outstanding. Lastly, unless all outstanding amounts under the Note
have been paid or the Note has been previously converted, all amounts are due in
full upon the earlier of (i) the sale of the Company or (ii) two (2) years from
the issuance date of the Note.
At any
time that is 360 days following the issuance date of the Note, and from time to
time, the noteholder may convert all or any portion of the Note, together with
the repayment percentage, and accrued and unpaid interest, into common shares of
the Company. Any amounts the noteholder elects to convert will be
converted into common shares at a conversion price which is the lesser of (i)
the price that the common stock of the Company is trading at on the date of
conversion less a fifty percent (50%) discount to market or (ii) $0.0001 per
share. As of October 31, 2009, no portion of the Note has been
converted. As of October, 31, 2009, the remaining principal balance
of the convertible note payable was $10,000. During the nine months
ended October 31, 2009 and 2008, interest expense of $1,876 and $0,
respectively, was recognized.
Embedded
Conversion Option Liability
The
conversion feature of the aforementioned Note is deemed to be an embedded
conversion option liability that is required to be treated as a
derivative. At the issuance date of the Note, the fair value of the
embedded conversion option liability was $19,985, which was recorded as a
liability with a corresponding $10,000 discount to the Note and a $9,985 charge
to other expense. During the nine months ended October 31, 2009, the
remaining $9,889 of debt discount was amortized to interest
expense. As of October 31, 2009, the fair value of the embedded
conversion option liability was $17,480 and, accordingly, the $2,505 decrease in
fair value of the embedded conversion option liability during the nine months
ended October 31, 2009 has been recorded in the accompanying condensed
consolidated statement of operations as other income.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
7 – ACCRUED LIABILITIES – DISCONTINUED OPERATIONS
As
discussed in Note 1, the Company ceased operations in April 2005. As
of October 31, 2009, the remainder of the liabilities related to operations that
occurred prior to when the Company ceased operations were past the statute of
limitations. Accordingly, the Company has eliminated $3,475 of these
liabilities, which resulted in a corresponding gain on termination of
debt.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
Legal
Matters
From time
to time, we may be involved in litigation relating to claims arising out of our
operations in the normal course of business. As of October 31, 2009, there were
no pending or threatened lawsuits that could reasonably be expected to have a
material effect on the results of our operations.
There are
no proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.
NOTE
9 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The
Company’s financial instruments, including cash, note payable, accounts payable
and accrued expenses, and due from (to) related party are carried at historical
cost basis, which approximates their fair values because of the short-term
nature of these instruments. The carrying amount of the Company's
long-term debt approximates quoted market prices or current rates offered to the
Company for debt of the same remaining maturities.
On
February 1, 2009, we adopted a newly issued accounting standard for fair
value measurements of all nonfinancial assets and nonfinancial liabilities not
recognized or disclosed at fair value in the financial statements on a recurring
basis. The accounting standard for those assets and liabilities did
not have a material impact on our financial position, results of operations or
liquidity. We did not have any significant nonfinancial assets or
nonfinancial liabilities that would be recognized or disclosed at fair value on
a recurring basis as of October 31, 2009.
The
accounting standard for fair value measurements provides a framework for
measuring fair value and requires expanded disclosures regarding fair value
measurements. Fair value is defined as the price that would be
received for an asset or the exit price that would be paid to transfer a
liability in the principal or most advantageous market in an orderly transaction
between market participants on the measurement date. The accounting
standard established a fair value hierarchy which requires an entity to maximize
the use of observable inputs, where available. This hierarchy
prioritizes the inputs into three broad levels as follows. Level 1
inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities. Level 2 inputs are quoted prices for similar
assets and liabilities in active markets or inputs that are observable for the
asset or liability, either directly or indirectly through market corroboration,
for substantially the full term of the financial instrument. Level 3
inputs are unobservable inputs based on the Company’s own assumptions used to
measure assets and liabilities at fair value. A financial asset or
liability’s classification within the hierarchy is determined based on the
lowest level input that is significant to the fair value
measurement.
We
classify assets and liabilities measured at fair value in their entirety based
on the lowest level of input that is significant to their fair value
measurement. Assets and liabilities measured at fair value on a
recurring basis consisted of the following at October 31, 2009:
|
|
|
Total
Carrying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
at
|
|
|
Fair
Value Measurements at October 31, 2009
|
|
|
|
October
31,2009
|
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded
conversion option liability
|
|
$
|
17,480
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
17,480
|
|
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER
31, 2009 (UNAUDITED)
NOTE
9 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
The
Company estimates the fair value of the embedded conversion option liability
utilizing the Black-Scholes option pricing model, which is dependent upon
several variables such as the estimated conversion option term, expected
volatility of our stock price over the estimated conversion option term,
expected risk-free interest rate over the estimated conversion option term, and
the expected dividend yield rate over the estimated conversion option
term. The Company believes this valuation methodology is appropriate
for estimating the fair value of the embedded conversion option
liability. The following table summarizes the assumptions the Company
utilized to estimate the fair value of the embedded conversion option liability
at October 31, 2009:
|
Assumptions
|
|
January
31, 2008
|
|
|
Expected
life (years)
|
|
|
1.25
|
|
|
Expected
volatility
|
|
|
238.6
|
%
|
|
Risk-free
interest rate
|
|
|
0.37
|
%
|
|
Dividend
yield
|
|
|
0.00
|
%
|
The
expected life is based on the estimated conversion option term. The
expected volatility is based on historical volatility. The risk-free
interest rate is based on the U.S. Treasury yields with terms equivalent to the
expected life of the related conversion option at the time of the
valuation. Dividend yield is based on historical
trends. While the Company believes these estimates are reasonable,
the fair value would increase if a higher expected volatility was used, or if
the expected dividend yield increased.
There
were no changes in the valuation techniques during the nine months ended October
31, 2009.
NOTE
10 – SUBSEQUENT EVENTS
In
preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through November 30, 2009,
the date the financial statements were issued.
On
November 24, 2009, the Company and an investor entered into an addendum to a
convertible note that was previously delinquent, whereby the amortizing
requirement of the convertible note was removed effective March 1, 2009, thereby
curing the default (see Note 5).
Since
October 31, 2009, through November 30, 2009, a related party has contributed an
additional $8,000 to fund operations.
GOLD
ENTERTAINMENT
GROUP,
INC. AND SUBSIDIARY
CONSOLIDATED
FINANCIAL STATEMENTS
JANUARY
31, 2009
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-14
|
|
|
|
|
Consolidated
Balance Sheets as of January 31, 2009 and 2008
|
F-15
|
|
|
|
|
Consolidated
Statements of Operations for the years ended January 31, 2009 and
2008
|
F-16
|
|
|
|
Consolidated
Statements of Changes in Stockholders’ Deficiency for the years ended
January 31, 2009 and 2008
|
F-17
|
|
|
|
|
Consolidated
Statements of Cash Flows for the years ended January 31, 2009 and
2008
|
F-18
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
F-19
|
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors and Stockholders of:
Gold
Entertainment Group, Inc.
We have
audited the accompanying consolidated balance sheets of Gold Entertainment
Group, Inc. as of January 31, 2009 and 2008, and the related consolidated
statements of operations, changes in stockholders' deficiency, and cash flows
for the years ended January 31, 2009 and 2008. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Gold
Entertainment Group, Inc. as of January 31, 2009 and 2008, and the consolidated
results of its operations and its cash flows for the years ended January 31,
2009 and 2008, in conformity with accounting principles generally accepted in
the United States of America.
The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, the Company had cash used in operating
activities of $19,133 for the year ended January 31, 2009. Additionally, as of
January 31, 2009, the Company had a working capital deficit of $57,364, an
accumulated deficit of $2,868,268, a stockholders deficit of $107,364, and was
an inactive Company with no revenues and minimal cash. These matters
raise substantial doubt about the Company’s ability to continue as a going
concern. Management's plans as to these matters are also described in
Note 2. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ SALBERG & COMPANY,
P.A.
SALBERG
& COMPANY, P.A.
Boca
Raton, Florida
November
5, 2009
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
|
|
|
Janaury
31, 2009
|
|
|
Janaury
31, 2008
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
62
|
|
|
$
|
3,806
|
|
|
Prepaid
expenses
|
|
|
7,000
|
|
|
|
-
|
|
|
Due
from related party
|
|
|
-
|
|
|
|
14,045
|
|
|
Total
current assets
|
|
|
7,062
|
|
|
|
17,851
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
-
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
7,062
|
|
|
$
|
20,851
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Promissory
note guarantee liability
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
Embedded
conversion option liability
|
|
|
19,985
|
|
|
|
-
|
|
|
Accounts
payable and accrued expenses
|
|
|
19,510
|
|
|
|
484,917
|
|
|
Accrued
liabilities - discontinued operations
|
|
|
3,476
|
|
|
|
126,775
|
|
|
Due
to related party
|
|
|
1,344
|
|
|
|
-
|
|
|
Note
payable, net of $9,889 debt discount
|
|
|
111
|
|
|
|
-
|
|
|
Total
current liabilities
|
|
|
64,426
|
|
|
|
631,692
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
note payable
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Total
liabilities
|
|
|
114,426
|
|
|
|
681,692
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficiency:
|
|
|
|
|
|
|
|
|
|
Preferred
stock, no par value; 50,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
|
none
issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock, $0.0001 par value; 25,000,000,000 shares
authorized;
|
|
|
|
|
|
|
|
|
|
8,981,501,513
shares issued and outstanding
|
|
|
898,150
|
|
|
|
898,150
|
|
|
Additional
paid-in capital
|
|
|
1,862,754
|
|
|
|
1,862,754
|
|
|
Accumulated
deficit
|
|
|
(2,868,268
|
)
|
|
|
(3,421,745
|
)
|
|
Total
stockholders' deficiency
|
|
|
(107,364
|
)
|
|
|
(660,841
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' deficiency
|
|
$
|
7,062
|
|
|
$
|
20,851
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
For
the Year Ended
|
|
|
For
the Year Ended
|
|
|
|
|
Janaury
31, 2009
|
|
|
Janaury
31, 2008
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
General
and administrative (includes stock-based compensation
|
|
|
|
|
|
|
expense
of $0 and $745,105, respectively)
|
|
|
14,237
|
|
|
|
1,352,593
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
14,237
|
|
|
|
1,352,593
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(14,237
|
)
|
|
|
(1,352,593
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Gain
on settlement of accrued liabilities
|
|
|
461,429
|
|
|
|
-
|
|
|
Gain
on termination of debt
|
|
|
123,300
|
|
|
|
-
|
|
|
Interest
expense
|
|
|
(7,030
|
)
|
|
|
(12,492
|
)
|
|
Change
in embedded conversion option liability
|
|
|
(9,985
|
)
|
|
|
-
|
|
|
Loss
on conversion of debt to equity
|
|
|
-
|
|
|
|
(64,615
|
)
|
|
Total
other income (expense)
|
|
|
567,714
|
|
|
|
(77,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
553,477
|
|
|
$
|
(1,429,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) per share - basic and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic
|
|
|
8,981,501,513
|
|
|
|
6,330,843,979
|
|
|
Weighted
average shares outstanding - diluted
|
|
|
10,181,501,513
|
|
|
|
6,330,843,979
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
FOR
THE YEARS ENDED JANUARY 31, 2009 AND 2008
|
|
|
|
|
|
|
|
|
Additional
Paid-in
|
|
|
|
|
|
Total
Stockholders'
|
|
|
|
|
Common
Stock
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Par
Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficiency
|
|
|
Balance,
January 31, 2007
|
|
|
141,501,513
|
|
|
$
|
14,150
|
|
|
$
|
1,643,344
|
|
|
$
|
(1,992,045
|
)
|
|
$
|
(334,551
|
)
|
|
Conversions
of notes payable
|
|
|
3,440,000,000
|
|
|
|
344,000
|
|
|
|
(107,385
|
)
|
|
|
-
|
|
|
|
236,615
|
|
|
Contributed
capital
|
|
|
-
|
|
|
|
-
|
|
|
|
100,710
|
|
|
|
-
|
|
|
|
100,710
|
|
|
Conversions
of related party payable
|
|
|
3,250,000,000
|
|
|
|
325,000
|
|
|
|
(314,020
|
)
|
|
|
-
|
|
|
|
10,980
|
|
|
Common
shares issed for services
|
|
|
2,035,714,286
|
|
|
|
203,571
|
|
|
|
(72,466
|
)
|
|
|
-
|
|
|
|
131,105
|
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
614,000
|
|
|
|
-
|
|
|
|
614,000
|
|
|
Common
shares issed for cash
|
|
|
114,285,714
|
|
|
|
11,429
|
|
|
|
(1,429
|
)
|
|
|
-
|
|
|
|
10,000
|
|
|
Net
loss for the year ended January 31, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,429,700
|
)
|
|
|
(1,429,700
|
)
|
|
Balance,
January 31, 2008
|
|
|
8,981,501,513
|
|
|
|
898,150
|
|
|
|
1,862,754
|
|
|
|
(3,421,745
|
)
|
|
|
(660,841
|
)
|
|
Net
income for the year ended January 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
553,477
|
|
|
|
553,477
|
|
|
Balance,
January 31, 2009
|
|
|
8,981,501,513
|
|
|
$
|
898,150
|
|
|
$
|
1,862,754
|
|
|
$
|
(2,868,268
|
)
|
|
$
|
(107,364
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
For
the Year Ended
|
|
|
For
the Year Ended
|
|
|
|
|
Janaury
31, 2009
|
|
|
Janaury
31, 2008
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
553,477
|
|
|
$
|
(1,429,700
|
)
|
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
|
|
Change
in embedded conversion option liability
|
|
|
9,985
|
|
|
|
-
|
|
|
Amortization
of debt discount
|
|
|
111
|
|
|
|
-
|
|
|
Gain
on termination of debt
|
|
|
(123,300
|
)
|
|
|
-
|
|
|
Gain
on settlement of accrued liabilities
|
|
|
(461,429
|
)
|
|
|
-
|
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
614,000
|
|
|
Common
stock issued for services
|
|
|
-
|
|
|
|
131,105
|
|
|
Contributed
capital
|
|
|
-
|
|
|
|
100,710
|
|
|
Loss
on debt conversion
|
|
|
-
|
|
|
|
64,615
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Increase
in prepaid expenses
|
|
|
(7,000
|
)
|
|
|
-
|
|
|
Decrease
(increase) in deposit
|
|
|
3,000
|
|
|
|
(3,000
|
)
|
|
Increase
in promissory note guarantee liability
|
|
|
-
|
|
|
|
20,000
|
|
|
Increase
in accounts payable and accrued expenses
|
|
|
6,023
|
|
|
|
484,917
|
|
|
Net
cash used in operating activities
|
|
|
(19,133
|
)
|
|
|
(17,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Repayments
received from related party
|
|
|
14,045
|
|
|
|
18,949
|
|
|
Advances
to related party
|
|
|
-
|
|
|
|
(7,940
|
)
|
|
Net
cash provided by investing activities
|
|
|
14,045
|
|
|
|
11,009
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from common shares issued for cash
|
|
|
-
|
|
|
|
10,000
|
|
|
Repayments
of advances to related party
|
|
|
(7,047
|
)
|
|
|
-
|
|
|
Advances
received from related party
|
|
|
8,391
|
|
|
|
-
|
|
|
Net
cash provided by financing activities
|
|
|
1,344
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash
|
|
|
(3,744
|
)
|
|
|
3,656
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- beginning of year
|
|
|
3,806
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- end of year
|
|
$
|
62
|
|
|
$
|
3,806
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income
taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Settlement
of accrued liability for note payable
|
|
$
|
10,000
|
|
|
$
|
-
|
|
|
Recognition
of embedded conversion option liability as debt discount
|
|
$
|
10,000
|
|
|
$
|
-
|
|
|
Notes
payable converted to common shares
|
|
$
|
-
|
|
|
$
|
172,000
|
|
|
Accrued
liabilities converted to common shares
|
|
$
|
-
|
|
|
$
|
10,980
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
1 – NATURE OF ORGANIZATION
Gold
Entertainment Group, Inc. (the “Company”) was originally incorporated in the
State of Nevada on February 3, 1999 under the name Advanced Medical
Technologies, Inc. The Company was organized formerly for the purpose
of establishing a multimedia internet-based communication network between the
healthcare industry manufacturers and the key base managers in the medical field
to advertise and promote the manufacturers products. As a result of
the abandonment of its patent rights and termination of its previous consulting
agreements, as of March 26, 2002, the Company decided not to pursue its previous
business plan involving multimedia internet bases. On March 26, 2002,
pursuant to the "Stock Exchange and Merger Agreement", the Company consummated a
"reverse acquisition" and changed its name to Gold Entertainment Group,
Inc. On August 28, 2007, the Company filed a certificate of
domestication with the State of Florida whereby the Company became a Florida
corporation. Simultaneously, the Company’s capital structure was
increased to 25,000,000,000 common shares having a par value of $0.0001 per
share and 50,000,000 preferred shares having no par value per
share.
The
Company was previously presented as a development stage
company. During May 2004 through April 2005, the Company was a
marketer of a national multi-level, fixed-price DVD rental program marketing its
products and programs exclusively through an independent network of
distributors. Accordingly, the Company exited the development stage
in May 2004 when it began operating in the DVD rental program. The
Company ceased this business in April 2005.
On
October 11, 2005, the Company filed with the State of Florida Articles of
Incorporation for Quality of Life Marketing, Inc., which became a wholly-owned
subsidiary of the Company. This subsidiary became inactive and,
therefore, the Company elected not to incur the costs of maintaining this
entity. As a result, on September 25, 2009, this subsidiary was
dissolved by the State of Florida.
In 2007,
the Company attempted to reposition itself in the music entertainment market,
specifically showcasing emerging talent. Also in 2007, the Company
formed, with two other entities, World Riddim International Music, LLC in which
the Company held a one-third interest. As the other two entities
failed to perform as agreed, the LLC was dissolved on September 26,
2008.
The
Company’s current business plan is primarily to serve as a vehicle for the
acquisition of or merger or consolidation with another company (a “target
business”). The Company intends to use its capital stock, debt, or a
combination of these to effect a business combination with a target business
which management believes has significant growth potential.
NOTE
2 – GOING CONCERN
As
reflected in the accompanying consolidated financial statements, the Company has
net cash used in operations of $19,133 for the year ended January 31, 2009, and
an accumulated deficit of $2,868,268, stockholders’ deficiency of $107,364, and
working capital deficit of $57,364 at January 31, 2009 and has been inactive
with no revenues since April 2005. The ability of the Company to
continue as a going concern is dependent on the Company’s ability to further
implement its business plan and/or raise capital. The Company plans
to locate an operating company to merge with or sell a controlling interest to a
third party who would subsequently merge an operating business into the
Company. Management believes that the actions presently being taken
provide the opportunity for the Company to continue as a going
concern. The consolidated financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
Use
of estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities and assets at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from these estimates. Significant estimates include the valuation of
stock-based compensation, the valuation of discount on debt, the valuation of
derivative instruments, the valuation of debt guarantees, and the valuation
allowance on deferred tax assets.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principals
of Consolidation
The
consolidated financial statements include the accounts of Gold Entertainment
Group, Inc. and its wholly-owned subsidiary Quality of Life Marketing,
Inc. All inter-company balances and transactions have been eliminated
in consolidation.
Cash
and Cash Equivalents
The
Company considers all short-term highly liquid investments with an original
maturity at the date of purchase of three months or less to be cash equivalents.
There were no cash equivalents at January 31, 2009 or 2008,
respectively.
Fair
Value of Financial Instruments
The
Company’s financial instruments, including cash, note payable, accounts payable
and accrued expenses, and due from (to) related party are carried at historical
cost basis, which approximates their fair values because of the short-term
nature of these instruments. The carrying amount of the Company's
long-term debt approximates quoted market prices or current rates offered to the
Company for debt of the same remaining maturities.
Fair
Value
On
January 1, 2008, the Company adopted the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 157, “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value as used
in numerous accounting pronouncements, establishes a framework for measuring
fair value and expands disclosure of fair value measurements. In
February 2008, the Financial Accounting Standards Board (“FASB”) issued
FASB Staff Position, “FSP FAS 157-2—Effective Date of FASB Statement
No. 157” (“FSP 157-2”), which delays the effective date of SFAS 157 for one
year for certain nonfinancial assets and nonfinancial liabilities, except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). Excluded from the scope of SFAS
157 are certain leasing transactions accounted for under SFAS No. 13,
“Accounting for Leases.” The exclusion does not apply to fair value
measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
SFAS 157.
Accounting
for Derivatives
The
Company evaluates its options, warrants or other contracts to determine if those
contracts or embedded components of those contracts qualify as derivatives to be
separately accounted for under Statement of Financial Accounting Standards 133
“Accounting for Derivative Instruments and Hedging Activities” and related
interpretations including EITF 00-19 “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”
(“EITF 00-19”) and EITF Issue No. 07-5, “Determining Whether an Instrument (or
Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF
07-5”). The result of this accounting treatment is that the fair
value of the derivative is marked-to-market each balance sheet date and recorded
as a liability. In the event that the fair value is recorded as a
liability, the change in fair value is recorded in the statement of operations
as Other income (expense). Upon conversion or exercise of a derivative
instrument, the instrument is marked to fair value at the conversion date and
then that fair value is reclassified to equity. Equity instruments
that are initially classified as equity that become subject to reclassification
under SFAS 133 are reclassified to liability at the fair value of the instrument
on the reclassification date.
Income
taxes
Current
income taxes are based on the year’s taxable income for federal and state income
tax reporting purposes. Deferred income taxes are provided on a
liability basis whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax law and
rates on the date of enactment.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income
taxes (Continued)
In June
2006, the FASB issued SFASB Interpretation No. 48, “Accounting for Uncertainty
in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN
48”). This statement clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48, which is effective for fiscal years beginning
after December 15, 2006, also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The Company believes its tax positions
are all highly certain of being upheld upon examination. As such, the
Company has not recorded a liability for
unrecognized
tax benefits. As of January 31, 2009, the tax years 2006 through 2008
remain open for IRS audit. The Company has received no notice of
audit from the Internal Revenue Service for any of the open tax
years. The adoption of the provisions of FIN 48 did not have a
material impact on our financial position and results of
operations.
On May 2,
2007, the FASB issued FASB Staff Position FIN 48-1, Definition of Settlement in
FASB Interpretation No. 48, (“FSP FIN 48-1”). FSP FIN 48-1 amends FIN
48 to provide guidance on how an entity should determine whether a tax position
is effectively settled for the purpose of recognizing previously unrecognized
tax benefits. The term “effectively settled” replaces the term
“ultimately settled” when used to describe recognition, and the terms
“settlement” or “settled” replace the terms “ultimate settlement” or “ultimately
settled” when used to describe measurement of a tax position under FIN
48. FSP FIN 48-1 clarifies that a tax position can be effectively
settled upon the completion of an examination by a taxing authority without
being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the
tax position is not considered more likely than not to be sustained based solely
on the basis of its technical merits and the statute of limitations remains
open. The adoption of FSP FIN 48-1 did not have an impact on the
accompanying consolidated financial statements.
Stock-Based
Compensation
Compensation
expense associated with the granting of stock based awards to employees and
directors and non-employees is recognized in accordance with SFAS No.
123(R), “Share Based Payment” and related interpretations. SFAS No. 123(R)
requires companies to estimate and recognize the fair value of stock-based
awards to employees and directors. The value of the portion of an award that is
ultimately expected to vest is recognized as an expense over the requisite
service periods using the straight-line attribution method.
Basic
and Diluted Net Loss Per Common Share
Basic net
loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding for the period. Diluted
net loss per common share is computed using the weighted average number of
common shares outstanding for the period, and, if dilutive, potential common
shares outstanding during the period. Potential common shares consist
of the incremental common shares issuable upon the exercise of stock options,
stock warrants, convertible debt instruments or other common stock
equivalents.
Concentrations
of Credit Risk
Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash. The Company has not experienced any
losses in such accounts and believes it is not exposed to any risks on its cash
in bank accounts.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently
Issued Accounting Standards
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair
Value Measurements” (“SFAS 157”), which is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. SFAS 157 defines fair value as used
in numerous accounting pronouncements, establishes a framework for measuring
fair value and expands disclosure of fair value measurements. In
February 2008, the FASB issued FASB Staff Position, “FSP FAS
157-2—Effective Date of FASB Statement No. 157” (“FSP 157-2”), which delays
the effective date of SFAS 157 for one year for certain nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least
annually). Excluded from the scope of SFAS 157 are certain leasing
transactions accounted for under SFAS No. 13, “Accounting for
Leases.” The exclusion does not apply to fair value measurements of
assets and liabilities recorded as a result of a lease transaction but measured
pursuant to other pronouncements within the scope of SFAS 157. The
Company does not believe the adoption of SFAS 157, on February 1, 2008, had a
material impact on its consolidated financial position, cash flows or results of
operations.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities — Including an amendment of FASB
Statement No. 115.”, which is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007 SFAS No. 159 permits
all entities to choose to measure and report many financial instruments and
certain other items at fair value at specified election dates. If
such an election is made, any unrealized gains and losses on items for which the
fair value option has been elected are required to be reported in earnings at
each subsequent reporting date. In addition, SFAS No. 159 establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. The Company does not believe the adoption
of SFAS 159, on February 1, 2008, had a material impact on its consolidated
financial position, cash flows or results of operations.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements” (“SFAS 160”), which is effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. This Statement amends Accounting Research
Bulletin No. 51, “Consolidated Financial Statements,” to establish
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
required to be adopted simultaneously with SFAS 141R. The Company
does not currently have any non-controlling interests in its subsidiaries, and
accordingly, the Company does not believe the adoption of SFAS 160, effective
February 1, 2009, shall have a material impact on its consolidated financial
position, cash flows or results of operations.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities” (“SFAS 161”), which is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. SFAS 161 requires enhanced disclosures about an entity’s
derivative and hedging activities and thereby improves the transparency of
financial reporting. It is intended to enhance the current disclosure
framework in SFAS 133 by requiring that objectives for using derivative
instruments be disclosed in terms of underlying risk and accounting
designation. This disclosure better conveys the purpose of derivative
use in terms of the risks that the entity is intending to manage. The
Statement encourages, but does not require, comparative disclosures for earlier
periods at initial adoption. The Company does not believe the
adoption of SFAS 161, effective February 1, 2009, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles,” which is effective 60 days following the SEC’s approval
of the Public CompanyAccounting Oversight Board amendments to AU Section 411,
“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles”. This standard reorganizes the GAAP hierarchy in order to
improve financial reporting by providing a consistent framework for determining
what accounting principles should be used when preparing U.S. GAAP financial
statements. The Company is currently evaluating the impact, if any,
this new standard will have on its consolidated financial position, cash flows
and results of operations.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently
Issued Accounting Standards (Continued)
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts, an interpretation of FASB Statement No. 60.”, which is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and all interim periods within those fiscal
years. The scope of SFAS 163 is limited to financial guarantee
insurance (and reinsurance) contracts, as described in this Statement, issued by
enterprises included within the scope of Statement 60. Accordingly, SFAS 163
does not apply to financial guarantee contracts issued by enterprises excluded
from the scope of Statement 60 or to some insurance contracts that seem similar
to financial guarantee insurance contracts issued by insurance enterprises (such
as mortgage guaranty insurance or credit insurance on trade receivables). SFAS
163 also does not apply to financial guarantee insurance contracts that are
derivative instruments included within the scope of FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” The Company does
not believe the adoption of SFAS 163, effective February 1, 2009, shall have a
material impact on its consolidated financial position, cash flows or results of
operations.
In June
2008, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-5,
Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity’s Own Stock (“EITF 07-5”), which is effective for fiscal years ending
after December 15, 2008, with earlier application not permitted by entities that
has previously adopted an alternative accounting policy. The adoption of
EITF 07-5’s requirements will affect accounting for convertible instruments and
warrants with provisions that protect holders from declines in the stock price
(“round-down” provisions). Warrants with such provisions will no longer be
recorded in equity. EITF 07-5 guidance is to be applied to outstanding
instruments as of the beginning of the fiscal year in which the Issue is
applied. The cumulative effect of the change in accounting principle shall
be recognized as an adjustment to the opening balance of retained earnings (or
other appropriate components of equity) for that fiscal year, presented
separately. The cumulative-effect adjustment is the difference between the
amounts recognized in the statement of financial position before initial
application of this Issue and the amounts recognized in the statement of
financial position at initial application of this Issue. The amounts
recognized in the statement of financial position as a result of the initial
application of this Issue shall be determined based on the amounts that would
have been recognized if the guidance in this Issue had been applied from the
issuance date of the instrument. The Company implemented this standard on
February 1, 2008.
In May
2009, the FASB issued SFAS No. 165 “Subsequent Events” (“SFAS 165”), which is
effective for interim or annual financial periods ending after June 15,
2009. SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS
165 sets forth (1) the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. The Company does not believe
the adoption of SFAS 165, effective August 1, 2009, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In June
2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“SFAS 166”), which is effective
as of the beginning of each reporting entity’s first annual reporting period
that begins after November 15, 2009. SFAS 166 improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. The Company does not believe the
adoption of SFAS 166, effective February 1, 2010, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”), which is effective as of the beginning of each reporting entity’s
first annual reporting period that begins after November 15,
2009. SFAS 167 improves financial reporting by enterprises involved
with variable interest entities and to address (1) the effects on certain
provisions of FASB Interpretation No. 46 (revised December 2003), “Consolidation
of Variable Interest Entities”, as a result of the elimination of the qualifying
special-purpose entity concept in SFAS 166 and (2) constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprise’s involvement
in a variable interest entity. The Company does not believe the
adoption of SFAS 167, effective February 1, 2010, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently
Issued Accounting Standards (Continued)
In June
2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162”, which is effective for financial statements issued for
interim and annual periods ending after September 15, 2009. The FASB
Accounting Standards Codification (“Codification”) will be the single source of
authoritative nongovernmental U.S. generally accepted accounting
principles. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. All existing accounting standards are superseded as
described in SFAS 168. All other accounting literature not included
in the Codification is nonauthoritative. The Company does not believe
the adoption of SFAS 168, effective August 1, 2009, shall have a material impact
on its consolidated financial position, cash flows or results of
operations.
NOTE
4 – RELATED PARTY TRANSACTIONS
Due From
(To) Related Party
From time
to time during the years ended January 31, 2009 and 2008, advances were made to
and from the Company’s current President (also a significant stockholder) and an
entity owned 100% by this individual (collectively, the “related
party”). These advances are short-term in nature, non-interest
bearing and were the primary source of funding for the Company in fiscal 2008
and 2009. For the years ended January 31, 2009 and 2008, the activity
with the related party consisted of the following:
|
|
|
For
the Year Ended
|
|
|
For
the Year Ended
|
|
|
|
|
January
31, 2009
|
|
|
January
31, 2008
|
|
|
Balance
due from (to) related party - Beginning
|
|
$
|
14,045
|
|
|
$
|
14,074
|
|
|
Advances
made to related party
|
|
|
7,047
|
|
|
|
7,940
|
|
|
Proceeds
received from related party
|
|
|
(22,436
|
)
|
|
|
(18,949
|
)
|
|
Conversions
to common shares
|
|
|
-
|
|
|
|
10,980
|
|
|
Balance
due from (to) related party - Ending
|
|
$
|
(1,344
|
)
|
|
$
|
14,045
|
|
NOTE
5 – CONVERTIBLE NOTE PAYABLE AND PROMISSORY NOTE GUARANTEE
LIABILITY
Convertible
Note Payable
At
January 31, 2007, the Company was indebted to an individual (the “consultant”),
pursuant to both a patent license agreement and a consulting agreement, in the
amount of $222,000 bearing interest at 12% per annum. On March 1,
2007, the Company entered into a Note Purchase Agreement, whereby the Company
consented to the sale of this $222,000 debt to a third party (the
“investor”). In connection with the Note Purchase Agreement, on March
1, 2007, the Company modified the debt whereby the debt became a convertible
note (the “Note”) in the amount of $222,000. The Note accrues
interest during the first two years and at the beginning of year three, on March
1, 2009, the Note shall be amortized with monthly payments of principal and
interest required in order to repay the loan in full by February 28,
2011. As of March 1, 2009, the Company became delinquent with regards
to the amortizing provision of the Note (See Note 12). The noteholder
is entitled, at his option, at any time and in whole or in part, to convert the
outstanding principal amount of the Note, or any portion of the principal amount
thereof, and any accrued interest, into common shares of the
Company. Any amounts the noteholder elects to convert will be
converted into common shares at a conversion price which is the higher of (i)
$0.00005 per share or (ii) fifty percent (50%) of the five (5) day average
closing bid price immediately prior to the delivery of a notice of conversion to
the Company. The embedded conversion option did not qualify for
derivative treatment and there was no beneficial conversion feature value as the
minimum conversion rate of $0.00005 exceeded the fair value of the Company’s
common stock on the note date. During the year ended January 31,
2008, the noteholder converted $236,615 of the principal balance into
3,440,000,000 common shares. The Company calculated an incorrect
conversion price for one of the conversions and, as a result, the Company issued
too many shares for said conversion. Accordingly, a loss on
conversion of $64,615 was recognized based on the excess number of shares issued
at the market price of the Company’s common stock. As of January, 31,
2009 and 2008, the remaining principal balance of the convertible note payable
was $50,000. During the years ended January 31, 2009 and 2008,
interest expense of $6,919 and $12,492, respectively, was
recognized.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
5 – CONVERTIBLE NOTE PAYABLE AND PROMISSORY NOTE GUARANTEE LIABILITY
(Continued)
Promissory
Note Guarantee Liability
In
connection with the aforementioned Note Purchase Agreement whereby the
consultant assigned his receivable from the Company to the investor, the Company
guaranteed the payment due from the investor to the consultant. The
guarantee consists of free-trading common shares of the Company with a trading
value of not less than $20,000. As the due date for payment from the
investor to the consultant under the Note Purchase Agreement was May 7, 2007,
and the investor had not yet fully paid the consultant at that time, a
promissory note guarantee liability of $20,000, which represents the fair value
of the guarantee, was recognized accordingly. As of the date of this
report, the investor has not yet paid in full the consultant and, therefore, the
liability remains.
NOTE
6 – NOTE PAYABLE AND EMBEDDED CONVERSION OPTION LIABILITY
Note
Payable
On April
19, 2007, the Company entered into a six-month Consulting Agreement (the
“Agreement”) whereby the Company received investor and marketing relations in
exchange for: (i) $600,000 payable at the rate of $100,000 per month in the form
of free trading common shares of the Company with the first and last month’s
compensation due at the inception of the Agreement and (ii) a six-month option
to purchase $1,000,000 worth of free trading common shares of the Company at a
50% discount to market of the five (5) day average closing bid
price. As the option was exercisable immediately, stock-based
compensation of $614,000 was recognized with a corresponding increase in
additional paid-in capital (See Note 9). As of September 19, 2007,
the Company had recognized $600,000 of expense under the
Agreement. During August and November 2007, the Company issued an
aggregate of 1,285,714,286 common shares to settle an aggregate of $128,571 of
the accrued liability, with the remaining balance of $471,429 included in
accounts payable and accrued expenses in the accompanying consolidated balance
sheet at January 31, 2008.
On
January 30, 2009, the Company and the consultant entered in a Release Agreement
whereby the remaining liability of $471,429 was replaced with a $10,000
promissory note payable (the “Note”). Accordingly, the Company
recognized a gain on settlement of accrued liabilities of
$461,429. The Note bears interest at 5% per annum and is payable
within ten (10) days of demand after the 90
th
day
following the issuance date of the Note. The Company is currently in
default on this note (See Note 12). In addition, the Note requires a
repayment percentage equal to 1.5% of the outstanding principal amount of the
Note for each month, or portion thereof, the Note is
outstanding. Lastly, unless all outstanding amounts under the Note
have been paid or the Note has been previously converted, all amounts are due in
full upon the earlier of (i) the sale of the Company or (ii) two (2) years from
the issuance date of the Note.
At any
time that is 360 days following the issuance date of the Note, and from time to
time, the noteholder may convert all or any portion of the Note, together with
the repayment percentage, and accrued and unpaid interest, into common shares of
the Company. Any amounts the noteholder elects to convert will be
converted into common shares at a conversion price which is the lesser of (i)
the price that the common stock of the Company is trading at on the date of
conversion less a fifty percent (50%) discount to market or (ii) $0.0001 per
share. As of January 31, 2009, no portion of the Note has been
converted. As of January, 31, 2009, the remaining principal balance
of the convertible note payable was $10,000.
Embedded
Conversion Option Liability
The
conversion feature of the aforementioned Note is deemed to be an embedded
conversion option liability that is required to be treated as a
derivative. At the issuance date of the Note, the fair value of the
embedded conversion option liability was $10,000, which was recorded as a
liability with a corresponding discount to the Note. During the year ended
January 31, 2009, $111 of the debt discount has been amortized to interest
expense. As of January 31, 2009, the fair value of the embedded
conversion option liability was $19,985, and accordingly, the $9,985 change
in fair value of the embedded conversion option liability during the year ended
January 31, 2009, has been recorded in the accompanying consolidated statement
of operations as other income (expense).
NOTE
7 – ACCRUED LIABILITIES – DISCONTINUED OPERATIONS
As
discussed in Note 1, the Company ceased operations in April 2005. As
of January 31, 2009, a portion of the liabilities related to operations that
occurred prior to when the Company ceased operations were past the statute of
limitations. Accordingly, the Company has eliminated $123,300 of
these liabilities, which resulted in a corresponding gain on termination of
debt.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
8 – COMMITMENTS AND CONTINGENCIES
Legal
Matters
From time
to time, we may be involved in litigation relating to claims arising out of our
operations in the normal course of business. As of January 31, 2009, there were
no pending or threatened lawsuits that could reasonably be expected to have a
material effect on the results of our operations.
There are
no proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.
NOTE
9 – STOCKHOLDERS’ DEFICIENCY
Par
Value
On August
27, 2007, the Company changed the par value of its common stock to $0.0001 per
share. All share information has been retroactively restated
accordingly.
Common
Stock Issuances
On March
5, 2007, $70,000 of the principal balance of the convertible note payable was
converted into 1,400,000,000 common shares.
On March
7, 2007, the Company’s current President (also a principal stockholder) and an
entity owned 100% by this individual (collectively, the “related party”)
converted $10,980 of amounts due from the Company into 3,250,000,000 common
shares.
On March
7, 2007, the Company issued 500,000,000 common shares to a consultant for
services rendered. Accordingly, the Company recognized $1,689 of
expense with a corresponding increase in common stock of $50,000 and a decrease
in additional paid-in capital of $48,311.
On March
7, 2007, the Company issued 250,000,000 common shares to the Company’s Chief
Executive Officer for services rendered. Accordingly, the Company
recognized $845 of expense with a corresponding increase in common stock of
$25,000 and a decrease in additional paid-in capital of $24,155.
On March
29, 2007, $20,000 of the principal balance of the convertible note payable was
converted into 400,000,000 common shares. The Company calculated an
incorrect conversion price for this conversion and, as a result, the Company
issued too many shares for this conversion. Accordingly, a loss on
conversion of $64,615 was recognized based on the excess number of shares issued
at the market price of the Company’s common stock.
On April
17, 2007, $29,500 of the principal balance of the convertible note payable was
converted into 590,000,000 common shares.
On August
31, 2007, the Company issued 114,285,714 common shares in exchange for $10,000
cash.
On August
31, 2007, the Company issued 585,714,286 common shares as compensation for
$58,571 of services rendered under a consulting agreement.
On
November 29, 2007, the Company issued 700,000,000 common shares as compensation
for $70,000 of services rendered under a consulting agreement.
On
January 3, 2008, $52,500 of the principal balance of the convertible note
payable was converted into 1,050,000,000 common shares.
Since the
Company’s common stock was very thinly traded and no reliable quotation was
available, the Company’s best estimate of fair value of its common stock in
March 2007 was the $15,000 price a third party investor paid a noteholder to
purchase a $222,000 promissory note that became convertible immediately into
4,440,000,000 common shares ($0.00000338 per share). Common shares
issued for services after March 2007 were valued at the quoted trading price on
the grant date.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
9 – STOCKHOLDERS’ DEFICIENCY (Continued)
Contributed
Capital
On March
5, 2007, the noteholder of the convertible note payable contributed $12,500 cash
for working capital purposes.
On March
5, 2007, the noteholder of the convertible note payable paid 950,000,000 of his
common shares on behalf of the Company for services rendered to the
Company. Accordingly, the Company recognized $3,210 of expense, which
was treated as contributed capital.
On April
17, 2007, the noteholder of the convertible note payable paid 300,000,000 of his
common shares on behalf of the Company for services rendered to the
Company. Accordingly, the Company recognized $60,000 of expense,
which was treated as contributed capital.
On
January 3, 2008, the noteholder of the convertible note payable paid 250,000,000
of his common shares on behalf of the Company for services rendered to the
Company. Accordingly, the Company recognized $25,000 of expense,
which was treated as contributed capital.
Services
contributed by any officers during fiscal 2009 and 2008 were
deminimus.
Stock
Options
On April
19, 2007, the Company granted to a consultant a six-month option to
purchase $1,000,000 worth of free trading common shares of the Company at a 50%
discount to market of the five (5) day average closing bid price. The
fair value of the option was $614,000, which was recognized immediately as
stock-based compensation with a corresponding increase in additional paid-in
capital as the option was exercisable upon inception of the
contract.
The
Company estimates the fair value of stock-based compensation utilizing the
Black-Scholes option pricing model, which is dependent upon several variables
such as the expected option term, expected volatility of our stock price over
the expected term, expected risk-free interest rate over the expected option
term, expected dividend yield rate over the expected option term, and an
estimate of expected forfeiture rates. The Company believes this
valuation methodology is appropriate for estimating the fair value of stock
options granted to employees and directors which are subject to SFAS 123R
requirements. These amounts are estimates and thus may not be
reflective of actual future results, nor amounts ultimately realized by
recipients of these grants. No stock options were issued during the
year ended January 31, 2009. The following table summarizes the
assumptions the Company utilized to record compensation expense for stock
options granted during the year ended January 31, 2008:
|
|
|
For
the Year Ended
|
|
|
Assumptions
|
|
January
31, 2008
|
|
|
Expected
life (years)
|
|
|
0.5
|
|
|
Expected
volatility
|
|
|
150
|
%
|
|
Risk-free
interest rate
|
|
|
4.84
|
%
|
|
Dividend
yield
|
|
|
0.00
|
%
|
The
expected volatility for the year ended January 31, 2008 is based on comparative
companies since the Company’s common stock was very thinly traded and the quoted
market price was not reliably measurable. The expected life is equal
to the contractual life for non-employee contracts. The risk-free
interest rate is based on the U.S. Treasury yields with terms equivalent to the
expected life of the related option at the time of the
grant. Dividend yield is based on historical trends. While
the Company believes these estimates are reasonable, the compensation expense
recorded would increase if the expected life was increased, a lower expected
volatility was used, or if the expected dividend yield increased.
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
9 – STOCKHOLDERS’ DEFICIENCY (Continued)
Stock
Options (Continued)
A summary
of the Company’s stock option activity during the year ended January 31, 2008 is
presented below:
|
|
|
No.
of Shares
|
|
|
Weighted
Average Exercise Price
|
|
|
Weighted
Average Remaining Contractual Term
|
|
|
Aggregate
Intrinsic Value
|
|
|
Balance
Outstanding, 01/31/07
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Granted
|
|
|
10,000,000,000
|
|
|
$
|
0.00005
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(10,000,000,000
|
)
|
|
$
|
0.00005
|
|
|
|
|
|
|
|
|
Balance
Outstanding, 01/31/08
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Exercisable,
01/31/08
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
The
weighted-average grant-date fair value of options granted during the year ended
January 31, 2008 was $0.000614.
NOTE
10 – EARNINGS (LOSS) PER SHARE
The
following table summarizes the weighted average shares outstanding:
Basic
earnings (loss) per share is computed on the basis of the weighted average
number of shares of common stock outstanding during the
period. Diluted earnings per share is computed on the basis of the
weighted average number of shares of common stock plus the effect of dilutive
potential common shares outstanding during the period using the treasury stock
method. Dilutive potential common shares include outstanding stock
options, warrants, convertible debt and the promissory note guarantee
liability. Potentially dilutive securities are excluded from the
computation if their effect is anti-dilutive. The treasury stock
effect of stock options, warrants, convertible debt and the promissory note
guarantee liability outstanding during the year ended January 31, 2008 have not
been included in the calculation of the net loss per share as such effect would
have been anti-dilutive. As a result, the basic and diluted loss per
share amounts for the year ended January 31, 2008 are identical.
Components
of basic and diluted earnings per share for the year ended January 31, 2009 were
as follows:
|
|
|
For
the Year Ended January 31, 2009
|
|
|
|
|
Income
|
|
|
Shares
|
|
|
Per
Share
|
|
|
|
|
(Numerator)
|
|
|
(Denominator)
|
|
|
Amount
|
|
|
Income
from continuing operations
|
|
$
|
553,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders
|
|
|
553,477
|
|
|
|
8,981,501,513
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
debt
|
|
|
6,919
|
|
|
|
1,000,000,000
|
|
|
|
|
|
|
Promissory
note guarantee liability
|
|
|
-
|
|
|
|
20,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders + assumed conversions
|
|
$
|
560,396
|
|
|
|
10,181,501,513
|
|
|
$
|
-
|
|
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
10 – EARNINGS (LOSS) PER SHARE (Continued)
Convertible
debt of $10,000 was outstanding during the year ended January 31, 2009, but was
not included in the computation of diluted earnings per share because the debt
is not yet convertible until January 25, 2010. The convertible debt
may dilute future earnings per share.
NOTE
11 – INCOME TAXES
The
components of the benefit (provision) for income taxes from continuing
operations are as follows:
|
|
|
For
the Year Ended January 31, 2009
|
|
|
For
the Year Ended January 31, 2008
|
|
|
Current
(benefit) provision: federal
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Current
(benefit) provision: state
|
|
|
-
|
|
|
|
-
|
|
|
Total
current provision
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
(benefit) provision: federal
|
|
|
-
|
|
|
|
-
|
|
|
Deferred
(benefit) provision: state
|
|
|
-
|
|
|
|
-
|
|
|
Total
deferred provision
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
provision (bebnfit) for income taxes from continuing operations
|
|
$
|
-
|
|
|
$
|
-
|
|
Significant
items making up the deferred tax assets and deferred tax liabilities are as
follows:
|
|
|
January
31, 2009
|
|
|
January
31, 2008
|
|
|
Long-Term
deferred taxes:
|
|
|
|
|
|
|
|
|
|
Operating
loss carryforwards-federal
|
|
|
829,600
|
|
|
|
1,016,600
|
|
Operating
loss carryforwards-state
|
|
|
97,600
|
|
|
|
119,600
|
|
|
Total
deferred taxes
|
|
|
927,200
|
|
|
|
1,136,200
|
|
|
Less:
valuation allowance
|
|
|
(927,200
|
)
|
|
|
(1,136,200
|
)
|
|
Net
deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
A
valuation allowance is established if it is more likely than not that all or a
portion of the deferred tax asset will not be realized. Accordingly,
a valuation allowance was established in 2009 and 2008 for the full amount of
the deferred tax asset due to the uncertainty of
realization. Management believes that based upon its projection of
future taxable operating income for the foreseeable future, it is more likely
than not that the Company will not be able to realize the benefit of the
deferred tax asset at January 31, 2009. The net change in the valuation
allowance during the year ended January 31, 2009 was a decrease of
$209,000. The valuation allowance as of January 31, 2009 was
$927,200.
The
Company’s effective income tax (benefit) rate for continuing operations
differs from the statutory federal income tax benefit rate as
follows:
|
|
|
For
the Year Ended January 31, 2009
|
|
|
For
the Year Ended January 31, 2008
|
|
|
Federal
tax benefit (provision) rate
|
|
|
34
|
%
|
|
|
34
|
%
|
State
tax benefit (provision) rate
|
|
|
4
|
%
|
|
|
4
|
%
|
|
Change
in valuation allowance
|
|
|
-38
|
%
|
|
|
-38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Effective
Income tax (benefit) provision rate from continuing
operations
|
|
|
0
|
%
|
|
|
0
|
%
|
GOLD
ENTERTAINMENT GROUP, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2009 AND 2008
NOTE
11 – INCOME TAXES (Continued)
The
Company has unused net operating loss carryforwards for income tax purposes
totaling approximately $2,440,000 and $2,990,000 at January 31, 2009 and 2008,
respectively, expiring through the year 2029 subject to the Internal Revenue
Code Section 382, which places a limitation on the amount of taxable income that
can be offset by net operating losses after a change in ownership. In
accordance with certain provisions of the Tax Reform Act of 1986 a change in
ownership of greater than fifty (50%) percent of a corporation within a three
(3) year period will place an annual limitation on the corporation’s
ability to utilize its existing tax benefit carryforwards. Such a
change in ownership may have occurred in connection with the private placement
of securities. Additionally, the Company’s utilization of its tax benefit
carryforwards may be restricted in the event of possible future changes in the
ownership of the Company from the exercise of options or other future issuances
of common stock.
NOTE 12 – SUBSEQUENT
EVENTS
As of
March 1, 2009, the Company is delinquent with regards to the convertible note
that became an amortizing loan on that date (See Note 5).
In
preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through November 5, 2009,
the date the financial statements were issued.
Since
January 31, 2009, through November 5, 2009, a related party has contributed an
additional $12,370 to fund operations.
Exhibits
and
Financial Statement
Schedules
|
Exhibit
Number
|
|
Description
of Document
|
|
|
|
|
|
1.0
|
|
Florida
Certificate of Domestication and Amended Articles of
Incorporation
|
|
2.0
|
#
|
Shareholder
List
|
|
3.0
|
|
Opinion
of Jean-Pierre & Jean-Pierre, LLC. Corporate
Counsel
|
|
4.0
|
|
Consent
of Independent Accounting Firm
|
#
Confidential
Treatment has been requested with respect to portions of this exhibit. Omitted
portions have been filed separately with the Securities and Exchange
Commission.
Undertakings.
The
undersigned registrant hereby undertakes:
1.
To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:
i.
Include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
ii.
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement.
Notwithstanding the foregoing,, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
iii.
Include any additional or changed material information on the plan of
distribution
2.
For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3.
File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of offering.
4.
Each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
5.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons under the foregoing provisions or otherwise, we have been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by any of our directors, officers or controlling persons in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGN
AT
URES
Pursuant
to the requirements of the Securities Act of 1933, as amended, Gold
Entertainment Group, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-1 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca Raton, State of
Florida, on the 2nd day of March, 2010.
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GOLD
ENTERTAINMENT GROUP, INC.
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By:
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/s/
BRIAN
STETTEN
BRIAN STETTEN
Chairman
and Chief Executive Officer
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GOLD
ENTERTAINMENT GROUP, INC.
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By:
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/s/
HAMON
FRANCIS FYTTON
Hamon Francis Fytton
President
and Chief Financial Officer
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/s/
HAMON
FRANCIS FYTTON
HAMON FRANCIS
FYTTON
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Director
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March 2,
2010
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/s/
BRIAN
STETTEN
BRIAN
STETTEN
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Director
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March 2,
2010
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Gold Entertainment (PK) (USOTC:GEGP)
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