DUESENBERG TECHNOLOGIES INC. - Quarter Report: 2016 July (Form 10-Q)

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

VGRAB COMMUNICATIONS INC.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN US DOLLARS)

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

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VGRAB COMMUNICATIONS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(EXPRESSED IN US DOLLARS)

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

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VGRAB COMMUNICATIONS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(EXPRESSED IN US DOLLARS)

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

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VGRAB COMMUNICATIONS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN US DOLLARS)

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

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VGRAB COMMUNICATIONS INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2016

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Nature of Operations

Vgrab Communications Inc. (the “Company”) is a development stage company.

On June 24, 2015, the Company formed a subsidiary, Vgrab International Ltd., (the “Subsidiary”) under the Labuan Companies Act 1990 in Federal Territory of Labuan, Malaysia.

Basis of Presentation

The unaudited interim consolidated financial statements of the Company are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended October 31, 2015, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The unaudited interim consolidated financial statements should be read in conjunction with those financial statements for the year ended October 31, 2015 included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended July 31, 2016, are not necessarily indicative of the results that may be expected for the year ending October 31, 2016.

Going Concern

The accompanying unaudited interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations.  The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that the Company will be able to continue as a going concern.  These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.  Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain prior period amounts in the accompanying unaudited interim consolidated financial statements have been reclassified to conform to the current period’s presentation. These reclassifications had no effect on the results of operations or financial position for any period presented.

Principles of Consolidation

The interim consolidated financial statements include the accounts of the Company and the Subsidiary. On consolidation, all intercompany balances and transactions are eliminated.

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Internal-Use Software

The Company incurs costs related to the development of its Vgrab Applications, Vmore Platform and Vgrab.com website. Costs incurred in the planning and evaluation stage of internally-developed software and website, as well as development costs where economic benefit cannot be readily determined, are expensed as incurred. Costs incurred and accumulated during the development stage, where economic benefit of the software can be readily determined, are capitalized and included as part of Intangible assets on the balance sheets. Additional improvements to the web site following the initial development stage are expensed as incurred. Capitalized internally-developed software and website development costs will be amortized over their expected economic life using the straight-line method.

NOTE 3 - SOFTWARE PURCHASE AGREEMENT

On January 8, 2015, the Company entered into an agreement with Hampshire Capital Limited to acquire the Vgrab Software Application. The transaction was completed on February 10, 2015. In consideration, the Company issued the Vendor 22,500,000 shares of its common stock with a fair value of $0.19 per share for a total value of $4,275,000, which was expensed as software development costs. These costs were expensed in the year ended October 31, 2015.

NOTE 4 - RELATED PARTY TRANSACTIONS

Pursuant to a service agreement terminated on March 31, 2016, during the nine months ended July 31, 2016, the Company incurred $150,000 to Hampshire Infotech SDN BHD (“Hampshire Infotech”) a company that is a member of the Hampshire Group, the Company’s significant shareholder, for software development costs. During the comparative period ended July 31, 2015, the Company incurred $46,362 in software development costs and $15,453 in consulting fees with Hampshire Capital Limited.

During the nine month period ended July 31, 2016, the Company received CAD$21,000 (USD$14,027) and USD$12,500 in exchange for the notes payable to Hampshire Avenue SDN BHD (the “Hampshire Avenue”), a company controlled by Hampshire Capital Limited. The loans bore interest at 4% per annum, were unsecured and payable on demand.

On July 11, 2016, the Company reached an agreement with Hampshire Infotech to convert $358,919 owed to Hampshire into 2,994,951 restricted common shares of the Company at a deemed price of $0.12 per share. At the time of the conversion, the fair market value of the Company’s common shares was $0.07 per share. The conversion resulted in a gain of $149,273 which was credited to Additional Paid in Capital (“APIC”) (Note 5).

On July 19, 2016, the Company entered into release agreement with its director, who agreed to resign as a director of the Company effective July 19, 2016. As a consideration for the resignation and for the past services, the Company agreed to issue to the director 300,000 shares of the Company’s common stock at $0.095 per share as fully paid and non-assessable. The full value of the shares being $28,500 was recorded as part of consulting fees on the statement of operations (Note 5).

As at July 31, 2016, the Company owed $37 (2015 - $186,761) to related parties.

NOTE 5 - COMMON STOCK

On November 24, 2015, the Company issued 500,000 shares of its common stock to Rain Communications Inc., a company controlled by a significant shareholder of the Company. The shares were issued as finder’s fee for introducing the Company to Hampshire Capital Limited (Note 3).

During the quarter ended April 30, 2016, the board of directors of the Company approved conversion of certain debts into shares of the Company’s common stock at a deemed price of $0.12 per share as follows:

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The agreements were finalized on July 11, 2016, when the Company issued 3,407,177 common shares to the parties specified in the table above.

At the time of the conversion, the fair market value of the Company’s common shares was $0.07 per share, which resulted in a gain of $169,884.  $149,273 of the gain was credit to APIC as certain of the debt was owed to a major shareholder (Note 4) and $20,611 was recognized as income in net loss.

On July 19, 2016, the Company issued 300,000 shares of the Company’s common stock at $0.095 per share as fully paid and non-assessable to its director. The full value of the shares, being $28,500, was recorded as part of consulting fees on the statement of operations (Note 4).

NOTE 6 - LOAN AGREEMENTS

On July 11, 2016, as part of the debt settlement agreement with Hampshire Infotech, the Company converted $29,394 in notes payable to Hampshire consisting of the principal of CAD$21,000 (USD$14,027) and USD$12,500  and accrued interest thereon. As of July 31, 2016, the Company was not indebted to Hampshire Infotech (Note 4).

On July 12, 2016, the Company entered into a loan agreement with BSmart Technology Limited for $100,000. The loan bears no interest and is payable on demand.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q filed by Vgrab Communications Inc. contains forward-looking statements. These are statements regarding financial and operating performance and results and other statements that are not historical facts. The words “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “forecast,” and similar expressions are intended to identify forward-looking statements. Certain important risks could cause results to differ materially from those anticipated by some of the forward-looking statements. These risks include, among other things: general economic conditions; our ability to raise enough money to continue our operations; changes in regulatory requirements that adversely affect our business; customer acceptance of our proprietary software application; and other risks and uncertainties as set forth in “Part II - Item 1A - Risk Factors”.

Forward-looking statements are based on a number of material factors and assumptions, including, but not limited to, the economic conditions will continue to show modest improvement in the near to medium future, no material change to competitive environment, we will be able to access sufficient qualified staff and there will be no material changes to the tax and other regulatory requirements governing us. While we consider these assumptions may be reasonable, based on information currently available to us, these assumptions may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in the section titled "Part II - Item 1A - Risk Factors.”

We caution you not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this report.  We are not obligated to update these statements or publicly release the results of any revisions to them to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events unless required by applicable securities laws. You should refer to, and carefully review, the information in future documents we file with the United States Securities and Exchange Commission (the “SEC”).

General

You should read this discussion and analysis in conjunction with our interim unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes for the fiscal year ended October 31, 2015, included in our Annual Report on Form 10-K. The inclusion of supplementary analytical and related information may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole. Actual results may vary from the estimates and assumptions we make.

Overview

We were incorporated on August 4, 2010, under the laws of the State of Nevada under the name “SOS Link Corporation”. On April 15, 2011, we changed our place of incorporation from the State of Nevada to the Province of British Columbia, Canada and concurrently changed our name to “Venza Gold Corp.”.  The change from Nevada to British Columbia was approved by our shareholders on April 14, 2011.  On January 6, 2014, we changed our name to “CoreComm Solutions Inc.” and on February 11, 2015, we changed our name to Vgrab Communications Inc. to reflect our current business.

On February 10, 2015, we completed an acquisition of the Vgrab software application (the “Vgrab Application”) pursuant to the terms of a software purchase agreement dated January 8, 2015 (the “Software Purchase Agreement”) between us and Hampshire Capital Limited (“Hampshire”). The Vgrab Application is a free mobile voucher application developed for smartphones using the Android and Apple iOS operating systems and allows users to redeem vouchers on their smartphones at a number of retailers and merchants.

During our Fiscal 2015 we started working on the expansion of our product mix to include an application designed specifically for merchants (the “Vgrab Merchant Application”) as well as an online platform that will allow merchants and consumers to sell and purchase online goods (the “Vmore Platform”).

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On June 24, 2015, we formed a subsidiary, Vgrab International Ltd., (the “Subsidiary”, or “Vgrab International”) under the Labuan Companies Act 1990 in Federal Territory of Labuan, Malaysia. The main focus of the Subsidiary is to continue development of the Vgrab Applications and the Vmore Platform, and start their market penetration in Southeast Asia.

Recent Corporate Events

The following corporate developments have occurred during the third quarter ended July 31, 2016, and up to the date of the filing of this Quarterly Report:

·

During the quarter ended April 30, 2016, the board of directors of the Company approved conversion of up to $358,919 in debt to related parties and up to $49,467 in debt owed to non-related parties into shares of the Company’s common stock at a price of $0.12 per share for the total of 3,407,177 shares. The transaction was finalized on July 11, 2016, when we issued 2,994,951 of our common shares to Hampshire Infotech Sdn., a company that is a member of Hampshire Group, our significant shareholder, and 412,226 of our common shares to an unrelated debt holder.

·

On July 19, 2016, we entered into release agreement (the “Agreement”) with Nelson Da Silva, who has been acting as our director since May 2014. Mr. Da Silva agreed to resign as a director of the Company effective July 19, 2016. As a consideration for the resignation, we agreed to issue to Mr. Da Silva 300,000 shares of our common stock as fully paid and non-assessable. Mr. Da Silva's resignation was not due to, and was not caused by, in whole or in part, any disagreement with the Company, whether related to our operations, policies, practices or otherwise.

To fill the vacancy caused by Mr. Da Silva’s resignation, we appointed Mr. Lim Hun Beng a director of the Company. Mr. Lim is a principal of Hampshire Group, our significant shareholder.

Summary of Financial Condition

Results of Operation

Our operating results for the three and nine months ended July 31, 2016 and 2015 and the changes in the operating results between those periods are summarized in the table below.

Three and Nine Months Summary

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Revenue

During the three and nine months ended July 31, 2016 and 2015 we did not have any revenue generating operations.  We are presently a development stage company engaged in a software application development and marketing. We can provide no assurances that we will be able to generate enough cash flow from our operations to support our ongoing operations.

Operating Expenses

Our operating expenses for the three and nine months ended July 31, 2016 and 2015 consisted of the following:

On a year-to-date basis, our operating expenses decreased by $598,472, or 71% from $842,981, for the nine months ended July 31, 2015 to $244,509 for the nine months ended July 31, 2016.

The most significant changes in operating expenses included the following items:

·

During the nine month period ended July 31, 2015, we recorded $685,323 in amortization expense associated with the Vgrab Application, which we acquired pursuant to our software purchase agreement with Hampshire Capital Limited. The value of 22,500,000 common shares we issued to Hampshire Capital Limited was originally recorded as an intangible asset and was amortized on the straight line basis over the estimated useful life of three years. At October 31, 2015, we decided to treat the acquisition cost as software development costs, and no amortization was recorded during the nine month period ended July 31, 2016.

·

During the nine month period ended July 31, 2016, we incurred $150,000 (2015 - $46,362) in software development costs associated with the continued development of the Vgrab Applications, the Vmore Platform, and the Vgrab.com website. These costs were paid or accrued to Hampshire Infotech. On March 31, 2016, we terminated the development agreement with Hampshire Infotech.

·

Our administrative, legal, and regulatory fees, decreased by $14,869, $2,189 and $9,737 respectively. These decreases resulted from the restructuring of our current operations and the shift of our current business activities to the development of the Vgrab Applications.

·

Our consulting fees increased by $7,930, from $20,369 we incurred during the nine month period ended July 31, 2015, to $28,299 we incurred during the nine month period ended July 31, 2016. The increase was associated with the fair value of 300,000 common shares we issued to our former director.

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Other Items

During the nine month period ended July 31, 2016, we recorded $79,167, being a fair value of the 500,000 common shares we issued to Rain Communications Inc., a company controlled by Mr. Ralph Biggar our shareholder, and former director and officer. The shares were issued as finder’s fee for introducing us to Hampshire Capital Limited, the Vendor of the Vgrab Application. The share issuance was completed pursuant to the provisions of Regulation S of the Securities Act.

On July 11, 2016, we reached an agreement to convert USD$49,467 we owed to a third party into 412,226 restricted common shares of the Company at a deemed price of USD$0.12 per share. At the time of the conversion, the fair market value of the Company’s common shares was $0.07 per share, which resulted in a gain of $20,611 on conversion of debt.

Following the acquisition of the Vgrab Application in our Fiscal 2015, we terminated our property acquisition and exploration activities.  We determined that we will not be able to recover the carrying value of our OS Gold Property, which resulted in a write off of full acquisition costs associated with this property being $11,697. Other items also contain $2,573 in mineral exploration expenses associated with the preparation of the geological report on our OS Gold Property, which was required to keep the property in good standing.

Translation to Reporting Currency

Changes in translation to reporting currency results from a difference between our functional currency, being the Canadian dollar, and reporting currency, being the United States dollar, and are caused by fluctuation in foreign exchange between the two currencies as well as different accounting treatments between various financial instruments.

Liquidity and Capital Resources

GOING CONCERN

The unaudited interim consolidated financial statements included in this Quarterly Report have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. We have not generated any revenues from operations since inception, have never paid any dividends and are unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. Based upon our current plans, we expect to incur operating losses in future periods. At July 31, 2016, we had a working capital deficit of $92,505 and accumulated losses of $5,556,696 since inception. These factors raise substantial doubt about our ability to continue as a going concern. We cannot assure you that we will be able to generate significant revenues in the future. These unaudited interim consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern. Therefore, we may be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.

Working Capital

During the nine months ended July 31, 2016, our working capital deficit decreased by $189,484, from $281,989 at October 31, 2015 to $92,505 at July 31, 2016. The decrease in working capital deficit was primarily related to the debt settlements with Hampshire Infotech and an unrelated creditor. The debt settlements resulted in a reduction to our current liabilities of $408,386, and were in part offset by a note payable we issued to an unrelated party for $100,000 non-interest bearing loan.  

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Cash Flows

Net cash used in operating activities. During the nine months ended July 31, 2016, we used $78,115 to support our operating activities. This cash was used to cover our cash operating expenses of $215,768, increase our prepaid expenses by $3,780, and to decreases to our accounts payable and accrued liabilities by $7,273 and $1,524, respectively. These uses of cash were offset by decrease in our GST recoverable of $230. The $150,000, which we recorded as due to related party during the nine months ended July 31, 2016, and which was associated with the continued development of the Vgrab Applications, the Vmore Platform, and the Vgrab.com website, further offset the cash used in operations, as the amount owed was converted into shares of our common stock, as part of the debt settlement agreement between Hampshire Infotech and the Company.   

During the nine months ended July 31, 2015, we used $114,689 to support our operating activities. This cash was used to cover our cash operating expenses of $160,231, to increase our GST recoverable and prepaid expenses by $590, and $3,750, respectively, and to reduce our accounts payable and accrued liabilities by $5,987 and $4,131, respectively. These uses of cash were offset by increase in the amounts due to related parties of $60,000.

Non-cash operating activities. During the nine months ended July 31, 2016, we issued 500,000 shares of our common stock to Rain Communications Inc. for introducing us to Hampshire Capital Limited, the Vendor of the Vgrab Application. The fair value of these shares was determined to be $79,167 and was recorded as finder’s fees. During the same period we issued 300,000 shares of our common stock to our director as part of his resignation package. The shares were valued at $28,500 and were recorded as non-cash consulting fees.

During the nine months ended July 31, 2016, we recorded $20,611 gain on conversion of debt to an arms length party, when we settled $49,467 with 412,226 shares of our common stock with a fair market value of $28,856.

During the nine months ended July 31, 2015, our net loss was affected by a write-off of the OS Gold Property totalling $11,697, and an amortization of the VGrab Application of $685,323. These transactions did not have any impact on the cash we used in our operations.

Net cash provided by financing activities. During the nine months ended July 31, 2016, we received $14,027 (CAD$21,000) and $12,500 as proceeds from the loan agreements with Hampshire Avenue SDN BHD, a company controlled by Hampshire Capital Limited. The loans bore interest at 4% per annum, were unsecured and payable on demand. These loans were converted to shares of our common stock as part of debt settlement agreement with Hampshire Infotech Sdn. During the same period we received $100,000 in exchange for a non-interest bearing note payable to an unrelated party.

During the nine months ended July 31, 2015, we issued 500,000 shares of our common stock for gross proceeds of $100,000 pursuant to Regulation S of the Securities Act of 1933, as amended (the “Act”). The subscriber represented that the company was not a “U.S. Person” as that term is defined in Regulation S of the Act.

Capital Resources

Our ability to continue the development and marketing of the Vgrab Applications and the Vmore Platform is subject to our ability to obtain the necessary funding.  We expect to raise funds through sales of our debt or equity securities. We have no committed sources of capital.  If we are unable to raise funds as and when we need them, we may be required to curtail, or even to cease, our operations.

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As of July 31, 2016, we had cash on hand of $54,309 and working capital deficit of $92,505, which raises substantial doubt about our continuation as a going concern. We plan to mitigate our losses in future years by controlling our operating expenses and actively seeking new distribution channels for our Vgrab Applications and Vmore Platform. We cannot provide assurance that we will be successful in generating additional capital to support our development. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements and no non-consolidated, special-purpose entities.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies.  As an “emerging growth company,” we may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. We may take advantage of this extended transition period until the first to occur of the date that we (i) are no longer an "emerging growth company" or (ii) affirmatively and irrevocably opt out of this extended transition period. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an "emerging growth company," affirmatively and irrevocably opt out of the exemption provided by Securities Act Section 7(a)(2)(B), or upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.

Our significant accounting policies are disclosed in the notes to the audited financial statements for the year ended October 31, 2015. The following accounting policies have been determined by our management to be the most important to the portrayal of our financial condition and results of operation:

Principles of Consolidation

The Company’s interim consolidated financial statements include the accounts of the Company and the Subsidiary. On consolidation, the Company eliminates all intercompany balances and transactions.

Internal-Use Software

The Company incurs costs related to the development of its Vgrab Applications, Vmore Platform as well as its website. Costs incurred in the planning and evaluation stage of internally-developed software and website, as well as development costs where economic benefit cannot be readily determined, are expensed as incurred. Costs incurred and accumulated during the development stage, where economic benefit of the software can be readily determined, are capitalized and included as part of Intangible assets on the balance sheets. Additional improvements to the web site and applications following the initial development stage are expensed as incurred. Capitalized internally-developed software and website development costs will be amortized over their expected economic life using the straight-line method.

Impairment of Long-Lived Assets

Long lived assets, such as property, equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

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If circumstances require that a long lived asset or asset group be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying amount exceeds its fair value.

Foreign Currency Translation and Transaction

The Company’s functional currency is the Canadian dollar and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using exchange rates in effect at the reporting date, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on translation to the reporting currency are included in the other comprehensive income.

The Subsidiary’s functional and reporting currency is the United States dollar.

Foreign exchange gains and losses on the settlement of foreign currency transactions or the translation of monetary balances to the functional currency at the year end exchange rate are included in foreign exchange expense.

Fair Value of Financial Instruments

Our financial instruments include cash, prepaids, GST recoverable, accounts payable, accrued liabilities, amounts due to related parties and loans payable. We believe the fair value of these financial instruments approximate their carrying values due to their short-term nature.

Concentration of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable.

At July 31, 2016, we had $54,390 in cash on deposit with a large chartered Canadian bank, of which $3,218 was insured.  As part of our cash management process, we perform periodic evaluations of the relative credit standing of this financial institution.  We have not experienced any losses in cash balances and do not believe we are exposed to any significant credit risk on our cash.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report.  The evaluation was undertaken in consultation with our accounting personnel.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to our current size and lack of segregation of duties, our disclosure controls and procedures are not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

IN ADDITION TO THE FACTORS DISCUSSED ELSEWHERE IN THIS QUARTERLY REPORT, THE FOLLOWING RISKS AND UNCERTAINTIES COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL ALSO MAY IMPAIR OUR BUSINESS OPERATIONS AND FINANCIAL CONDITION.

We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease our operations and if we do not obtain sufficient financing, our business will fail.

We were incorporated on August 4, 2010, and have been involved primarily in the acquisition and exploration of mineral properties. On December 2, 2013, we entered into a license agreement to market the Correlation Technology to English and Spanish education users. However, the license agreement was terminated in April 2014 due to lack of funds. On January 8, 2015, we entered into the Software Purchase Agreement with Hampshire Capital Ltd., to develop and market Vgrab Application to world-wide market; the transaction was completed on February 10, 2015.

In order to continue our operations we will be required to raise additional capital through financing, which would be subject to a number of factors, including market fluctuations, customer confidence, and general economic condition.  These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.  Since our inception, we have used our common shares to raise money for our operations. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation.

Because we are a development stage company, our business has a high risk of failure.

We are a development stage company that has incurred net losses since inception, we have not attained profitable operations and we are dependent upon obtaining adequate financing to carry out our business activities.  The success of our business operations will depend upon our ability to obtain further financing to complete our planned development and marketing programs and to attain profitable operations. Development stage companies encounter difficulties in generating revenue from services that are provided based on the applications installed on smart phones, and the risk of failure of these companies is high.  If we are not able to complete a successful development and marketing programs and attain sustainable profitable operations, then our business will fail.

Our auditors have expressed substantial doubt about our ability to continue as a going concern; as a result we could have difficulty finding additional financing.

Our interim consolidated financial statements have been prepared assuming that we will continue as a going concern.   We have not generated any revenue from our main operations since inception and have accumulated losses.  As a result, our auditors have expressed substantial doubt about our ability to continue as a going concern.  Our ability to continue our operations depends on our ability to complete equity or debt financings or generate profitable operations.  Such financings may not be available or may not be available on reasonable terms.  Our financial statements do not include any adjustments that could result from the outcome of this uncertainty.

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We face intense competition.

Our business is evolving and intensely competitive, and is subject to changing technology, shifting user needs, and frequent introductions of new products and services.

We expect competition in e-commerce generally, and group buying in particular, to continue to increase. Our current and potential competitors range from large and established companies to emerging start-ups. Established companies have longer operating histories and more established relationships with customers and users, and they can use their experience and resources against us in a variety of competitive ways, including acquisitions, investing aggressively in research and development, and competing aggressively for advertisers and websites.

If our competitors are more successful than we are in developing compelling products or in attracting and retaining users, advertisers, and content providers, our potential for generating revenues and growth rates could decline.

Our success is dependent upon our ability to provide a superior mobile experience for our customers and merchants.

In order to continue to grow our mobile transactions, it is critical that our application works well with a range of mobile technologies, systems, networks and standards. Our business may be adversely affected if our customers choose not to access our offerings on their mobile devices, or use mobile devices that do not offer access to our mobile applications. Similarly, our business may suffer if our merchants choose not to advertise through our application.

We may be subject to claims that we violated intellectual property rights of others, which claims are extremely costly to defend and could require us to pay significant damages and limit our ability to operate.

Companies in the Internet and technology industries, and other patent and trademark holders seeking to profit from royalties in connection with grants of licenses, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights.  We acquired the Vgrab Application from an original developer, however, there may be intellectual property rights held by others, including patents, copyrighted works and/or trademarks, which cover significant aspects of our technology. Any intellectual property claim against us, regardless of merit, could be time consuming and expensive to settle or litigate and could divert management’s attention and other resources. These claims also could subject us to significant liability for damages and could result in our having to stop using technology or content found to be in violation of another party’s rights. We might be required or may opt to seek a license for rights to intellectual property held by others, which may not be available on commercially reasonable terms, or at all. Even if a license is available, we could be required to pay significant royalties, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, or content, which could require significant effort and expense and make us less competitive in the relevant market. Any of these results could harm our business and financial performance.

We have a limited number of products.

We are reliant on the marketing and sale of our Vgrab Applications and Vmore Platform.  If these products do not achieve sufficient market acceptance, it will be difficult for us to achieve consistent profitability.

If our software is defective, it will adversely affect our business.

Our Vgrab Application may contain undetected errors, defects or bugs. Although we have not suffered significant harm from any errors, defects or bugs to date, we may discover significant errors, defects or bugs in the future that we may not be able to correct or correct in a timely manner. It is possible that errors, defects or bugs will be found in our existing or future software products and related services with the possible results of delays in, or loss of market acceptance of, our products and services, diversion of our resources, injury to our reputation, increased service and warranty expenses and payment of damages.

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We have limited brand awareness and there is no assurance that we will be able to achieve brand awareness.

We have achieved limited brand awareness with respect to our Vgrab Application.  There is no assurance that we will be able to achieve brand awareness.  In addition, we must develop a successful market for our products in order to complete sales. If we are not able to develop successful markets for our products, then such failure will have a material adverse effect on our business, financial condition and operating results.

We sometimes hold a significant portion of our cash in United States dollars, which could weaken our purchasing power in other currencies and limit our ability to conduct our development programs.

Currency fluctuations could affect the costs of our operations and affect our operating results and cash flows.  The appreciation of Canadian dollar against the U.S. dollar can increase the costs of our operations.

If we are unable to hire and retain key personnel, we may not be able to implement our business plan and our business will fail.

Our success will largely depend on our ability to hire highly qualified personnel with experience in marketing, programming, data architecture and design. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Currently, we have not hired any key personnel. Our failure to hire key personnel when needed could have a significant negative effect on our business.

The JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.

We are and we will remain an "emerging growth company" until the earliest of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a "large accelerated filer" (with at least $700 million in public float) under the Exchange Act. For so long as we remain an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, as is currently our plan, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.

Our election not to opt out of JOBS Act extended accounting transition period may not make its financial statements easily comparable to other companies.

Pursuant to the JOBS Act, as an “emerging growth company”, we can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board (PCAOB) or the SEC. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, our company, as an “emerging growth company”, can adopt the standard for the private company. This may make comparison of our financial statements with any other public company which is not either an “emerging growth company” nor an “emerging growth company” which has opted out of using the extended transition period difficult or impossible, as possible different or revised standards may be used.

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The JOBS Act will also allow our company to postpone the date by which it must comply with certain laws and regulations intended to protect investors and to reduce the amount of information provided in reports filed with the SEC.

The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies”. We meet the definition of an “emerging growth company” and so long as we qualify as an “emerging growth company,” we will, among other things:

·

be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;

·

be exempt from the "say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the "say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers;

·

be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act, as amended and instead provide a reduced level of disclosure concerning executive compensation; and

·

be exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.

We intend to take advantage of all of the reduced regulatory and reporting requirements that are available to the Company so long as we qualify as an “emerging growth company”. We have elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act. Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an “emerging growth company”, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as we qualify as an “emerging growth company”, we may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to be provided in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate us. As a result, investor confidence in our company and the market price of our common stock may be adversely affected.

Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”.  Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.  Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.

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Because our directors are not independent they can make and control corporate decisions that may be disadvantageous to other common shareholders.

Our shares of common stock are listed on OTC Markets inter-dealer quotation system, which does not have director independence requirements.

For the purpose of determining director independence, we have adopted the independence requirements of Canadian National Instrument 52-110 - Audit Committees (“NI 52-110”) as we are an OTC reporting issuer in the province of British Columbia. NI 52-110 recommends that the Board of Directors of a public company be constituted with a majority of individuals who qualify as “independent” directors. An “independent” director is a director who has no direct or indirect material relationship with us. A material relationship is a relationship, which could, in the view of the Board of Directors, reasonably interfere with the exercise of a director’s independent judgment. None of our current directors can be considered independent.  Nelson Da Silva is not an independent director because of his prior position as CEO, CFO and President. Jacek (Jack) Skurtys is not an independent director because of his current position as CEO, CFO and President.

We do not expect to declare or pay dividends in the foreseeable future.

We have never paid cash dividends on our common stock and have no plans to do so in the foreseeable future. We intend to retain any earnings to develop, carry on, and expand our business.

“Penny stock” rules may make buying or selling our common stock difficult, and severely limit its marketability and liquidity.

Because our securities are considered a penny stock, shareholders will be more limited in their ability to sell their shares. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. Because our securities constitute “penny stocks” within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the trading price of our common shares is less than $5.00 per share, the common shares will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

1.

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

2.

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

3.

contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

4.

contains a toll-free telephone number for inquiries on disciplinary actions;

5.

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

6.

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such shares; and (d) a monthly account statements showing the market value of each penny stock held in the customer’s account.

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In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our shares.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On July 11, 2016, pursuant to the debt settlement agreements with Hampshire and Mr. Lim, the Company issued to Hampshire and to Mr. Lim 2,994,951 and 412,226 common shares of the Company, respectively. The shares were issued pursuant to the provisions of Regulation S of the United States Securities Act of 1933, as amended (the “Act”). Hampshire and Mr. Lim represented that they were not residents of the United States and were otherwise not “U.S. Persons” as that term is defined in Rule 902(k) of Regulation S of the Act.

On July 19, 2016, pursuant to the release agreement with Mr. Da Silva, the former director of the Company, the Company issued to Mr. Da Silva 300,000 common shares of the Company pursuant to the provisions of Regulation S of the United States Securities Act of 1933, as amended (the “Act”). Mr. Da Silva represented that he was not a resident of the United States and was otherwise not a “U.S. Person” as that term is defined in Rule 902(k) of Regulation S of the Act.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

The following table sets out the exhibits either filed herewith or incorporated by reference.

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Notes:

(1)

Filed with the SEC as an exhibit to our Registration Statement on Form S-1 filed on June 12, 2012.

(2)

Filed with the SEC as an exhibit to our Registration Statement on Form S-1/A2 filed on August 23, 2012.

(3)

Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on January 28, 2013

(4)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 9, 2014.

(5)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 14, 2015.

(6)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on February 17, 2015.

(7)

Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on February 9, 2016.

(8)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on June 16, 2016.

(9)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 15, 2016

(10)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 22, 2016.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  September 14, 2016

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