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EX-31.2 - EXHIBIT 31.2 - Eventure Interactive, Inc.v358418_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Eventure Interactive, Inc.v358418_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - Eventure Interactive, Inc.v358418_ex32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2013
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to _______
 
Commission File Number: 333-172685
 
EVENTURE INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
27-4387595
(State or other jurisdiction of incorporation)
 
(I.R.S. Employer Identification No.)
 
3420 Bristol Street, 6th Floor, Costa Mesa, CA 92626
(Address of principal executive offices)
 
855.986.5669
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ¨       No x
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ¨
 
Accelerated filer ¨
 
Non-accelerated filer ¨
 
Smaller reporting company x
 
 
 
 
(Do not check if a smaller
Reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
 
There were 18,807,500 shares of the issuer’s common stock outstanding as of November 14, 2013.
 
 
 
EVENTURE INTERACTIVE, INC.
 
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013
TABLE OF CONTENTS
 
 
 
PAGE
 
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements
3
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
13
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
16
 
 
 
Item 4.
Controls and Procedures
17
 
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
18
 
 
 
Item 1A.
Risk Factors
18
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
18
 
 
 
Item 3.
Defaults Upon Senior Securities
18
 
 
 
Item 4.
Mine Safety Disclosures
18
 
 
 
Item 5.
Other Information
18
 
 
 
Item 6.
Exhibits
19
 
 
 
 
SIGNATURES
21
  
 
2

 
PART I – FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS
 
 
 
PAGE
 
 
 
Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 (unaudited)
 
4
 
 
 
Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and
      2012 and the period from November 29, 2010 (date of inception) to September 30, 2013 (unaudited)
 
5
 
 
 
Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 and
      for the period from November 29, 2010 (inception) to September 30, 2013 (unaudited)
 
6
 
 
 
Notes to Consolidated Financial Statements (unaudited)
 
7
 
 
3

 
EVENTURE INTERACTIVE, INC.
(A DEVELOPMENT STAGE COMPANY)
(FORMERLY CHARLIE GPS, INC.)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
 
 
September 30,
 
December 31, 
 
 
 
2013
 
2012
 
ASSETS
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
Cash
 
$
273,563
 
$
357,643
 
Deposit
 
 
5,000
 
 
-
 
Total current assets
 
 
278,563
 
 
357,643
 
Software development costs
 
 
204,540
 
 
108,290
 
Fixed assets, net
 
 
36,225
 
 
-
 
Intangible asset - domain name
 
 
103,750
 
 
103,750
 
Total assets
 
$
623,078
 
$
569,683
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
Accounts payable
 
$
102,237
 
$
10,970
 
Accrued expenses
 
 
75,481
 
 
82,490
 
 
 
 
 
 
 
 
 
Total current liabilities
 
 
177,718
 
 
93,460
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Common stock subject to redemption, 25,000 shares
 
 
43,750
 
 
43,750
 
 
 
 
 
 
 
 
 
Stockholders’ Equity
 
 
 
 
 
 
 
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding
 
 
-
 
 
-
 
Common stock, $0.001 par value, 300,000,000 shares authorized; 18,657,500 and 17,932,500 shares issued and outstanding, respectively
 
 
18,658
 
 
17,932
 
Additional paid-in-capital
 
 
4,314,060
 
 
1,721,729
 
Deficit accumulated during the development stage
 
 
(3,931,108)
 
 
(1,307,188)
 
Total stockholders’ equity
 
 
401,610
 
 
432,473
 
Total liabilities and stockholders’ equity
 
$
623,078
 
$
569,683
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
4

 
EVENTURE INTERACTIVE, INC.
(FORMERLY CHARLIE GPS, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
 
 
Three months
Ended
September 30,
 
Nine months
Ended
September 30,
 
From 
November 29, 
2010
(Inception)
to September 
 
 
 
2013
 
2012
 
2013
 
2012
 
30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
-
 
$
-
 
$
-
 
$
-
 
$
-
 
General and administrative expenses
 
 
516,932
 
 
108,174
 
 
2,623,920
 
 
119,515
 
 
3,931,108
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(516,932)
 
$
(108,174)
 
$
(2,623,920)
 
$
(119,515)
 
$
(3,931,108)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per common share
 
$
(0.03)
 
$
(0.01)
 
$
(0.14)
 
$
(0.01)
 
 
 
 
Weighted average number of common shares outstanding – basic and diluted
 
 
18,558,038
 
 
10,400,000
 
 
18,274,808
 
 
10,400,000
 
 
 
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
5

 
EVENTURE INTERACTIVE, INC.
(FORMERLY CHARLIE GPS, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 
 
Nine Months Ended
September 30,
 
From November 10, 2010 
(Inception) to
 
 
 
2013
 
2012
 
September 30, 2013
 
Operating activities
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(2,623,920)
 
$
(119,515)
 
$
(3,931,108)
 
Adjustments to reconcile net loss to net cash used in operating
activities:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
 
1,893,057
 
 
-
 
 
2,914,569
 
Depreciation expense
 
 
1,775
 
 
-
 
 
1,775
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
Prepaid expenses
 
 
-
 
 
5,507
 
 
-
 
Inventory
 
 
-
 
 
-
 
 
(1,258)
 
Deposits
 
 
(5,000)
 
 
-
 
 
(5,000)
 
Accounts payable
 
 
91,267
 
 
-
 
 
211,563
 
Accrued expenses
 
 
(7,009)
 
 
107,476
 
 
75,481
 
Net cash used in operating activities
 
 
(649,830)
 
 
(6,532)
 
 
(733,978)
 
 
 
 
 
 
 
 
 
 
 
 
Investing activities
 
 
 
 
 
 
 
 
 
 
Software development costs
 
 
(96,250)
 
 
-
 
 
(106,250)
 
Acquisition of fixed assets
 
 
(38,000)
 
 
-
 
 
(38,000)
 
Purchase of domain name
 
 
-
 
 
-
 
 
(60,000)
 
Net cash used in investing activities
 
 
(134,250)
 
 
-
 
 
(204,250)
 
 
 
 
 
 
 
 
 
 
 
 
Financing activities
 
 
 
 
 
 
 
 
 
 
Contributed capital from related party
 
 
-
 
 
-
 
 
1,650
 
Proceeds from notes payable, related party
 
 
-
 
 
2,000
 
 
3,141
 
Proceeds from sale of common stock
 
 
700,000
 
 
-
 
 
1,207,000
 
Net cash provided by financing activities
 
 
700,000
 
 
2,000
 
 
1,211,791
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash
 
 
(84,080)
 
 
(4,532)
 
 
273,563
 
 
 
 
 
 
 
 
 
 
 
 
Cash at beginning of the period
 
 
357,643
 
 
4,532
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
Cash at end of the period
 
$
273,563
 
$
0
 
$
273,563
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
 
 
 
 
 
Income taxes
 
$
-
 
$
-
 
$
-
 
Interest
 
$
-
 
$
-
 
$
-
 
Non-cash investing and financing transactions:
 
 
 
 
 
 
 
 
 
 
Contributed capital from the forgiveness of debt, related party
 
$
-
 
$
5,991
 
$
5,991
 
Distribution of net liabilities to former shareholder
 
$
-
 
$
-
 
$
105,218
 
Common stock subject to redemption issued for purchase of domain name
 
$
-
 
$
-
 
$
43,750
 
Software contributed for common stock
 
$
-
 
$
-
 
$
98,290
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
6

 
EVENTURE INTERACTIVE, INC.
(FORMERLY CHARLIE GPS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
1.  ORGANIZATION AND BUSINESS OPERATIONS
 
Charlie GPS, Inc. was incorporated in the State of Nevada on November 29, 2010 (“Inception”). The Company was in the GPS tracking system business until late in 2012, when the Company redirected all of its efforts into the social media business.
 
On November 20, 2012, the Company filed Amended and Restated Articles of Incorporation (the “Charter Amendment”) with the Nevada Secretary of State to, among other things, (i) change its name to Live Event Media, Inc.; (ii) increase authorized capitalization from 75,000,000 shares, consisting of 75,000,000 shares of common stock, $0.001 par value per share, to 310,000,000 shares, consisting of 300,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of blank check preferred stock, $0.001 par value per share; and (iii) limit the liability of the Company’s officers and directors to the Company, the Company’s stockholders and the Company’s creditors to the fullest extent permitted by Nevada law.
 
On February 20, 2013, the Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State to change its name to Eventure Interactive, Inc. (the “Company”).
 
Asset Acquisition
 
On November 21, 2012, the Company issued 14,582,500 shares of common stock in exchange for software, which resulted in a change of control of the Company.   This transaction was accounted for as a transfer of nonmonetary assets by a shareholder and was recorded at the historical cost of the software which was $98,290.   In connection with the transaction, the Company cancelled 8,000,000 shares of common stock of the former principal shareholder of the Company and transferred $1,258 of the Company’s inventory and $106,476 of the Company’s liabilities to the former principal shareholder of the Company.  The Company treated the cancellation of assets and liabilities as a contribution of capital to the Company of $105,218.
 
Going Concern
 
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses since inception resulting in an accumulated deficit of $3,931,108 as of September 30, 2013 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern.  The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock.  These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.
 
 
7

 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
The accompanying unaudited interim consolidated financial statements of Eventure Interactive, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent year ended December 31, 2012, as reported in Form 10-K, have been omitted.
 
Principles of Consolidation
 
The financial statements include the accounts of the Company and its subsidiary. Intercompany transactions and balances have been eliminated.
 
Development Stage Company
 
The Company is currently considered a development stage company. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date. An entity remains in the development stage until such time as, among other factors, revenues have been realized.
 
Use of Estimates and Assumptions
 
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
 
Basic and Diluted Loss Per Share
 
Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
 
Since the Company is in a loss position, it has excluded stock options and warrants from its calculation of diluted net loss per share.  At September 30, 2013, the Company had 1,534,168 stock options and 750,000 warrants that would have been included in its calculation of diluted net loss per share if they were not antidilutive.
 
 
8

 
Fixed Assets
 
Fixed assets are stated at cost and depreciated using the straight-line method over the estimated useful life of the asset. Our fixed assets are comprised of computer equipment and the estimated life our computer equipment is three years.
 
Software Development Costs
 
Costs incurred in the research and development of new software products are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any additional costs are capitalized in accordance with authoritative guidance until the product is available for general release.
 
Intangible Assets - Domain Name
 
On December 28, 2012, the Company purchased a domain name.  The Company considers the domain name an indefinite-lived intangible asset and will test for impairment on an annual basis.
 
Stock-Based Compensation
 
We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, over the vesting or service period, as applicable, of the stock award using the straight-line method.
 
Reclassifications
 
Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.

3. RELATED PARTIES
 
The Company received unsecured, non-interest bearing demand loans totaling $2,000 during the nine months ended September 30, 2012 from the Company’s former CEO. These loans were forgiven and contributed as capital during 2012.
 
On August 20, 2012, a related party contributed capital of $2,800 by paying for audit and accounting services on behalf of the Company.
 
During July 2013, the Company entered into a one-year lease with an entity that is 12% owned by the Chief Executive Officer (“CEO”) of the Company. The Company incurred expenses of $7,944 to this entity during the three months ended September 30, 2013.
 
On August 1, 2013, the Company’s CEO sold fixed assets to the Company for cash proceeds of $21,030.

4. COMMON STOCK SUBJECT TO REDEMPTION
 
In connection with the Company’s purchase of the domain name, the Company provided the seller with the right to exchange his 25,000 shares of common stock received in connection with the transaction (valued at $43,750) for $15,000 in the event the buyer is unable to utilize Rule 144 to resell the shares within eight months following the December 28, 2012 issuance date.
 
 
9

 
5. STOCKHOLERS’ EQUITY
 
2012 Equity Incentive Plan
 
On July 1, 2013, our board of directors and shareholders owning a majority of our outstanding shares authorized an increase in the number of shares issuable under our 2012 Equity Incentive Plan from 2,500,000 shares to 7,500,000 shares.
 
Sales of Common Stock
 
On December 29, 2010, the Company issued 8,000,000 shares of common stock at a price of $0.001 per share, to its sole Director, for total cash proceeds of $8,000.
 
During 2011, the Company issued 2,400,000 shares of common stock at a price of $0.01 per share for total cash proceeds of $24,000.
 
During 2012, the Company issued 950,000 shares of common stock at a price of $0.50 per share for total cash proceeds of $475,000.
 
On March 7, 2013, the Company issued 250,000 shares of common stock at a price of $1.00 per share for total cash proceeds of $250,000.
 
On June 12, 2013, the Company issued 200,000 shares of common stock at a price of $1.00 per share for total cash proceeds of $200,000.
 
On August 7, 2013, the Company issued 250,000 shares of common stock at a price of $1.00 per share for total cash proceeds of $250,000.
 
Cancellation of Common Stock and distribution of assets and liabilities to former shareholder
 
In connection with the change of control, on November 21, 2012, the Company cancelled 8,000,000 shares of common stock.  In addition, the Company created a separate entity named Charlie GPS Split Corp. (“Split-off Corp”) and in connection therewith transferred $1,258 of the Company’s inventory and $106,476 of the Company’s liabilities to Split-off Corp in addition to transferring all of the capital stock of Split-off Corp to the former principal shareholder of the Company.  The Company treated the cancellation of assets and liabilities as a contribution of capital to the Company of $105,218.
 
Issuances of Common Stock for Assets
 
On November 21, 2012, the Company issued 14,582,500 shares of common stock in exchange for software.   This transaction was accounted for as a transfer of nonmonetary assets by a shareholder and was recorded at the historical cost of the software which was $98,290.
 
On December 28, 2012, the Company purchased a domain name for $60,000 in cash and 25,000 shares of common stock of the Company.  The common stock issued for the domain name was valued at the grant date closing price on December 28, 2012, or $1.75 per share, and totaled $43,750.
 
 
10

 
Common Stock Issued for Services
 
During March 2013, the Company entered into a consulting agreement with Hart Partners LLC to perform certain services on behalf of the Company and required the Company to issue 25,000 shares of its common stock upon execution of the agreement, and would require the Company to issue an additional 25,000 shares in six months in the event the agreement is not terminated by either party. The Company issued 25,000 shares of common stock to Hart Partners LLC during the nine months ended September 30, 2013, which were valued at the grant date closing price of $2.38 per share, and totaled $59,500 which the Company recorded as stock compensation. The Company and Hart Partners LLC cancelled their consulting agreement after six months and, accordingly, the Company is not obligated to issue the remaining 25,000 shares of common stock.
 
Stock Option Awards
 
During January through February 2013, the Company granted certain employees and consultants options to purchase 1,250,000 shares of common stock.  The options all have an exercise price of $0.50 per share and vest over periods of 0 to 4 years.  The stock price on the grant date was $1.79-$2.14 per share.  The options were valued on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions:  (1) risk free interest rate 2.00%, (2) term of 10 years, and (3) expected stock volatilities of 182.18% -195.60% (4) dividend rate of 0%.  As a result, the fair value of these options on the grant date was $2,339,820 and the intrinsic value was $1,738,500.
 
During April through September 2013, the Company granted certain consultants and the Company’s Chief Financial Officer options to purchase 155,000 shares of common stock.  The options all have an exercise price of $1.00 per share and vest over 2 to 4 years.  The stock price on the grant date was $3.00-$3.51 per share. The options were valued on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.00%, (2) term of 10 years, and (3) expected stock volatility of 180.83-188.37%.  As a result, the fair value of these options on the grant date was $475,041 and the intrinsic value was $324,000.
 
A summary of stock option activity is presented below:
 
 
 
Number of
 
Weighted Average
 
 
 
Shares
 
Exercise Price
 
Outstanding at December 31, 2012
 
 
200,000
 
$
0.50
 
Granted
 
 
1,405,000
 
$
0.56
 
Exercised
 
 
-
 
 
-
 
Expired/Forfeited/Cancelled
 
 
(70,832)
 
 
-
 
Outstanding at September 30, 2013
 
 
1,534,168
 
$
0.54
 
 
During the nine months ended September 30, 2013 and 2012, the Company recognized stock-based compensation expense of $1,833,557 and $0, respectively, related to stock options.  As of September 30, 2013, there was approximately $938,288 of total unrecognized compensation cost related to non-vested stock options.
 
Warrant Awards
 
On December 3, 2012, the Company issued warrants to third parties to purchase 750,000 shares of its common stock granted with an exercise price of $0.01 per share.  The stock price on the grant date was $1.24 per share.   As a result, the intrinsic value for these warrants on the grant date was $922,500. The fair value of these warrants was $929,734 and were valued on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions:  (1) risk free interest rate 2.00%, (2) term of 10 years, (3) expected stock volatility of 178.45%, and (4) expected dividend rate of 0%. All of the warrants vested immediately and $929,734 was expensed during the year ended December 31, 2012.
 
 
11

 
A summary of warrant activity is presented below:
 
 
 
 
 
 
 
 
Weighted-average
 
 
 
 
 
 
 
 
Weighted-average
 
Remaining
 
Aggregate
 
 
 
Number of
 
Exercise
 
Contractual
 
Intrinsic
 
 
 
Shares
 
Price
 
Term (years)
 
Value
 
Outstanding at December 31, 2012
 
 
750,000
 
$
0.01
 
 
 
 
$
 
 
Granted
 
 
-
 
$
-
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Expired/Forfeited
 
 
-
 
 
-
 
 
 
 
 
 
 
Outstanding at September 30, 2013
 
 
750,000
 
$
0.01
 
 
9.3
 
$
2,280,000
 

6. COMMITMENTS AND CONTINGENCIES
 
Effective August 15, 2013, we entered into an Independent Contractor Agreement with Jigsaw Partners, Inc. (“Jigsaw”) pursuant to which Jigsaw provides us with marketing and other services intended to generate traffic/users to our products and services. The agreement has a term of two years and may be renewed or extended as mutually agreed by the parties. Pursuant to the agreement, we are paying Jigsaw (i) a cash retainer of $2,500 per month, (ii) bounty payments on the basis of a $0.10 bounty per download/acquisition of new users (defined as application downloads or new user accounts created that logs in and creates two new sessions), (iii) a 10% commission on net new revenues and a 5% commission on net renewal revenues derived from invitation sales (on net new revenues only), cloud storage, ad suppression and other services offered to consumers from time to time deemed to be generated by active use accounts established via the traffic generation efforts of Jigsaw. Net new revenue is defined in the agreement as revenue minus the cost of the service allocated to the exact type of revenue. Net renewal revenue is defined in the agreement as revenue minus the cost of the service allocated to the exact type of revenue. Our obligation to pay net renewal revenue to Jigsaw continues, to the extent applicable, beyond the termination of the agreement.
 
Jigsaw may, in its sole discretion, agree to accept shares of our common stock in lieu of any cash payments due to Jigsaw pursuant to the agreement. The number of shares issuable to Jigsaw will be determined based upon the average closing price for our common stock during the five trading days immediately prior to the date on which we receive notice from Jigsaw as to its intention to accept shares after applying a 10% discount to such average closing price. Alternatively, the number of shares issuable to Jigsaw may be based on the price at which we are offering shares in a private placement taking place at the time we receive notice from Jigsaw to accept shares or in a private placement which closed within thirty days of the date of notice.
 
The Company had no obligation owed to Jigsaw at September 30, 2013.

7. SUBSEQUENT EVENTS
 
During October 2013, the Company issued 125,000 shares of common stock at a price of $1.00 per share for total cash proceeds of $125,000.
 
 
12

 
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Statement Regarding Forward-Looking Information
 
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe”, “expects”, “anticipates”, “intends”, “estimates”, “projects”, “target”, “goal”, “plans”, “objective”, “should”, or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, the availability and pricing of additional capital to finance operations.
 
Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
 
The following discussion should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.
 
Overview
 
Since November 21, 2012, we have engaged in the social media business. Our first project is the socialization of the ordinary utilitarian calendar. Every day, millions of people are forced to use multiple applications to plan, invite, navigate, capture, organize and share their social and business events. Without organization and a simple retrieval system, sharing and recalling the memories are often difficult, and many times non-existent. In addition, currently used techniques of memory sharing are person-to-person as opposed to people-to-event, so many captured memories never end up being socially shared correctly. The currently available apps are disjointed which results in a scattered experience for the user. It is not uncommon for a person to have several thousand photos on his camera roll and also replicated on his hard drive; have to toggle between multiple calendars and invite applications; and have to spend endless hours organizing and attaching photos and videos; just so he can share the memories captured from an event. Thus, there is not a simple one-stop solution that syncs and allows for access and review of activities.
 
Our technically unique, yet simple-to-use application addresses these inefficiencies in the social marketplace by enabling captured memories to be centrally stored and effortlessly shared among event attendees in a secure, real-time ad-hoc network. Even for those who could not attend, our “Wish You Were Here” feature allows for a participation in an online stream of the event activities, thus truly socializing the event within the user’s circle of connections.
 
During 2013, we will continue to develop and commercialize our social media business with the objective of creating operating revenues. This may require us to raise additional funds to support our future growth plans
 
On November 21, 2012, we entered into and closed an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Local Event Media, Inc., our wholly owned Nevada subsidiary, and Gannon Giguiere and Alan Johnson (collectively the “Sellers”) under which the Sellers sold to us assets (the “Assets”) intended to enable us to engage in the social media business. The Assets consist of a software platform with millions of lines of code authored in various languages including, but not limited to HTML, Java, Python and SQL. The software platform operates at multiple levels from a back-end, middle-ware and front-end, all which have been compiled into a fully functional web based application. The software has been and will continue to be written locally by various software developers, committed to a storage vault and then compiled into a functional application, which is then served on rented servers or what is currently referred to as a cloud server farm.
 
 
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Asset Purchase Agreement
 
In conjunction with the Asset Purchase Agreement and in consideration of the purchase of the Assets, we issued an aggregate of 14,582,500 shares of our restricted common stock to the Sellers and their assigns. In conjunction with the closing under the Asset Purchase Agreement (the “Closing”), we closed on the sale of 200,000 shares of our common stock at a price of $0.50 per share or an aggregate of $100,000 pursuant to a private offering which was completed in December 2012 and in which we sold an aggregate of 950,000 shares for an aggregate of $475,000.
 
At the Closing or in anticipation of the Closing, we also took the following actions:
 
 
·
We transferred all of our pre-Asset Purchase Agreement assets, excluding the private placement offering proceeds, and all of our pre-Asset Purchase Agreement liabilities, to a newly formed wholly owned subsidiary, Charlie GPS Split Corp. (“Split-Off Subsidiary”) and in connection therewith transferred all of the outstanding shares of capital stock of Split-Off Subsidiary to our pre-Asset Purchase Agreement principal stockholder in exchange for the surrender and cancellation of 8,000,000 shares of our common stock owned by such stockholder.
 
 
 
 
·
Effective November 19, 2012, our board of directors and persons holding a majority of our outstanding common stock adopted a Two Million Five Hundred Thousand (2,500,000) share Equity Incentive Plan for future issuances, at the discretion of our board of directors, of awards to officers, key employees, consultants and directors.
 
 
 
 
·
Effective at Closing, our pre-Asset Purchase Agreement officers and directors resigned, we increased the size of our board of directors to three members with the intent to increase the board to at least five members post-Closing and we appointed new executive officers and two directors to fill the vacancies created by the resignations and the increase in the size of the board. In connection therewith we appointed Gannon Giguiere as our Chairman, Chief Executive Officer and Secretary and appointed Alan Johnson as our President and as a Director.
 
 
 
 
·
Effective at Closing, we executed 24 month lock-up agreements with all post-Closing officers and directors and all stockholders holding ten percent or more of our common stock.
 
 
 
 
·
Effective at Closing, we entered into Employment Agreements with Gannon Giguiere and Alan Johnson.
 
 
 
 
·
Effective at Closing, we entered into Indemnification Agreements with Gannon Giguiere and Alan Johnson under which we agreed to indemnify Messrs. Giguiere and Johnson and to provide for advancement of expenses under certain circumstances to the fullest extent permitted by applicable law.
 
 
 
 
·
We adopted a Code of Ethics applicable to our principal officers.
 
On December 28, 2012, we entered into a Domain Name Purchase and Assignment Agreement pursuant to which we acquired the internet domain name “eventure.com” for $60,000 and 25,000 shares of our restricted common stock. We have agreed to buy back the restricted shares from the domain name seller at a price of $0.60 per share if they are not saleable under Rule 144 of the Securities Act of 1933, as amended, eight months following their issuance date. We subsequently launched a social calendar application on our website, www.eventure.com.
 
We believe our Social Calendaring application to be unique and that it will appeal to both social and work events, allowing for a comprehensive business model including:
 
 
·
Digital Invitation Sales
 
·
Ad Suppression Subscription
 
·
Media Cloud Storage
 
·
Event Ticket Sales
 
·
Sponsored Content
 
 
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·
Targeted Listings
 
·
Promotional Offers
 
We expect to able to generate multiple revenue streams from each user, as well as professional event organizations and eventually project management professionals.
 
Results of Operations
 
Revenues
 
We generated no revenues during the period from November 29, 2010 (date of inception) through September 30, 2013.
 
Loss from Operations
 
We incurred net losses from operations of $516,932 and $2,623,920 for the three and nine months ended  September 30, 2013, respectively. For the three and nine months ended September 30, 2012, we incurred losses from operations of $108,174 and $119,515, respectively. The increase in comparable losses was due to increases in general and administrative expenses due to the commencement of operations of the Company. Such expenses included stock-based compensation of $240,664 and $1,893,057 and salaries of $130,771 and $368,170, for the three and nine months ended September 30, 2013, respectively.
 
Liquidity and Capital Resources
 
We expect that we will need additional capital to implement our strategies. Given the currently unsettled state of the capital markets and credit markets, there is no assurance that we will be able to raise the amount of capital that we seek for acquisitions or for future growth plans. Even if financing is available, it may not be on terms that are acceptable to us. In addition, we do not have any determined sources for any future funding. If we are unable to raise the necessary capital at the times we require such funding, we may have to materially change our business plan, including delaying implementation of aspects of our business plan or curtailing or abandoning our business plan. We represent a speculative investment and investors may lose all of their investment.
 
Since inception, we have been financed primarily by way of sales of our common stock.
 
At September 30, 2013, cash was $273,563 and a $5,000 deposit. At the same time, we had current liabilities of $177,718, which consisted of accounts payable and accrued expenses. We attribute our net loss from operations to having no revenues to sustain our operating costs as we are a development stage company. At December 31, 2012, cash was $357,643 and we had no other current assets. At the same time, we had current liabilities of $93,460, which consisted of accounts payable and accrued expenses.
 
Net Cash Used in Operating Activities
 
Net cash used in operating activities was $649,830 for the nine months ended September 30, 2013, as compared to net cash used of $6,532 for the nine months ended September 30, 2012. The increase in net cash used in operations was primarily due to the net loss of $2,623,920 partially offset by stock compensation of $1,893,057, and accounts payable of $91,267.
 
Net Cash Used by Investing Activities
 
During the nine months ended September 30, 2013 and 2012, we used $134,250 and $0, respectively, of cash in investing activities. The cash used in investing activities in 2013 was for software development costs of $96,250, and purchase of fixed assets of $38,000.
 
Net Cash Provided by Financing Activities
 
During the nine months ended September 30, 2013, we received $700,000 in proceeds from the sale of our common stock to investors as compared to $2,000 in proceeds from notes payable from a related party for the nine months ended September 30, 2012.
 
 
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General
 
We will only commit to capital expenditures for any future projects requiring us to raise additional capital as and when adequate capital or new lines of finance are made available to us. There is no assurance that we will be able to obtain any financing or enter into any form of credit arrangement. Although we may be offered such financing, the terms may not be acceptable to us. If we are not able to secure financing or it is offered on unacceptable terms, then our business plan may have to be modified or curtailed or certain aspects terminated. There is no assurance that even with financing we will be able to achieve our goals.
 
Going Concern
 
Our financial statements have been prepared on a going concern basis which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. We have incurred losses since inception resulting in an accumulated deficit of $3,931,108 as of September 30, 2013 and further losses are anticipated in the development of our business raising substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.
 
Critical Accounting Policies and Estimates
 
Significant Accounting Policies
 
Use of Estimates and Assumptions
 
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
 
Stock-based Compensation
 
We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, over the vesting or service period, as applicable, of the stock award using the straight-line method.
 
Off-Balance Sheet Arrangements
 
None.
 
Contractual Obligations
 
Not applicable.
 
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable.
 
 
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ITEM 4.
CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. At the end of the quarter ended September 30, 2013 we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, and for the same reasons set forth in our Annual Report on Form 10-K for the year ended December 31, 2012 management concluded that as of September 30, 2013 our disclosure controls and procedures were not effective.
 
Limitations on Effectiveness of Controls and Procedures
 
Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
 
Changes in Internal Controls
 
During the fiscal quarter ended September 30, 2013, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
 
 
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PART II – OTHER INFORMATION
 
ITEM 1.
LEGAL PROCEEDINGS
 
From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, we are not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Furthermore, as of the date of this Quarterly Report, our management is not aware of any proceedings to which any of our directors, officers, or affiliates, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
 
ITEM 1A.
RISK FACTORS
 
Not applicable.
 
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
During May 2013, we commenced an offering of a maximum of 750,000 shares of our common stock at a price of $1.00 per share. It was originally intended that the shares to be issued in this offering would not have anti-dilution protection. However, we subsequently determined to provide for anti-dilution protection. The shares issued in the offering contain full ratchet anti-dilution protection for one year following the final closing thereunder. If we issue common stock at less than $1.00 per share during such one year period or if we issue securities during such one year period which are convertible into or exercisable for shares of our common stock with a conversion or exercise price of less than $1.00 per share, then the offering price of $1.00 gets adjusted to the lower price entitling the subscribers to additional shares. In June 2013 we closed on the sale of 100,000 shares ($100,000). In August 2013 we closed on the sale of 250,000 shares ($250,000). In October 2013 we closed on the sale of 125,000 shares ($125,000). The shares were issued in reliance on the exemption from the registration requirements of the Securities Act provided by Section 4(2) of the Securities Act and/or Registration D promulgated thereunder, as transactions by an issuer not involving a public offering.
 
On July 1, 2013, we issued 25,000 non-statutory stock options under our 2012 Equity Incentive Plan to an employee to purchase up to 25,000 shares of our common stock. These options are exercisable for a period of ten years at an exercise price of $1.00 per share. The issuance of the options was made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act for transactions by an issuer nor involving a public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.
 
During September 2013, we issued 25,000 non-statutory stock options under our 2012 Equity Incentive Plan to an employee to purchase up to 25,000 shares of our common stock. These options are exercisable for a period of ten years at an exercise price of $1.00 per share. The issuance of the options was made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act for transactions by an issuer nor involving a public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.
 
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
 
None.
 
ITEM 4.
MINE SAFETY DISCLOSURES
 
Not applicable.
 
ITEM 5.
OTHER INFORMATION
 
On July 1, 2013, our board of directors and shareholders owning a majority of our outstanding shares authorized an increase in the number of shares issuable under our 2012 Equity Incentive Plan from 2,500,000 shares to 7,500,000 shares.
 
 
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Effective August 15, 2013 we entered into an Independent Contractor Agreement (the “Agreement”) with Jigsaw Partners Inc., (“Jigsaw”) pursuant to which Jigsaw provides us with marketing and other services intended to generate traffic/users to our products and services. The Agreement has a term of two years and may be renewed or extended as mutually agreed by the parties. Pursuant to the Agreement, we are paying Jigsaw (i) a cash retainer of $2,500 per month, (ii) bounty payments on the basis of a $0.10 bounty per download/acquisition of new users (defined as application downloads or new user accounts created that logs in and creates two new sessions), (iii) a 10% commission on net new revenues and a 5% commission on net renewal revenues derived from invitation sales (on net new revenues only), cloud storage, ad suppression and other services offered to consumers from time to time deemed to be generated by active use accounts established via the traffic generation efforts of Jigsaw. Net new revenue is defined in the Agreement as revenue minus the cost of the service allocated to the exact type of revenue. Net renewal revenue is defined in the Agreement as revenue minus the cost of the service allocated to the exact type of revenue. Our obligation to pay net renewal revenue to Jigsaw continues, to the extent applicable, beyond the termination of the Agreement.
 
Jigsaw may, in its sole discretion, agree to accept shares of our common stock in lieu of any cash payments due to Jigsaw pursuant to the Agreement. The number of shares issuable to Jigsaw will be determined based upon the average closing price for our common stock during the five trading days immediately prior to the date on which we receive notice from Jigsaw as to its intention to accept shares after applying a 10% discount to such average closing price. Alternatively, the number of shares issuable to Jigsaw may be based on the price at which we are offering shares in a private placement taking place at the time we receive notice from Jigsaw to accept shares or in a private placement which closed within thirty days of the date of notice.
 
The services being provided by Jigsaw pursuant to the Agreement are being provided by Jigsaw in the capacity of an independent contractor. The Agreement also contains a standard confidentiality provision.
 
ITEM 6.
EXHIBITS
 
In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
 
 
·
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
 
 
 
 
·
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
 
 
 
 
·
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
 
 
 
 
·
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
 
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
 
 
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The following exhibits are included as part of this report:
 
Exhibit No.
 
Description
 
 
 
10.1
 
Independent Contactor Agreement made effective as of August 15, 2013 between Registrant and Jigsaw Partners, Inc.
 
 
 
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 the Sarbanes-Oxley Act of 2002
 
 
 
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 the Sarbanes-Oxley Act of 2002
 
  
 
32.1
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
32.2
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
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SIGNATURES
 
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
EVENTURE INTERACTIVE, INC.
 
 
 
November 14, 2013
 
By:
/s/ Gannon Giguiere
 
 
Gannon Giguiere, Chief Executive Officer
 
 
 
 
 
EVENTURE INTERACTIVE, INC.
 
 
 
November 14, 2013
 
By:
/s/ Michael D. Rountree
 
 
Michael D. Rountree, Chief Financial Officer
 
 
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