I-WELLNESS MARKETING GROUP INC. - FORM 10-K/A

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EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - I-WELLNESS MARKETING GROUP INC.	f10ka103114_ex31z1.htm
EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - I-WELLNESS MARKETING GROUP INC.	f10ka103114_ex32z1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment no. 1

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

For the fiscal year ended October 31, 2014

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 333-172825

Monarchy Ventures Inc

(Exact name of registrant as specified in its charter)


NEVADA		46-0525633
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)


Calle urique número 5, Colonia Fuentes de Bellavista, c.p. 33880 Hidalgo del Parral, Chihuahua, Mexico
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code		(702) 722-1003

Securities registered pursuant to Section 12(b) of the Act:

NONE.

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 Par Value Per Share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

Yes No X

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes No X

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 X No

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes No X


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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of May 1, 2015: $27,841,341.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of May 1, 2015, the Registrant had 56,937,187 shares of common stock outstanding.

MONARCHY VENTURES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED OCTOBER 31, 2014


	Contents
PART I		4

ITEM 1.	BUSINESS OVERVIEW	4

ITEM 1A.	RISK FACTORS	6

ITEM 2.	PROPERTIES.	20

ITEM 3.	LEGAL PROCEEDINGS.	25

ITEM 4.	MINE SAFETY DISCLOSURES.	25

PART II		26

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.	26

ITEM 6.	SELECTED FINANCIAL DATA	26

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.	26

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.	30

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	30

ITEM 9A.	CONTROLS AND PROCEDURES.	31

ITEM 9B.	OTHER INFORMATION.	32

PART III		33

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.	33

ITEM 11.	EXECUTIVE COMPENSATION.	35

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	35

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	40

ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	40

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES.	41

ITEM 16.	SIGNATURES	42

PART I

In this Form 10-K, “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Form 10-K, including statements regarding our future financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “might,” “objective,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described under the section titled “Risk Factors” and elsewhere in this Form 10-K, regarding, among other things:

our initial attempt at exploring a mineral claim which might not have any reserves thereon;

our ability to successfully identify any future mineral properties of merit;

our ability to attract personnel who have experience in the mining industry;

our ability to complete in the mining industry with both big and small mining companies;

our ability to raise additional capital to finance our exploration programs; and

our ability to manage our future growth.

These risks are not exhaustive. Other sections of this Form 10-K may include additional factors that could adversely impact our business and financial performance. These statements reflect our current views with respect to future events and are based on assumptions and subject to risk and uncertainties. Moreover, we operate in a very competitive and rapidly-changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assume responsibility for the accuracy and completeness of the forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-K to conform these statements to actual results or to changes in our expectations.

As used in this Annual Report, the terms “we,” “us,” “our,” “Monarchy,” and the “Company” mean Monarchy Resources, Inc., unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.

ITEM 1.

BUSINESS OVERVIEW

Our principal office is located at Calle urique número 5, Colonia Fuentes de Bellavista, c.p. 33880 Hidalgo del Parral, Chihuahua, Mexico and our telephone number is (702) 722-1003.

We were incorporated in the State of Nevada on June 16, 2010 under the name “Monarchy Resources, Inc.” in order to seek out and acquire mineral properties. With strong gold prices at the present time they were interested in acquiring a property whereby gold might be discovered on it in sufficient quantities to warrant a production decision being made in the future.

We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act.

We shall continue to be deemed an emerging growth company until the earliest of:

(A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;

(B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title;

(C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or

(D) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.

As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.

Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.

As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.

We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act.

Prior to incorporation on June 16, 2010, we entered into an assignment agreement with Rodelio Mining Ltd., an unrelated third party company, to acquire La Carlota for the sum of $5,000. At the time of entering into the assignment agreement, our previous President, Guilfred Casimiro, believed that the Company had already been incorporated on the laws of the State of Nevada. As a result, the assignment agreement constitutes a “pre-incorporation contract” and was subsequently ratified, including all other prior acts and actions, by our board of directors.

Subsequent to incorporation, our two directors and officers purchased “seed stock” in the Company and engaged a consulting geologist, Angela Ventura, to prepare a geological report on the La Carlota Property. Mr. Ventura’s geological report dated June 28, 2010 recommends a two phase program which is set out in detail in the section below titled “Properties”. We do not have an ore body on La Carlota and the chances of us ever having an ore body are remote.

On May 14, 2013, the Company entered into a Share Purchase Agreement (the “SPA”) with the owners of New World Minerals S.A.P.I. de C.V. (“New World”) Under the terms of the SPA, On September 9, 2013, the Company issued 10,000,000 shares of the Company at a deemed value of $1.00 per share to the owners of New World in exchange for 28% of the issued and outstanding shares of New World. New World is a mining operator in the Chihuahua region of Mexico which owns three working mines; Morelos, La Luna, and Peneto.

We have spent significant funds on the three working mines; Morelos, La Luna, and Peneto since their acquisition. We have not yet undertaken sufficient exploration work on our mineral claim, La Carlota. Three of our claims are located in Mexico, our other claim, La Carlota, is located in the Philippines. We have mined the Mexican claims and hope that the mining becomes profitable, we are also hopeful that our future exploration programs on the La Carlota claim will identify mineralization which eventually can be put into commercial production. It must be borne in mind that very few mineral claims explored are ever able to go into commercial production. This might be the case with La Carlota. Nevertheless, we would like to be able to generate revenue from La Carlota by selling the mineral we locate on the claim.

On July 4, 2013, the Company entered into an agreement to increase its ownership in New World by 17% to 45% by issuing 5,000,000 shares at $1.00 per share and investing $750,000 in New World. The 5,000,000 shares were issued on May 9, 2013. The $750,000 was to be invested in New World over the following year.

On January 15, 2014, the Company converted the $750,000 commitment to New World into 200,000 shares (20,000,000 pre- reverse split) of the Company, and on January 17, 2014 these shares were issued. As the fair value of these shares was $1,096,000 (based on the quoted price of the Company’s stock on January 17, 2014), the Company recorded a loss on debt extinguishment of $346,000 in the statement of operations.

On August 5, 2014, the Company completed a merger with Budbay Inc. a wholly owned subsidiary incorporated in the State of Nevada. This corporate action was approved by the Company’s Board of Directors as authorized by Nevada corporate law. The company applied to FINRA for approval of the merger together with a 1 for 100 reverse stock split. The merger and reverse stock split was approved by FINRA on August 19, 2014 and became effective on August 20, 2014.

On October 12, 2014, at a special meeting of the board of directors of the Company, the Company resolved to enter into, execute, and close a share exchange agreement to acquire 100% of the outstanding shares of The Spud Shack Fry Company Ltd., an operating British Columbia based restaurant company (“Spud Shack”). Under the terms of the Agreement, the Company acquired 100% of Spud Shack in exchange for the issuance of 90,000,000 restricted common shares of the Company at a deemed price of $0.01 per share for a total acquisition cost of $900,000. The Agreement was closed on Friday, October 17, 2014.

On November 18, 2014, the Company completed a merger with Monarchy Ventures Inc., a wholly owned subsidiary incorporated in the State of Nevada. This corporate action was approved by the Company’s Board of Directors as authorized by Nevada corporate law. The company applied to FINRA for approval of the merger together with a corporate name change to “Monarchy Ventures Inc.” and a 1 for 3 reverse stock split. The merger, corporate name change and reverse stock split were approved by FINRA on November 20, 2014, and became effective on November 24, 2014.

ITEM 1A.

RISK FACTORS.

Investing in our common stock involves a high degree of risk. Before you invest in our common stock, you should be aware that our business faces numerous financial and market risks, including those described below, as well as general economic and business risks. The following discussion provides information concerning the material risks and uncertainties that we have identified and believe may adversely affect our business, financial condition and results of operations. Before you decide whether to invest in our common stock, you should carefully consider these risks and uncertainties, together with all of the other information included in this Form 10-K.

Risks Associated with our Company and our Industry

We are governed by only one executive officer, Tim Ferguson, which may lead to faulty corporate governance.

We have two directors but only one executive officer who makes all the decisions regarding corporate governance. This includes their (executive) compensation, accounting overview, related party transactions and so on. They will also have full control over matters that require Board of Directors approval. This may introduce conflicts of interest and prevent the segregation of executive duties from those that require Board of Directors’ approval. This may lead to ineffective disclosure and accounting controls. Non-compliance with laws and regulations may result in fines and penalties. They would have the ability to take any action as they themselves review them and approve them. They would exercise control over all matters requiring shareholder approval including significant corporate transactions. We have not implemented various corporate governance measures nor have we adopted any independent committees as we presently do not have any independent directors.

Our directors and officers are not residents of the United States making the enforcement of liabilities against them difficult.

Our director and executive officer resides outside the United States. If a shareholder had a desire to sue them for damages, the shareholder would have to serve a summons and complaint. Even if personal service is accomplished and a judgment is entered against our directors in the United States, the shareholder would then have to locate the assets of our directors, and register the judgment in Mexico where the assets are located.

Our executive officers have other business interests which may limit the amount of time they can devote to our Company and create conflicts of interest.

Our executive officers have other business interests and our President is unable to work full time for our Company. This might eventually led to business failure. He plans to devote only 40 hours per month at this time to our affairs which may lead to sporadic exploration activities and periodic interruptions of business operations. Unforeseen events may cause this amount of time to become even less. Our officer may also have conflicts of interest as a result of these relationships with the companies they currently work for.

We must attract and maintain key personnel or our business will fail.

Success depends on the acquisition of key personnel. We will have to compete with other companies both within and outside the mining industry to recruit and retain competent employees. If we cannot maintain qualified employees to meet the needs of our anticipated growth, this could have a material adverse effect on our business and financial condition.

We are recently incorporated, have a lack an operating history and have yet to make any revenues. If we cannot generate any profits, you may lose your entire investment.

We are a recently incorporated company and have yet to generate any revenues. No profits have been made to date and if we fail to make any then we may fail as a business and an investment in our common stock will be worth nothing. We have no operating history and thus no way for you to measure progress or potential future success. Success has yet to be proved. Currently, there are no operations in place to produce revenue. We are exploration and have yet to find or produce sellable product. Financial losses should be expected to continue in the near future and at least until such time that we enter the production stage. As a new business we face all the risks of a ‘start-up’ venture including unforeseen costs, expenses, problems, and management limitations and difficulties. There is no guarantee, unfortunately, that we may ever be able to turn a profit or locate additional opportunities, hire additional management and other personnel.

We need to acquire additional financing or our company will fail.

We must obtain additional capital or our business will fail. In order to explore the claim and eventually establish operations, we must secure more funds. Currently, we have very limited resources and have already accumulated a net loss. Without operations, we will make no money which may result in complete loss of your investment. Financing is also needed to bring product to market. Financing may be subject to numerous factors including investor sentiment, acceptance of mining claims and so on. We are committed to raising $750,000 to fund the Mexican operations. We may also have to borrow large sums of money that require substantial capital and interest payments. We also must perform mineral explorations on La Carlota Gold Claim to determine if any ore reserves are present.

The probability of a mineral claim having profitable reserves is very rare and our claim, even with large investments, may never generate a profit.

We are dependent upon our mining property for success. All anticipated future revenues would come directly from our three small Mexican mines and our Philippine claim, La Carlota. Should we fail to extract and sell gold from this property, our business will fail. Mineral deposit estimates are imprecise and subject to error, and resource calculations when made may prove unreliable. Assumptions made regarding the supporting data may prove inaccurate and unforeseen events may lead to further inaccuracies. Sample variability, mining and processing adjustments, environmental changes, metal price fluctuations, and law and regulation changes are all factors that could lead to deviances from the original estimations. No assurances can be given that any mineral deposit estimate will ever be reclassified as a reserve. We have no known ore reserves. Despite future investment in exploration activities, there is no guarantee we will locate a commercially viable ore reserve. Most exploration projects do no result in discovery of commercially mineable deposits. With little capital available, we will have to limit our exploration which decreases the chances of finding a commercially viable ore body. Even if gold/and or silver is identified, La Carlota may not be put into production due to high extraction costs, low gold prices, or inadequate amount and reduced recovery rates. If the exploration activities do not suggest a commercially successful prospect then we may altogether abandon plans to develop the property.

The exploration and prospecting of minerals is speculative and extremely competitive which may make success difficult.

We face strong competition from other mining companies for the acquisition of new properties. New properties increase the probability of discovering a profitable reserve. Most companies have greater financial and managerial resources than we do and can acquire and explore attractive new mining properties. We will face similar difficulties raising new capital to expand operations against the larger, better capitalized competitors. Limited supply and unforeseen demand from larger, more competitive companies may make secure all necessary equipment and materials difficult and may result in periodic interruptions or even business failure. Success depends on a combination of many factors including but not limited to: the quality of management, technical (geological) expertise, quality of land available for exploration and the capital available for exploration.

We have put our mineral projects into production without first establishing mineral reserves supported by a technical report or feasibility study.

We have placed our Mexican mineral projects into production without first establishing mineral reserves supported by a technical report and completing a feasibility study. Historically, such projects have a much higher risk of economic or technical failure. We have not based our production decision on a pre-feasibility or feasibility study of mineral reserves, which demonstrate our economic and technical viability. As a result, there is increased uncertainty, with specific economic and technical failure associated with this decision.

International operations in Mexico and the Philippines are subject to inherent risks.

Political instability, uncertainty of the economic climate, currency fluctuations, exchange controls and taxation laws may be significant in our business dealing in Mexico and the Philippines. Access to all of the equipment, supplies and materials necessary to begin exploration may not be available and may delay our exploration activities in the Philippines. We have not yet attempted to locate or negotiate with any suppliers of products, equipment or materials but plan to do so when exploration begins. Exchange rate changes between the Mexican and Philippine currencies and the U.S. Dollar may also adversely affect our successful operations.

Our future operations may be adversely affected by future governmental and environmental regulations and permitting.

Environmental regulations may negatively affect the progression of operations and these regulations may become stricter in the future. In Mexico and in the Philippines, all mining is regulated by Federal and State/Provincial level government agencies. Obtaining licenses and permits from these agencies as well as an environmental impact study for each mining property must be completed before starting mining activities. These are expensive and affect the timing of operations. Pollution can be anticipated with mining activities. If we are unable to comply with current or future regulations, this may expose us to fines, penalties and litigation that could cause our business to fail.

We are vulnerable to the change of the world gold supply, demand and prices.

Gold prices change on a world market beyond our control. A drop in price would adversely affect our ability to generate a profit. All our revenues would be derived from the sale of gold and possibly other precious metals. Changes in the price of gold thus may affect profitability and impede us from being able to afford to continue operations. Gold prices historically have fluctuated widely; price tends to be linked to a number of factors beyond our control such as: various macroeconomic factors (terrorism, political and regional events that may include such, confidence in the global monetary system, rate of inflation expectations, interest rates, US dollar and certain other currency strength); speculative or hedging activities; forward sales by producers, speculators and other holders; central bank lending; sales and purchases of gold; industrial and jewelry demand; and the current supply and demand. These things are impossible for us to predict. Per ounce, gold has been $384 (1995), $279 (2000), $420 (2005), $1,120 (2010), $1,834 (2011), $1,755 (2012), $1,200 (2013), $1,200 (2014) London PM Fix Price for instance. This volatility may favor operations now but should the price drop unexpectedly some or all exploration activities may become economically unfeasible in the future.

We are subject to inherent mining hazards and risks that may result in future financial obligations.

Risks and hazards associated with the mining industry may adversely affect our operations such as, but not limited to,: political and country risks, industrial accidents, labor disputes, inability to retain necessary personnel or equipment, environmental hazards, unexpected geologic formations, cave-ins, landslides, flooding and monsoons, fires, explosions, power outages, processing problems. Personal injury and death could result as well as property damage, delays in mining, environmental damage, legal liability and monetary loss. We may not be able to obtain insurance to cover these risks at economically reasonable premiums. We do not carry any sort of insurance and may have difficulties obtaining such once operations start as insurance is generally sparse and cost prohibitive.

Our success depends substantially on the favorable image, credibility and value of the Spud Shack brand and our reputation for offering customers a higher quality, more differentiated total dining experience at a good value.

The successful operation of the Spud Shack restaurant concept is highly dependent upon Spud Shack’s ability to remain relevant to consumers and a brand they trust. We believe that we have built a strong reputation for the quality and differentiation of Spud Shack’s menu and beverage offerings as integral components of the total dining experience that customers enjoy in our restaurants. We believe that we must continue to protect, enhance and evolve the Spud Shack’s brand to continue to be successful in the future. Any incident that erodes consumer trust in or affinity for the Spud Shack’s brand could significantly reduce its value. If consumers perceive or experience any reduction in our food or beverage quality, service or facility ambiance, or in any way believe we failed to deliver a consistently positive dining experience, the value of the Spud Shack’s brand could be impaired. We may also need to evolve the Spud Shack’s restaurant concept in order to compete with popular new restaurant formats or concepts that emerge from time to time, and we cannot provide any assurance that we will be successful in doing so, or that any changes we make to our concept in response will be successful or not adversely affect our profitability. In addition, with the increasing prevalence of food-away-from-home at fast casual restaurants, single-serve operations, quick-service restaurants and certain grocery operations, combined with the continuing pressure on consumer discretionary spending for restaurant occasions, consumers may choose less expensive alternatives to Spud Shack’s which could also negatively affect customer traffic at our restaurants.

Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.

There has been a significant increase in the use of social media platforms and similar devices, including weblogs (blogs), social media websites and other forms of Internet-based communications which allow individuals’ access to a broad audience of consumers and other interested persons. Consumers value readily available information concerning goods and services that they have or plan to purchase, and may act on such information without further investigation or authentication. The availability of information on social media platforms is virtually immediate as is its impact. Many social media platforms immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning our Company may be posted on such platforms at any time. Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity for redress or correction. Such platforms also could be used for dissemination of trade secret information, compromising valuable company assets. In sum, the dissemination of information online could harm our business, prospects, financial condition and results of operations, regardless of the information’s accuracy. The inappropriate use of social media vehicles by our customers or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

As part of our marketing efforts, we rely on search engine marketing and social media platforms such as Facebook^®, Twitter^® and Google+™ to attract and retain customers. We also are initiating a multi-year effort to implement new technology platforms that should allow us to improve our level of digital engagement with our customers and employees and thereby help strengthen our marketing and related consumer analytics capabilities. These initiatives may not prove to be successful and may result in expenses incurred without the benefit of higher revenues or increased employee engagement.

Any deterioration in general economic conditions may affect consumer spending and may adversely affect our revenues, operating results and liquidity.

Any resulting decreases in customer traffic or the average expenditure per customer will negatively impact our financial results, since reduced sales result in the deleveraging of the fixed and semi-fixed costs in our operations and thereby cause downward pressure on our operating profits and margins. There is also a risk that if negative economic conditions persist for a long period of time or worsen, consumers may make long-lasting changes to their discretionary purchasing behavior, including less frequent discretionary purchases on a more permanent basis.

The above factors could also impose practical limits on our menu price increases. From time to time, we may announce that we intend to take price increases on selected menu items in order to offset increased operating expenses. Although we believe that we have not experienced significant consumer resistance to our past price increases, in light of the current economic and competitive environment, we cannot provide assurance that any future menu price increases will not deter customers from visiting our restaurants, reduce the frequency of their visits or affect their purchasing decisions.

Any deterioration in general economic conditions could have a material adverse impact on our landlords or on businesses neighboring our locations, which could adversely affect our revenues and results of operations.

Any deterioration in general economic conditions could result in our landlords being unable to obtain financing or remain in good standing under their existing financing arrangements which could result in their failure to satisfy obligations to us under leases, including failures to fund or reimburse agreed-upon tenant improvement allowances. Any such failure could adversely impact our operations.

In addition, if our landlords are unable to obtain sufficient credit to continue to properly manage their retail centers, we may experience a drop in the level of quality of such centers where we operate restaurants. Our future development of new restaurants may also be adversely affected by the negative financial situations of developers and potential landlords. Landlords may try to delay or cancel recent development projects (as well as renovations of existing projects) which could reduce the number of appropriate locations available that we would consider for our new restaurants. Furthermore, the failure of landlords to obtain licenses or permits for development projects on a timely basis, which is beyond our control, may negatively impact our ability to implement our development plan.

Changes in consumer buying patterns, particularly e-commerce sites, may affect our revenues, operating results and liquidity.

Our restaurant is located in a high consumer activity malls with a national chain grocery store and movie theatre. We depend in large part on a high volume of visitors to these centers to attract customers to our restaurants. E-commerce and online shopping continues to increase and negatively impact consumer traffic at traditional “brick and mortar” retail sites located in regional malls and entertainment centers. A decline in development or in visitors to these centers near our restaurants could negatively affect our sales.

If we do not successfully expand our restaurant operations, our growth rate and results of operations would be adversely affected.

A critical factor in our future success is our ability to expand our restaurant operations successfully, which will depend in large part on our ability to open new restaurants in a profitable manner. We anticipate that our new restaurants will generally take several months longer to reach targeted productivity levels due to the inefficiencies typically associated with new restaurants, including lack of initial market and consumer awareness, the need to hire and train sufficient management and restaurant personnel and other factors. The opening of new restaurants can also have either an expected or an unintended effect on sales levels at existing restaurants. We cannot guarantee that any restaurant we open will obtain operating results similar to those of our existing restaurants. If we are unable to open and operate new restaurants successfully, our growth rate and our results of operations would be adversely affected. Our expansion plans could also be impacted by the delay or cancellation of potential new sites by developers and landlords, which may become more common during the next couple of years as a result of the current economic environment and tight credit markets.

We intend to open new restaurants in both established and new markets. Opening new restaurants in established markets generally provides some advantages in the form of stronger levels of initial consumer awareness, trial and usage, as well as greater leverage of certain supply chain and field supervision resources. On the other hand, there is a risk that some portion of the sales of existing restaurants in the market may transfer to newly opened restaurants in the market, resulting in negative pressure on our overall comparable restaurant sales metric. While we do not generally select locations for our new restaurants where we believe that a significant sales transfer will likely occur, some unexpected sales transfer may inadvertently occur.

New markets may have different competitive conditions, consumer tastes and discretionary spending patterns than our existing market. As a result, new restaurants in those markets may be less successful than restaurants in our existing markets. Consumers in a new market will typically not be familiar with the Spud Shack’s brand. We also may find it more difficult to hire, motivate and retain qualified employees in new markets. Restaurants opened in new markets may also have lower average restaurant sales than restaurants opened in our existing markets, and may have higher construction, occupancy or operating costs than restaurants in existing markets. Sales at restaurants opened in new markets may take longer to achieve margins more typical of mature restaurants in existing markets or may never achieve these targeted margins thereby affecting our overall profitability. As we expand into new markets and geographic territories, our operating cost structures may not replicate our experience in existing markets. Because there will initially be fewer restaurants in a given market, our ability to optimally leverage our field supervision, marketing and supply chain resources will be limited for a period of time. Further, our overall new restaurant development and operating costs may increase due to more lengthy geographic distances between restaurants resulting in higher purchasing, preopening, labor, transportation and supervision costs. The performance of restaurants in new markets will often be less predictable. New restaurants may not have similar results as our existing restaurants and may not be as profitable.

Access to sources of capital and our ability to raise capital in the future may be limited, which could adversely affect our business and our expansion plans.

Our ability to continue to successfully grow our business depends, in part, on the availability of adequate capital. Changes in our operating plans, acceleration of our expansion plans, lower than anticipated revenues, unanticipated and/or uncontrollable events in the capital or credit markets that impact our liquidity, lower than anticipated tenant improvement allowances offered by landlords, increased expenses or other events may cause us to seek additional debt or equity financing on an accelerated basis in the event our cash flow from operations is insufficient. Financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could adversely affect our financial condition. Debt financing, if available, may involve significant cash payment obligations, covenants and financial ratios that restrict our ability to operate and grow our business, and would cause us to incur additional interest expense and financing costs. In addition, disruptions in the global credit and equity markets, including unanticipated and/or uncontrollable events in the capital or credit markets, may have an adverse effect on our liquidity and our ability to raise additional capital if and when required.

Any failure of our existing or new restaurants to achieve expected results could have a negative impact on our consolidated revenues and financial results, including a potential impairment of the long-lived assets of certain restaurants.

The results achieved by our newer restaurants may not be indicative of longer term performance or the potential market acceptance of restaurants in other locations. There can be no assurance that any new restaurant that we open will have similar operating results to those of prior restaurants. Our newer restaurants typically take several months, or even longer, to reach targeted levels of productivity due to inefficiencies typically associated with new restaurants. Accordingly, incremental sales from newly-opened restaurants generally do not make a significant contribution to our total operating profits in their initial months of operation. We make certain estimates and projections with regard to individual restaurant operations, as well as our overall performance in connection with our impairment analyses for long-lived assets in accordance with U.S. GAAP. An impairment charge is required when the carrying value of the restaurant exceeds the estimated undiscounted future cash flows of the restaurant, in which case the restaurant assets are written down to estimated fair value. The projection of restaurant future cash flows used in this analysis requires the use of judgment and a number of estimates and projections of future operating results. If the restaurant’s actual results differ from our estimates, charges to impair the restaurant’s assets may be required. If impairment charges are significant, our results of operations could be adversely affected.

Our recent trends in average restaurant sales or our trends in comparable restaurant sales may not be indicative of future trends or future operating results.

Our average restaurant sales and comparable restaurant sales trends may not be indicative of future trends or future operating results. Our ability to operate our restaurant profitably and increase average restaurant sales and comparable restaurant sales will depend on many factors, some of which are beyond our control, including:

our ability to execute our business strategy effectively;

our ability to execute productively and efficiently within the “four walls” of the restaurant;

our menu development and pricing strategy;

our ability to continue deploying menu, beverage, capital expenditure and technological innovations that have the opportunity to increase customer visit frequency and spending per visit;

intrusions into our restaurant trade areas by new restaurants operated by competitors;

changing demographics, consumer tastes or discretionary spending;

our ability to develop restaurants in geographic locations that do not compete with or otherwise adversely affect the sales of our existing restaurants;

overall brand awareness in new markets or existing markets where we may develop new restaurants;

maturation of the casual dining segment;

levels of competition in our market; and

general economic conditions, credit markets and consumer confidence.

Any failure to drive both short-term and long-term profitable sales growth through continued enhancements to the Spud Shack’s restaurant concept and brand, coupled with any slippage in restaurant operational execution, could result in poor financial performance. As part of our business strategy, we intend to drive profitable sales growth by increasing sales at existing restaurants and by opening new restaurants. This strategy involves numerous risks, and we may not be able to achieve our growth objectives. If we are unable to maintain Spud Shack’s brand relevance and restaurant operational excellence to achieve sustainable comparable restaurant sales growth, we may have to consider slowing the pace of new restaurant openings. Spud Shack’s short-term sales growth could be impacted if we are unable to drive near-term growth in customer traffic, and long-term sales growth could be impacted if we fail to continue to evolve Spud Shack’s to maintain its relevance, contemporary energy and overall value and appeal to the consumer.

Adverse changes in our average restaurant revenues and comparable restaurant sales could have an adverse effect on our common stock or increase the volatility of the price of our common stock.

Our menu development and marketing programs may not be successful.

We expect to continue investing in certain menu, marketing and merchandising initiatives that are intended to attract and retain customers for our restaurants. Not all of such initiatives may prove to be successful and may thereby result in incremental expenses incurred without the benefit of higher revenues, or may result in other unfavorable economic consequences. Additionally, if our competitors were to increase their spending on menu development and marketing initiatives, or if our menu and marketing initiatives were to be less effective than those of our competitors, we could experience a material adverse effect on our results of operations.

We have experienced significant increases in the costs of certain food, labor, energy and supply items in the past, and we may be unable to successfully and sufficiently raise menu prices to offset rising costs and expenses.

In the past, we have experienced dramatic increases in prices of certain commodities necessary for our restaurant and brewery operations, including increased costs of food, commodities, minimum wage, employee benefits, insurance arrangements, construction, energy and other costs. To manage this risk in part, we attempt to enter into fixed price purchase commitments, with terms up to one year in some cases, for many of our commodity requirements. However, it may not be possible for us to enter into fixed-price contracts for an entire fiscal year for many of our food commodity requirements. Additionally, we utilize menu price increases to help offset the increased cost of our commodities and other costs. However, there is no guarantee that our menu price increases will be accepted by our customers. If our costs do not stabilize, our operating margins and results of operations will be adversely affected if we are unable to increase our menu prices to offset such increased costs.

We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases.

Generally our leases are “net” leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities and cannot be canceled. Additional sites that we lease are likely to be subject to similar long-term non-cancelable terms. If an existing or future restaurant is not profitable and we decide to close it, we may be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, as each of our leases expires, we may fail to negotiate renewals, which could cause us to pay increased occupancy costs or to close restaurants in desirable locations. These potential increased occupancy costs could materially adversely affect our business, financial condition or results of operations.

Our operations could be adversely affected if our suppliers are not able to continue to do business with us or are forced to alter the terms on which they do business with us.

If we are forced to find alternative suppliers for key services, whether due to demands from the vendor or the vendor’s bankruptcy or ceasing operations, that could be a distraction to us and adversely impact our business. If any of our major suppliers or a large number of other suppliers suspend or cease operations, we may have difficulty keeping our restaurants fully supplied with the commodities and supplies that we require. In addition, we currently rely on one or a limited number of suppliers for certain key menu ingredients. If we were forced to suspend serving one or more of our menu items, that could have a significant adverse impact on our restaurant customer traffic and public perceptions of us, which would be harmful to our operations.

We are dependent upon consumer trends and upon high levels of consumer traffic at the sites where our restaurant is located, and any adverse change in such consumer trends or traffic levels could adversely affect our business, revenues and results of operations.

Due to the nature of the restaurant industry, we are dependent upon consumer trends with respect to the public’s tastes, eating habits, public perception toward alcohol consumption and discretionary spending priorities, all of which can shift rapidly. We also are dependent upon high consumer traffic rates at the sites surrounding our restaurants, which are primarily located in high-activity areas such as urban, retail, mixed-use and lifestyle centers, to attract customers to our restaurants. In general, such consumer trends and visit frequencies are significantly affected by many factors, including national, regional or local economic conditions, changes in area demographics, public perception and attitudes, increases in regional competition, food, liquor and labor costs, traffic and shopping patterns, weather, natural disasters, interest rates, co-tenancies in urban, retail and mixed-use and lifestyle centers and the availability and relative cost of gasoline. Our success will depend, in part, on our ability to anticipate and respond to such changing consumer preferences, tastes, eating and purchasing habits, as well as other factors affecting the restaurant industry, including new market entrants and demographic changes. Any adverse change in any of the above factors and our inability to respond to such changes could cause our restaurant volumes to decline and adversely affect our business, revenues and results of operations.

Our success depends on our ability to compete effectively in the restaurant industry.

The restaurant industry is highly competitive. We compete on the basis of the taste, quality and price of food offered, customer service, brand name identification, beer quality and selection, attractiveness of the facilities, restaurant location, atmosphere and overall dining experience. Our competitors include a large and diverse group of restaurant chains and individual restaurants that range from independent local operators that have opened restaurants in various markets to well-capitalized national restaurant companies. In addition, we compete with other restaurants and retailers for real estate. We also face growing competition as a result of the trend toward convergence in grocery, deli and restaurant services, particularly in the supermarket industry which offers “convenient meals” in the form of improved entrées and side dishes from the deli section. Many of our competitors have substantially greater financial, marketing and other resources than we do.

Restaurant consumers are highly focused on overall value and price perception. If other restaurants are able to promote and deliver a higher degree of perceived value through heavy discounting or other methods, our customer traffic levels may suffer which would adversely impact our revenues and profitability. In addition, with improving product offerings at “fast-casual” restaurants, quick-service restaurants and grocery stores, consumers may choose to trade down to these alternatives, which could also negatively affect our financial results.

We believe that we have built a favorable reputation for the quality and differentiation of our restaurant concept. We also believe that we must continue to re-invest in our core established restaurant operations to further protect and grow the overall consumer “value” of our concept so that it will continue to be relevant in the future. Any incident that erodes consumer trust in, or their attraction to, our concept could significantly reduce its value. If consumers perceive or experience any material reduction in food quality, service or ambiance, or in any way believe we materially failed to deliver a consistently positive dining experience, the consumer “value’ of our concept could suffer.

New information or attitudes regarding diet, health and the consumption of alcoholic beverages could result in changes in regulations and consumer consumption habits that could adversely affect our results of operations.

Regulations and consumer eating habits may change as a result of new information or attitudes regarding diet and health. Such changes may include regulations that impact the ingredients and nutritional content of the food and beverages we offer. The success of our restaurant operations is dependent, in part, upon our ability to effectively respond to changes in any consumer health regulations and our ability to adapt our menu offerings to trends in food consumption. If consumer health regulations or consumer eating habits change significantly, we may be required to modify or delete certain menu items. To the extent we are unable to respond with appropriate changes to our menu offerings, it could materially affect customer demand and have an adverse impact on our results of operations. The risks and costs associated with nutritional disclosures on our menus could also impact our operations, particularly given differences among applicable legal requirements and practices within the restaurant industry with respect to testing and disclosure, ordinary variations in food preparation among our own restaurants, and the need to rely on the accuracy and completeness of nutritional information obtained from third party suppliers.

The gross profit margin on our sales of alcoholic beverages is generally higher than our gross profit margin on sales of food items. The alcoholic beverage industry has become the subject of considerable societal and political attention in recent years due to increasing public concern over alcohol-related social problems, including driving under the influence, underage drinking and health consequences from the misuse of alcohol, including alcoholism. As an outgrowth of these concerns, the possibility exists that advertising by beer producers could be restricted, that additional cautionary labeling or packaging requirements might be imposed, that further restrictions on the sale of alcohol might be imposed, or that there may be renewed efforts to impose increased excise or other taxes on beer or alcohol related items. If beer or alcohol consumption were to come into disfavor among domestic drinkers, or if the domestic beer industry were subjected to significant additional governmental regulations, our sales and profits could be adversely affected.

Health concerns arising from outbreaks of flu viruses or other diseases, or regional or global health pandemics, could severely affect our business.

Some countries have experienced, or may experience in the future, outbreaks of viruses, such as norovirus, Avian Flu or “SARS,” and H1N1 or “swine flu,” or other diseases such as bovine spongiform encephalopathy, commonly known as “mad cow disease.” To the extent that a virus or disease is food-borne, or perceived to be food-borne, future outbreaks may adversely affect the price and availability of certain food products and cause our customers to eat less of a product. For example, health concerns relating to the consumption of beef or to specific events such as the outbreak of “mad cow disease” may adversely impact sales of our beef-related menu items. In addition, public concern over “avian flu” may cause fear about the consumption of chicken, eggs and other products derived from poultry. The inability to serve beef or poultry-based products would restrict our ability to provide a variety of menu items to our customers. If we change our menu in response to such concerns, we may lose customers who do not prefer the new menu, and we may not be able to sufficiently attract new customers to produce the revenue needed to restore the profitability of our restaurant operations. We also may generate different or additional competitors for our intended customers as a result of such a menu change and may not be able to successfully compete against such competitors. If a virus is transmitted by human contact, our employees or customers could become infected, or could choose, or be advised, to avoid gathering in public places, any of which could adversely affect our restaurant customer traffic and our ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level. We also could be adversely affected if jurisdictions in which we have restaurants impose mandatory closures, seek voluntary closures or impose restrictions on operations. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may adversely affect our business.

A health pandemic is a disease outbreak that spreads rapidly and widely by infection and affects many individuals in an area or population at the same time. We believe that our restaurants have one of the highest levels of customer traffic per square foot in the casual dining segment of the restaurant industry. Our restaurants are places where people can gather together for human connection. Customers might avoid public gathering places in the event of a health pandemic, and local, regional or national governments might limit or ban public gatherings to halt or delay the spread of disease. The impact of a health pandemic on us might be disproportionately greater than on other casual dining concepts that have lower customer traffic and that depend less on the gathering of people.

Negative publicity about us, our restaurant, other restaurants, or others across the food supply chain, or about the consumption of beef, seafood, poultry/produce, beer or alcoholic beverages, whether or not accurate, could adversely affect the reputation and popularity of our restaurants and our results of operations.

The good reputation of our restaurants is a key factor to the success of our business. Incidents that occur at any of our restaurants, or at restaurants operated by other foodservice providers or generally in the food supply chain, could be damaging to the restaurant industry overall, may specifically harm our brand and reputation and may quickly result in negative publicity for us, which could adversely affect our reputation and popularity with our customers. In addition, negative publicity resulting from poor food quality, illness, injury, food tampering or other health concerns, whether related to one of our restaurants, to the restaurant industry, or to the beef, seafood, poultry or produce industries (such as negative publicity concerning the accumulation of carcinogens in seafood, e-coli, hepatitis A, Avian Flu, listeria, salmonella, and other food-borne illnesses), or operating problems related to one or more of our restaurants, could adversely affect sales for all of our restaurants and make our brand and menu offerings less appealing to consumers. If our restaurant customers or employees become ill from food-borne illnesses, we could be forced to temporarily close the restaurant.

Our operations are susceptible to changes in our food, labor and related employee benefits and energy supplies which could adversely affect our profitability.

Our profitability depends, in part, on our ability to anticipate and effectively react to changes in food, labor, utilities and supply costs. Our supply chain department negotiates prices for all of our ingredients and supplies through contracts (with terms of one month up to one year, or longer in a few cases), spot market purchases or commodity pricing formulas. Furthermore, various factors beyond our control, including adverse weather conditions and governmental regulations, could also cause our food and supply costs to increase. We cannot predict whether we will be able to anticipate and react to changing food and supply costs by adjusting our purchasing practices. A failure to do so could adversely affect our operating results or cash flows from operations. We also have a single or a limited number of suppliers for certain of our commodity and supply items. Accordingly, supply chain risk could increase our costs and limit the availability of some products that are critical to our restaurant and brewing operations.

The overall cost environment for food commodities can be volatile primarily due to domestic and worldwide agricultural supply/demand and other macroeconomic factors that are outside of our control. The availabilities and prices of food commodities are also influenced by increased energy prices, droughts, animal-related diseases, natural disasters, increased geo-political tensions, the relationship of the dollar to other currencies, and other issues. Virtually all commodities purchased and used in the restaurant industry (meats, grains, oils, dairy products, and energy) have varying amounts of inherent price volatility associated with them. Our suppliers also may be affected by higher costs to produce and transport commodities used in our restaurants and breweries, higher minimum wage and benefit costs, and other expenses that they pass through to their customers, which could result in higher costs for goods and services supplied to us. Increases in minimum wage, health care costs and other benefit costs may have a material adverse effect on our labor costs. While we attempt to manage these factors by offering a diversified menu and by contracting for our key commodities for extended periods of time whenever feasible and possible, there can be no assurance that we will be successful in this respect due to the many factors that are outside of our control. In addition, raw materials that we may purchase on the international market are subject to fluctuations in both the value of the U.S. dollar and increases in local demand, which may increase our costs and negatively impact our profitability.

Our restaurant-level operating margins are also affected by fluctuations in the availability and cost of utilities services, such as electricity and natural gas. Interruptions in the availability of gas, electric, water or other utilities, whether due to aging infrastructure, weather conditions, fire, animal damage, trees, digging accidents or other reasons largely out of our control, may adversely affect our operations. In addition, weather patterns in recent years have resulted in lower than normal levels of rainfall in certain areas that could produce droughts in key states such as California, thus impacting the price of water and the corresponding prices of commodities grown in states facing drought conditions. There is no assurance that we will be able to maintain our utility and commodity costs at levels that do not have a material adverse effect on our operations.

If our distributors or suppliers do not provide food and beverages to us in a timely fashion, we may experience short-term supply shortages, increased food and beverage costs and quality control problems.

We currently depend on national and regional food distribution service companies, as well as other food manufacturers and suppliers, to provide food and beverage products to our restaurant. We also rely on independent third party brewers and many local beer distributors to provide us with beer for our restaurants. The operations of our distributors, suppliers and independent third party brewers are subject to risks including labor disputes, financial liquidity, inclement weather, natural disasters, supply constraints, and general economic and political conditions that could limit their ability to timely provide us with acceptable products. Additionally, under the “force majeure” provisions in most of our agreements with suppliers, certain unexpected and disruptive events may excuse a supplier from performing. If our distributors, suppliers and independent third party brewers cease doing business with us, or cannot make a scheduled delivery to us, or are unable to obtain credit in a tightened credit market or experience other issues, we could experience short-term product supply shortages in some or all of our restaurants and could be required to purchase food, beer and beverage products from alternate suppliers at higher prices. We may also be forced to temporarily remove popular items from the menu offering of our restaurants. If alternative suppliers cannot meet our current product specifications, the consistency and quality of our food and beverage offerings, and thus our reputation, customer patronage, revenues and results of operations, could be adversely affected.

With respect to potential liability claims related to our food, beer and beverage products, we believe we have sufficient primary or excess umbrella liability insurance in place. However, this insurance may not continue to be available at a reasonable cost or, if available, may not be adequate to cover all claims. We generally seek contractual indemnification and insurance coverage from our key suppliers of food, beer and beverages, but this indemnification or insurance coverage is limited, as a practical matter, by the creditworthiness of the indemnifying party and the insured limits of any insurance provided by suppliers.

Failure to protect our trademarks, service marks, trade secrets or other intellectual property could adversely affect our business.

Our business prospects depend in part on our ability to develop favorable consumer recognition of our brand, including the Spud Shack’s name in particular. While we intend to aggressively protect and defend our trademarks, service marks, trade dress, trade secrets and other intellectual property, particularly with respect to their use in our restaurant operations, they could be imitated or appropriated in ways that we cannot prevent. Alternatively, third parties may attempt to cause us to change our trademarks, service marks or trade dress or not operate in a certain geographic region or regions if our names are deemed confusingly similar to their prior trademarks, service marks or trade dress. We may also encounter claims from prior users of similar intellectual property in areas where we operate or intend to conduct operations. This could harm our image, brand or competitive position and cause us to incur significant penalties and costs. In addition, we rely on trade secrets, proprietary know-how, concepts and recipes. Our methods of protecting this information may not be adequate. While we believe that we take reasonable protective actions with respect to our intellectual property, these actions may not be sufficient to prevent, and we may not be aware of all incidents of, unauthorized usage or imitation by others. Moreover, we may face claims of misappropriation or infringement of third parties’ rights that could interfere with our use of this information. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use this proprietary information in the future and may result in a judgment or monetary damages. We do not maintain confidentiality and non-competition agreements with all of our employees or suppliers. Moreover, even with respect to the confidentiality and non-competition agreements we have, we cannot assure that those agreements will not be breached, that they will provide meaningful protection or that adequate remedies will be available in the event of an unauthorized use or disclosure of our proprietary information. If competitors independently develop or otherwise obtain access to our trade secrets, proprietary know-how or recipes, the appeal of our restaurants could be reduced and our business could be harmed.

Federal, state and local beer, liquor and food service regulations may have a significant adverse impact on our operations.

We are required to operate in compliance with federal and local laws and regulations relating to alcoholic beverages. In addition, each restaurant must obtain a food service license from local authorities. Failure to comply with federal, state or local regulations could cause our licenses to be revoked and force us to cease the brewing or sale of alcoholic beverages, or both, or the serving of food at our restaurants. If we are unable to maintain our existing license, our customer patronage, revenues and results of operations could be adversely affected.

Limitations in our insurance coverage or rising insurance costs could adversely affect our business or financial condition in certain circumstances.

We purchase comprehensive insurance coverage, including, but not limited to, workers’ compensation, general liability, directors’ and officers’ liability, employment practices, fire and extended coverage and property insurance with coverage levels that we consider appropriate, based on the advice of our outside insurance and risk management advisors. However, such insurance is subject to limitations, including deductibles, exclusions and maximum liabilities covered. The cost of workers’ compensation insurance, general liability insurance, property insurance and directors’ and officers’ liability insurance fluctuates based on market conditions and availability as well as our historical trends. Moreover, there are certain types of losses that may be uninsurable or not economically insurable. Such hazards may include earthquake, hurricane and flood losses and certain employment practices. If such a loss should occur, we would, to the extent that we were not covered for such loss by insurance, suffer a loss of the capital invested, as well as anticipated profits and cash flow from such damaged or destroyed properties. Punitive damage awards are generally not covered by insurance; thus, any awards of punitive damages as to which we may be liable could adversely affect our ability to continue to conduct our business, to expand our operations or to develop additional restaurants. There is no assurance that any insurance coverage we maintain will be adequate, that we can continue to obtain and maintain such insurance at all or that the premium costs will not rise to an extent that they adversely affect us or our ability to economically obtain or maintain such insurance.

We self-insure a substantial portion of our workers’ compensation and general liability costs, and unfavorable changes in trends could have a negative impact on our profitability. The dollar amount of claims that we actually experience under our workers’ compensation and general liability insurance, for which we carry high deductibles, may also increase at any time, thereby further increasing our costs. Additionally, health insurance costs have risen significantly over the past few years and are expected to continue to increase. These increases have a negative impact on our profitability if we are not able to offset the effect of such increases with plan modifications and cost control measures, or by continuing to improve our operating efficiencies.

Our business and future development could be harmed if we are unable to retain key personnel or have difficulties in recruiting qualified personnel.

The success of our business continues to depend on the contributions of our senior management team, both individually and as a group. Our senior executives have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could materially adversely affect our business until a suitable replacement is found. We believe that these individuals cannot easily be replaced with executives of equal experience and capabilities. Although we have employment agreements with our Chief Executive Officer and some of our senior executives, we cannot prevent them from terminating their employment with us.

Litigation, including allegations of illegal, unfair or inconsistent employment practices, could have a material adverse effect on our business.

Our business is subject to the risk of litigation by employees, customers, suppliers, shareholders, government agencies or others through private actions, class or collective actions, administrative proceedings, regulatory actions or other litigation. These actions and proceedings may involve allegations of illegal, unfair or inconsistent employment practices, including wage and hour violations and employment discrimination; customer discrimination; food safety issues including poor food quality, food-borne illness, food tampering, food contamination, and adverse health effects from consumption of various food products or high-calorie foods (including obesity); other personal injury; violation of “dram-shop” laws (providing an injured party with recourse against an establishment that serves alcoholic beverages to an intoxicated party who then causes injury to himself or a third party); trademark or patent infringement; violation of the federal securities laws; or other concerns. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend litigation may be significant. There may also be adverse publicity associated with litigation that could decrease customer acceptance of our brands, regardless of whether the allegations are valid or we ultimately are found liable. Litigation could impact our operations in other ways as well. Allegations of illegal, unfair or inconsistent employment practices, for example, could adversely affect employee acquisition and retention. Also, some employment related claims in the area of wage and hour disputes are not insurable risks. We also are subject to claims and disputes from landlords under our leases, which could lead to litigation or a threatened or actual lease termination. Litigation of any nature may be expensive to defend and may divert money and management’s attention from our operations and adversely affect our financial condition and results of operations.

The occurrence or threat of extraordinary events, including terrorist attacks, could cause consumer spending to decline, which would adversely affect our sales and results of operations.

The occurrence or threat of extraordinary events, including future terrorist attacks and military and governmental responses and the prospect of future wars, may result in negative changes to economic conditions likely resulting in decreased consumer spending. Additionally, decreases in consumer discretionary spending could impact the frequency with which our customers choose to dine out at restaurants or the amount they spend on meals while dining out at restaurants, thereby adversely affecting our sales and results of operations. A decrease in consumer discretionary spending could also adversely affect our ability to achieve the benefit of planned menu price increases to help preserve our operating margins.

Natural disasters could unfavorably affect our operations.

The occurrence of natural disasters, such as fires, hurricanes, freezing weather or earthquakes (particularly in California where our centralized operating systems and restaurant support center administrative personnel are located) could unfavorably affect our operations and financial performance. Such events could result in physical damage to one or more of our restaurants; the temporary or permanent closure of one or more of our restaurants or restaurant support center; the temporary lack of an adequate work force in an affected geographical trade area; the temporary or long-term disruption in the supply of food, beverages, beer and other products to our restaurants; the temporary disruption of electric, water, sewer and waste disposal services necessary for our restaurants to operate; and/or the temporary reduction in the availability of certain products in our restaurants.

We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including hurricanes and other natural disasters, including back up and off-site locations for recovery of electronic and other forms of data and information. However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation and exposure to administrative and other legal claims.

We are heavily dependent on information technology in our operations as well as with respect to our customer loyalty and employee engagement programs. And any material failure of such technology, including but not limited to cyber-attacks, could materially adversely affect our revenues and impair our ability to efficiently operate our business.

We rely heavily on electronic information systems in all aspects of our operations, including (but not limited to) point-of-sale transaction processing in our restaurants; efficient operation of our restaurant kitchens; management of our inventories and overall supply chain; collection of cash; payment of payroll and other obligations; and, various other processes and procedures including our customer loyalty and employee engagement programs. Our ability to efficiently manage our business depends significantly on the reliability and capacity of our in-house information systems and those technology services and systems that we contract for from third parties. Our electronic information systems, including our back-up systems, are subject to damage or interruption from power outages, cyber-attacks, computer and telecommunications failures, computer viruses, internal or external security breaches, catastrophic events such as fires, earthquakes, tornadoes and hurricanes, and/or errors by our employees. The failure of any of these systems to operate effectively, any problems with their maintenance, any issues with upgrades or transitions to replacement systems, or any breaches in data security could cause material interruptions to our operations or harm to individuals in the form of identity theft or improper use of personal information. While we have invested and continue to invest in technology security initiatives and disaster recovery plans, these measures cannot fully insulate us from technology disruption that could result in adverse effects on operations and profits. Although we, with the help of third party service providers and consultants, intend to maintain and upgrade our security technology and establish operational procedures to prevent such damage, breaches, or attacks, there can be no assurance that these security measures will be successful. In addition, advances in computer capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms we and our third party service providers use to encrypt and protect customer transaction data. A failure of such security measures could harm our reputation and financial results, as well as subject us to litigation or actions by regulatory authorities. Significant capital investments might be required to remediate any problems, infringements, misappropriations or other third party claims.

We outsource certain essential business processes to third party vendors that subject us to risks, including disruptions in business and increased costs.

Some of our essential business processes that are dependent on technology are outsourced to third parties. Such processes include, but are not limited to, gift card tracking and authorization, on-line ordering, credit card authorization and processing, certain components of our “Spud Shack’s Premier Rewards” customer loyalty program, certain insurance claims processing, payroll processing, web site hosting and maintenance, data warehousing and business intelligence services, point-of-sale system maintenance, certain tax filings, telecommunications services, web-based labor scheduling and other key processes. We make a diligent effort to ensure that all providers of outsourced services are observing proper internal control practices, such as redundant processing facilities; however, there are no guarantees that failures will not occur. Failure of third parties to provide adequate services could have an adverse effect on our results of operations, financial condition or ability to accomplish our financial and management reporting.

We may incur costs resulting from security risks we face in connection with our electronic processing and transmission of confidential customer information.

We accept electronic payment cards from our customers for payment in our restaurants. A number of restaurant operators and retailers have experienced actual or potential security breaches in which credit and debit card information may have been stolen in addition to other personal information such as our customer’s names, email addresses, home addresses and phone numbers. While we have taken reasonable steps to prevent the occurrence of security breaches in this respect, we may, in the future, become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings in the future relating to these types of incidents. Proceedings related to theft of credit or debit card information may be brought by payment card providers, banks and credit unions that issue cards, cardholders (either individually or as part of a class action lawsuit) and federal and state regulators. Any such proceedings could distract our management from running our business and cause us to incur significant unplanned losses and expenses. Additionally, any publicity related to stolen personal identification from credit and debit card information or other personal information such as our customer’s or employee names, email addresses, home addresses and phone numbers may negatively affect our sales and profitability. We also receive and maintain certain personal information about our customers and employees. The use of this information by us is regulated at the federal and state levels. If our security and information systems are compromised or our employees fail to comply with these laws and regulations and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation, as well as results of operations, and could result in litigation against us or the imposition of penalties. In addition, our ability to accept credit cards as payment in our restaurants and on-line store depends on us remaining in compliance with standards set by the PCI Security Standards Council. These standards, set by a consortium of the major credit card companies, require certain levels of system security and procedures to protect our customers’ credit card and other personal information. Privacy and information security laws and regulations change over time, and compliance with those changes may result in cost increases due to necessary systems and process changes.

Our tax returns may, from time to time, be selected for audit by the taxing authorities, which may result in tax assessments or penalties that could have a material adverse impact on our results of operations and financial position.

Significant judgment is required in determining the provision for income taxes. Although we believe our tax estimates are reasonable, if the IRS or other taxing authority disagrees with the positions we have taken on our tax returns, we could have additional tax liability, including interest and penalties. If material, payment of such additional amounts, upon final adjudication of any disputes, could have a material impact on our results of operations and financial position. The cost of complying with new tax rules, laws or regulations could be significant. Increases in federal or state statutory tax rates and other changes in tax laws, rules or regulations may increase our effective tax rate. Any increase in our effective tax rate could have a material impact on our financial results.

Risks related to our stock

We may not be able to raise additional capital through future offers of our shares but in doing so will dilute the shares presently issued and outstanding.

Raising additional capital through future offerings of common stock may be necessary for our company to continue going, but there is no guarantee that this will be possible. Doing so will, however, dilute percentage of our Company’s shares presently held by our shareholders. Financing may be achieved by issuing more shares which will increase the number of common shares outstanding. This will decrease the percentage interest held by each of our shareholders. As the total number of outstanding common shares increases, the equity attached to any individual share will decrease causing a dilution of shareholders’ ownership over the company. With little other access to funds currently, we may have to rely on this method substantially to raise additional capital.

There is no market for our common stock meaning that you may not be able to resell your shares.

Our common stock currently has no market limiting our future shareholders’ ability to resell their shares or use them as collateral. Thus, a shareholder must sell their shares privately which may prove very difficult. The shares are not currently listed on any exchange or quotation system. Private sales are more difficult and often give lower than anticipated prices.

Should a public market develop for our stock, future sales of shares may negatively affect their market price.

Even if a market develops, the shares may be sparsely traded and have wide share price fluctuations. If we succeed in receiving a quotation, the liquidity of the stock may be low despite there being a market making it difficult to get a return on the investment. In addition the price also depends on potential investor’s feelings regarding the results of our operations, the competition of other companies’ shares, mineral prices, our ability to generate future revenues, and market perception about future mineral exploration.

Because our stock is a “penny stock”, trading of it may be restricted and limit a shareholder’s ability to buy and sell shares.

As our stock is a penny stock, there are restrictions imposed by the United States Securities and Exchange Commission’s (“SEC”) penny stock regulations and the FINRA’s sales practice requirements. This might limit a shareholder’s ability to buy and sell their shares as broker-dealers may be less likely to engage in transactions of our common shares. A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Our common stock is expected to trade well below that mark. Rules 15g-1 through 15g-9 under the Exchange Act impose sale practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a “penny stock”.

We have not paid nor anticipate paying cash dividends on our common stock.

Cash dividends are not currently paid on our common stock shares nor are they expected to be paid in the near future. We intend to retain our cash for the continued development of our business. Thus, you will not be able to derive any dividend income and your return on investment will solely be based on your ability to sell your shares in a secondary market.

ITEM 2.

PROPERTIES.

Mexico:

In Mexico, we have a 45% interest in New World Metals SAPI (“New World”) which directly owns three working mines; Morelos, La Luna, and Peneto located in Chihuahua, Mexico. The Company is a 45% shareholder in New World. All three interests are lode mining concessions granted by the State, with the right to explore and exploit. The expiration dates for all titles expire in 2052. The three concessions have been all obtained through the State Ministry of Mines. New World Metals has both the surface and mineral rights to the property. The Concessions are without known proven (measured) or probable (indicated) reserves, as defined under SEC Industry Guide 7, and the exploration program is exploratory in nature.

Authorization and Permits

The transfer of concessions in Mexico must be registered under Mexican law. We have been advised that the transfer of the concessions to New World Metals has been registered with the appropriate Mexican authorities. Under Mexican law, a mining concession gives the holder both exploration and exploitation rights for any minerals found in the property. To maintain the concession, the holder must pay appropriate taxes, perform assessment work, comply with environmental laws, and file a production report each year with the appropriate authorities. Foreign individuals and companies wanting to hold concessions must do so through ownership in a Mexican corporation or through a joint venture and they may not hold mining concessions directly. Because of those requirements, we rely on New World Metals, persons associated with New World Metals, and its employees and consultants in Mexico, to perform all acts necessary to comply with the legal requirements necessary to maintain the concessions.

The Company has been advised that consultants working with New World Metals have obtained all of the approvals required for exploration rights under the concessions.

Mineralization

The mineralization is believed to be a low sulphadation epithermal deposit in quartz and calcite vein structures. The gold and silver on the properties is found in these veins and the host rock is shale.

Morelos Mine:

We hold an indirect 45% interest in this mine through our investment in New World. New World owns a direct interest in this mine. In 2013, major repairs and upgrades have been carried out to the mining structure at the Morelos Mine. Current assays at this new level show 1 gram of Gold and 200 grams of Silver per ton. The Morelos mine is 21 hectares and has gold and silver as its main minerals with assays averaging 2 grams of gold and 600 grams of silver per ton. Currently there is a stockpile of 6,000 tons of ore ready to process. Production is currently 30 tons per day.

Additional Mine details:


Name of Property	Morelos, Title number: T172230
Location and access	7.4 km southeast of Inde, Durango; Mexico, 2 hour drive from Parral, accessible by highway and 6 km of well-traveled dirt road
Description / History	This mine was in full production in the 1950′s. During the 1970′s it produced high grade mineral (15 kgs. of Silver)
Acreage	21 Hectares
Minerals Types	Gold & Silver
Stock Pile Size	6,000 tons
How many Assays	Multiple
Avg. Assay Results	600 Gr Silver 2 Gr Gold per ton
Bulk Sampling rate	40 Tons per day.
Source of power & water	Diesel generator, power line approx. 100m from property, water pumped out of mine and stored on site

La Luna Mine

We hold an indirect 45% interest in this mine through our investment in New World. New World owns a direct interest in this mine. In 2013 the La Luna Mine has been pumped free of water to the lower levels, and the shaft has been lowered an additional 7 meters. Most recent assays at these levels show 1.5 grams of Gold and 600 grams of Silver. The La Luna mine is 30 hectares and has gold and silver as its main minerals with assays averaging 2.5 grams of gold and 600 grams of silver per ton. Currently there is a stockpile of 3000 tons of ore ready to process. Production is currently 25 tons per day.

Additional Mine details:


Name of Property	La Luna, Title number: T217204
Location and access	Matamoros, Chihuahua, 42 km south of Parral, 24 km of highway, and 18 km of well-traveled dirt road.
Description / History	This mine was in operation in the 1970′s, but only the north zone was mined and only to the third level.
Acreage	30 hectares
Minerals Types	Gold and Silver
Stock Pile Size	3,000 tons
How many Assays	Multiple
Avg. Assay Results	600 Grams Silver; 2.5 Grams Gold. The main vein shows 13 kilos Silver and 25 Grams Gold
Bulk Sampling rate	30 Tons per day
Source of power & water	Access to electrical grid power on site, water pumped out of mine and stored on site

Peneto Mine

We hold an indirect 45% interest in this mine through our investment in New World. New World owns a direct interest in this mine. The Peneto mine has gold and silver as its main minerals with assays averaging 11 grams of gold and 170 grams of silver per ton. Currently there is a stockpile of 500 tons of ore ready to process. Production is

Currently at 15tons per day. In 2013, at the Peneto Mine, the shaft was deepened an additional 8 meters, and assays have been ordered on these recent samples.

Additional Mine details:


Name of Property	Peneto, Title number: T194641
Location and access	Santa Barbara, Chihuahua, access by 6km of well-traveled dirt road
Description / History	Mine in production since 1990, but only explored to the fourth level
Minerals Types	Gold & Silver
Stock Pile Size	500 Tons
Acreage Avg Assay Results	20 Hectares 11 Grams Gold, 170 Grams Silver
Bulk Sampling Rate	15 Tons per day

During the 6 months ended October 31, 2013, New World has spent $141,641 on exploration activities. Our share of this loss was $54,989 which has been recorded in the records as an equity loss in the investment in New World.

Our total daily production or bulk sampling rate was a combined 85 tons per day for all three mines. Based on this daily total, and on a basis of 25 operating days per month, our bulk sampling rateis approximately 25,500 tons per year.

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Philippines:

In the Philippines we have a single mineral claim, La Carlota. The title indicates that the Company owns the property outright.

The La Carlota Gold Claim was acquired on June 30, 2010. The Company has a Gold Claim on a 97.3 Hectare area. can be identified in the Philippines by the following information:

Property Name: La Carlota Gold Mine

Certificate Number: PCLC1028858

Title Number: CA188042

Registration Received: June 11, 2010; Entered on June 14, 2010

Title Granted On: June 30, 2010

Parcel Identifier: 058-735-651

8 Unit Claim Block: 97.3 Hectares

Our mining geologist, Angelo Ventura, recommended a two phase exploration program of this property but as of the date of this Form 10-K work has been undertaken on the La Carlota.

The Budget


Phase I (Completed)	Philippine Currency		United States Currency

Geological mapping including air photo	315,268	$	7,198
Geophysical surveying	291,500		6,655

Total Phase I	606,768		13,853
Phase II

Geochemical surveying with surface mapping including grab and soil samples	1,192,961		27,237

Total Phases I and II	1,799,729		$ 41,090

The above conversion rate has been done at PHP 43.8 to US $1.00. (July 11. 2011 rate at PHP 42.62 to US $1.00)

Phase I was commenced in July 2011 and the report issued by Jonathan Malig was dated December 13, 2011.

RECOMMENDATION & CONCLUSION

Based on the results of the exploration and the geological mapping done to date, an extensive diamond drilling program is recommended as it is clearly evident that significant mineralization exists on the property.

The soil sampling results (which are shown below) also suggest that an extensive diamond drilling program is merited and that significant mineralization exists on the property.

The soil sampling, highlights are as follows:

3,5km soil anomaly co-incident with hard rock artisanal gold working

Four prospects defined, with three currently being explored

Granite-hosted quartz vein and stock work deposit

Visible gold identified in 25 holes

Artisanal workings define a 16km-long mineralised corridor

Systematic soil and stream sampling over majority of license completed

IP resistivity / radiometric survey completed

12 trenches complete

Monarchy’s Main Product

Since our investment in New World in May 2013, Monarchy has put its exploration in La Carlota on hold. Through its investment in New World, the Company is extracting ore and continuing to assay its raw ore.

Exploration Facilities

In Mexico, the Company has plans to process its raw ore on site and is currently studying the feasibility and raising the funds to build a small flotation system.

Other Mineral Properties

We have not yet considered any other mineral properties until such time as we have at least raised additional funds to fully develop the Mexican claims.

Employees

As of April 26, 2015, our Company does not have any employees either part time or full time engaged in our mining business other than our director. However, we do have 10 employees for our restaurant operation and New World has over 10 full time employees in Mexico at its three mine sites.

We are not a party to any employment contracts or collective bargaining agreements. Mexico has a relatively large pool of people experienced in exploration of mineral properties; being mainly geologist and mining consultants.

Competition

In Mexico and the Philippines, there are numerous mining and exploration companies, both big and small. Every mining company is constantly seeking mineral properties of merit and most of them will have the funds to acquire and explore these properties. Our Company does not have the funds at this time to compete with these mining companies and it might never have the funds to compete.

The exploration business is highly competitive and highly fragmented, dominated by both large and small mining companies. Success will largely depend on our Company’s ability to attract talent from the mining industry in the Mexico and the Philippines.

Even though we have three small mines in Mexico there is no guarantee that we will be able to extract the gold and silver from our raw ore, without having sufficient funds to acquire the necessary facilities. Even though we have the rights to the La Carlota there is no guarantee we will be able to raise sufficient funds in the future to adequately explore the claim. We might have to seek out a joint venture partner thereby losing percentage interest in La Carlota. In the event we are unable to pay our proportional share of the exploration costs we might be forced to dilute our interest in La Carlota.

If we are successful in discovering an ore body we might not be able to find facilities to mill and smelt the ore at a reasonable rate and hence might not be able to commence commercial production. At this time the Company does not have any contractual agreements with a refining company and there is the distinct possibility it might never have. There is no assurance that the Company’s mineral expansion plans will ever be realized.

Risk Inherent in Mexico and La Carlota

Monarchy and its management are aware of the following risks:


1.		The full extent of the known body of commercial ore located in the three Mexican Claims is not known. La Carlota does not contain a known body of commercial ore and, therefore, any program conducted on La Carlota would be exploratory search for ore.

2.		There is no certainty that any expenditures made in processing the raw ore to metal or concentrate will be able to do so commercially. Also there is no certainty exploration of La Carlota will result in the discovery of commercial quantities of ore. Most exploration projects do not result in the discovery of commercially mineable deposits of ore.

3.		Resource exploration and development is a speculative business in that our company might not be able to raise any funding subsequent to the raising of funds from our director.

4.		Failure to discover a mineral deposit at all is as bad as finding a mineral deposit which, though present, is insufficient in size or grade to return a profit from production. The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond Monarchy’s control and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exploring of minerals, and environmental protection.

5.		Mining operations generally involve a high degree of risk. Hazards such as unusual or unexpected formations and other conditions are involved. Our Company may be subject to liability for pollution, cave-ins or hazards against which it cannot insure or which it may not elect to ensure. The payment of such liabilities may have a material, adverse effect on our financial position.

6.		La Carlota has never been surveyed and, accordingly, the precise location of the boundaries of the property and ownership of mineral rights on specific tracts of land comprising the claim might be in doubt.

ITEM 3.

LEGAL PROCEEDINGS.

We are not a party to any other legal proceedings and, to our knowledge; no other legal proceedings are pending, threatened or contemplated.

ITEM 4.

MINE SAFETY DISCLOSURES.

The Securities and Exchange Commission (SEC) approved amendments to its rules on December 21, 2011 to implement the mine safety disclosure requirements contained in Section 1503 of the Dodd-Frank Act. Section 1503 requires SEC registrants that are operators of coal or other mines to include in their periodic and current reports disclosures regarding certain safety violations, orders and regulatory actions. Based on Item 104 of Regulation S-K the Company is able to report the following, for the time period covered by the report:

no violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under Section 104 of the Federal Mine

Safety and Health Act of 1977 (Mine Safety Act) for which the operator received a citation from the Mine Safety and Health Administration (MSHA);

no orders issued under Section 104(b) of the Mine Safety Act;

no citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Safety Act;

no flagrant violations under Section 110(b)(2) of the Mine Safety Act;

no imminent danger orders issued under Section 107(a) of the Mine Safety Act; and

no proposed assessments (regardless of whether the assessment is being challenged or appealed) from the MSHA under the Mine Safety Act.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET INFORMATION

Our shares of common stock are quoted on the OTC under the symbol “MONK”.

HOLDERS OF OUR COMMON STOCK

As of April 26, 2015, there were 31 registered holders of record of our common stock.

DIVIDENDS

There are no restrictions in our Articles of Incorporation or Bylaws that would prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:


1.		We would not be able to pay our debts as they become due in the usual course of business; or

2.		Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 6.

SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in the Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K, particularly in the sections titled “Risk Factors” and “Forward-Looking Statements.”

We have a limited operating history and have not yet generated or realized any profits from our activities. We have commenced mining through our investment in New World Metals SAPI. We have yet to undertake any exploration activity on our Philippine property, La Carlota. Our restaurant operation is likewise relatively new and has net to generate any profits.

Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our operations. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals, if ever. Accordingly, we must raise cash from sources other than the sale of minerals found on La Carlota or from the sale of our investment in New World. That cash must be raised from other sources. Our only other source for cash at this time is investment by others in the Company. We must raise cash to implement our planned exploration program and stay in business.

As of October 31, 2014, we had a working capital deficit of $590,204

Despite the commitment of our director to advance us funds over the next twelve months, our future financial success will be dependent on the success of the restaurant in Canada and the mines in Mexico.

Our Company has no current plans, proposals or arrangement, written or otherwise, to seek a business combination with another entity.

Liquidity and Capital Resources

Our capital commitments for the next twelve months consist of expenses of general and administration and of raising additional funds for New World and the lease for Spud Shack:


Estimated expenses		Amount	Purpose

Accounting	$	5,000	Preparation of various quarterly and year-end financial statements
Independent accountants		15,000	Review of various quarterly financial statements and examination of the year-end financial statements
Filing fees		350	To maintain Company in good standing in the State of Nevada
Office and miscellaneous		1,000	Office supplies, delivery and photocopy charges
Rent		23,550	10-year lease for Spud Shack
Transfer agent’s fees		1,000	Annual fee and miscellaneous expenses

Estimated expenses	$	45,900

We recognize that additional capital will be required during the next twelve months. Should we be unable to raise additional capital from other sources such as bank financing with guarantees from our directors or a private placement of our common shares from Treasury, our directors and officers are committed to advance Monarchy whatever funds are required to enable the Company to meet its cash needs over the coming year in addition to the amount indicated in the following sentence. Our directors advanced $515,669 as of October 31, 2104. This advance is on a demand basis and bears no fixed interest or repayment terms similar to any future advances. The loan is not convertible into shares of our Company. These funds were advanced to the Company prior to October 31, 2014.

If we fail to continue to finance our operation in New World we may attempt to interest other companies to undertake additional work in the Mexican mines and/or work on La Carlota through joint venture arrangement or even the sale of part of La Carlota. Neither of these avenues has been pursued as of the date of this Form 10-K.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance. We have not generated any revenues from our mining activities nor any profits from our restaurant operation. We cannot guarantee we will be successful in our mining activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the further mining of our properties, and possible cost overruns due to price and cost increases in services.

It must be borne in mind that to become profitable and competitive, we must invest in exploration activities on La Carlota, which could be substantial, before we can produce of any minerals we discover on our claim. There may be no minerals of commercial value on our claim. We will have to either have our directors and officers provide us with working capital or else find other forms of equity financing. We can never be assured that any financing will be available as we require it and, if available, will be on the terms acceptable to us. Without any financing we will not be able to proceed with the future exploration of La Carlota or continue mining in Mexico.

Overview

Our financial statements contained herein have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business. Our accumulated deficit from inception through October 31, 2014 was $960,303. Our revenue for the year ended June 30, 2014 was $92,446 and for the year ended June 30, 2013 was $45,959. for the year ended June 30, 2013. Our revenue for the four months ended October 31, 2014 was $32,162 and $16,538 for the four months ended October 31, 2013. This revenue was generated solely from our restaurant operations. Our net losses for the same periods were (35,198), (42,262), (112,989), and (118,242) respectively. These losses are attributable to the start-up costs associated with a new business venture.

Our financial statements included in this Form 10-K have been prepared without any adjustments that would be necessary if we become unable to continue as a going concern and are therefore required to realize upon our assets and discharge our liabilities in other than the normal course of operations.

Products and Gold

New World has mined gold and silver raw ore in its three small Mexican Mines. In order to mill, float, smelt and refine this ore, we must invest in additional equipment. No third party calculation of the gold in place at the three Mexican Claims have been made.

We do not have any gold as of yet on La Carlota since we have not done any exploration work to support a calculation as to the ounces of gold which might be on the claim. To our knowledge we do not know, and may never know, if there is gold on the claim unless our future exploration work verifies this fact. At the present time we do not have any products for sale.

Other Minerals

At the present time we are not aware of other minerals on La Carlota since no exploration has been done to date. We are aware of Gold and Silver in New World’s three mines

Employees

We have approximately 10 employees at our restaurant operating and no employess for our mining operation other than our directors and officers.

Competitive Factors

We are a small company with limited personnel and funds. There are many other miningcompanies who have more personnel at their disposal and funds on hand to undertake substantial exploration work on claims they own. In the market place for workers they will have advantage over us because they can offer higher salaries and longer periods of employment. This puts our Company as a disadvantage in seeking workers for future exploration work at Carlota.

Foreign Currency

Our Company will be conducting activities in Mexico and the Canada and will pay its expenses in the local currency. Any currency fluctuation in an adverse way will increase our costs and affect our ability to generate profits from our activities.

Regulation of Mining Activity

Mining Laws

Government and environmental regulations exist in the Philippines and Mexico and our exploration and mining plans are subject to these various federal, state and local laws. The rules are dynamic and are generally becoming more demanding. Our plans aim to safeguard public and environmental health. We are currently in compliance with all material mining, health, safety, and environmental statutes of the Mexico and the Republic of the Philippines.

Legislation

Changes to current federal, state and local laws in the jurisdiction in which we operate may require additional costs and financing. These changes are unpredictable and the additional requirements may render certain exploration activities uneconomical and lead to business failure.

Our Planned Exploration Program

Mexico:

One of the Company’s goals since acquiring an interest in our Mexican mining projects is to build our own processing facility. In 2013 we placed a deposit on a 100 ton per day processing facility. The Company is looking at completing this acquisition and setting it up through 2015 to enable the company to begin processing its own ore.

There is currently 9,000 tons of stockpiled ore at its three Mexican mine locations. The Company is seeking to increase its production over the course of the coming year so as to have an ample supply for when the Company is in a position to begin processing ore.

Philippines:

We have yet to determine whether we will be conducting exploration activities on La Carlota in 2014 to determine what amounts of minerals exist on the claim and if they can be viable extracted in commercial quantities and subsequently sold. For the time being, our exploration activities are designed to efficiently explore and evaluate our interests in our three Mexican claims.

When we choose to do further exploration on the La Carlota claim our estimated exploration costs will be $27,237. This estimated figure represents the cost to our Company of doing the exploration work on Phase II.

Results of Operations

Expenses


		OCTOBER 31, 2014
IMPAIRMENT LOSS ON INVESTMENT	$	17,412,207	This is the market value of the shares to acquire shares in New World Metals and Spud Shack. As there is no valuation document of New World assets, management has written down investment.
LOSS ON EQUITY METHOD INVESTMENT		92,427	This is the share of the Company’s losses incurred in New World since time of acquisition
INTEREST EXPENSE		886,940

Balance Sheet as of October 31, 2014

Total cash as of October 31, 2014, was $22,173 ($23,418 – June 30, 2014).

We also have prepaid expenses of $5,297.

Liabilities were at $1,151,134 as of October 31, 2014. Convertible notes of $347,775 and Due to related Parties of $526,808 represent the majority of the liabilities.

The Company currently has a working capital deficit of $590,204

Trends

To the knowledge of management we are unaware of any trends or past and future events which will have a material effect upon our Company, its income and business, both in the long and short term. Please refer to our assessment of Risk Factors as noted on page 6.

Critical Accounting Policies and Estimates

In presenting our financial statements in conformity with U.S. generally accepting accounting principles, or GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.

Some of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. We base these estimates and assumptions on historical experience or on various other factors that we believe to be reasonable and appropriate under the circumstances. On an ongoing basis, we reconsider and evaluate our estimates and assumptions. Actual results may differ significantly from these estimates.

We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our financial statements. In addition, we believe that a discussion of these policies is necessary to understand and evaluate the financial statements contained in this Form 10-K.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Mineral claim acquisition and exploration costs

The cost of acquiring mineral properties or claims is initially capitalized and then tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Mineral exploration costs are expensed as incurred.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

Recent Accounting Pronouncements

The Company does not expect the adoption of any recent accounting pronouncements to have a materially impact on its financial statements.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements attached to this Form 10-K for the year ended October 31, 2014 have been prepared and audited by our independent auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered Accountants.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of October 31, 2014 (the “Evaluation Date”). Based on that evaluation, the Principal Executive Officer and Principal Accounting Officer have concluded that these disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified below, we believe that our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014 fairly present our financial condition, results of operations and cash flows in all material respects.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process, under the supervision of the management, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with United States Generally Accepted Accounting Principles (GAAP). Internal control over financial reporting includes those policies and procedures that:

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

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

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

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of October 31, 2014, based on criteria established in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, management identified a material weakness in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified is described below.


1.		Certain entity level controls establishing a “tone at the top” were considered material weaknesses. As of October 31, 2014, the Company did not have a separate audit committee or a policy on fraud. A whistleblower policy is not necessary given the small size of the organization.

2.		Due to the significant number and magnitude of out-of-period adjustments identified during the year- end closing process, management has concluded that the controls over the period-end financial reporting process were not operating effectively. A material weakness in the period-end financial reporting process could result in us not being able to meet our regulatory filing deadlines and, if not remediated, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.

3.		There is no system in place to review and monitor internal control over financial reporting. The Company maintains an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.

As a result of the material weakness in internal control over financial reporting described above, the Company's management has concluded that, as of October 31, 2014, the Company's internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by COSO.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report.

Changes in Internal Controls

There were no changes in our internal control over financial reporting during the fiscal year ended October 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION.

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

DIRECTORS AND EXECUTIVE OFFICERS

Each of our Directors serves until his successor is elected and qualified. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his successor is duly elected and qualified, or until he is removed from office. The Board of Directors has no nominating or compensation committees.

Our officers and directors and their respective ages and positions as of October 31, 2014 were as follows:


Name and address	Age	Position(s)
Tim Ferguson (1) Calle urique número 5, Colonia Fuentes de Bellavista, c.p. 33880 Hidalgo del Parral, Chihuahua, Mexico	51	Chief Executive Officer, President and Director

Ambrocio Lainez-Morales Calle urique número 5, Colonia Fuentes de Bellavista, c.p. 33880 Hidalgo del Parral, Chihuahua, Mexico	49	Director

(1)

Member of the audit committee

Tim Ferguson was appointed to the Board of Directors on September 3, 2014 and was appointed as Chief Executive Officer, President, and Chief Financial Officer on September 18, 2014 by a Resolution of the Board of Directors.

Ambrocio Lainez-Morales was appointed to the Board of Directors on September 3, 2014.

A description of the work experience of our directors and officers is as follows.

Mr. Timothy J. Ferguson, aged 51, has been the Owner and President of North By Northwest Ventures Inc., a private Canadian company that is an industry leader in commercial and residential landscape construction working throughout the Greater Vancouver Region and British Columbia for over 19 years. Mr. Ferguson has 25 years of experience in landscaping, land reclamation and environmental mitigation projects. Over this period, Mr. Ferguson has worked with major mining companies, governmental and private developers, and been closely involved in the design, estimating and operational aspects of these projects. Mr. Ferguson attended the British Columbia Institute of Technology where he became certified as a BioScience Technician. He is also a certified horticultural technician in Canada.

Mr. Ambrocio Lainez-Morales, aged 49, is a certified Journeyman Horticultural Landscaper. For the past 18 years, he has worked full-time for North By Northwest Ventures Inc. with Mr. Ferguson. Mr. Lainez-Morales has served in almost every capacity in the company, beginning as a labourer, through to a site superintendent. Currently, Mr. Lainez-Morales’ primary role in this company is Construction Superintendent, where he is responsible for ensuring projects are completed professionally and accurately. Mr. Lainez-Morales also speaks fluent Spanish.

Family Relationships

Our President and our Chief Financial Officer and Secretary Treasurer are one person, Tim Ferguson. Mr. Ferguson and Mr. Lainez-Morales are not related.

Term of Office

Members of our Board of Directors are appointed to hold office until the next annual meeting of our stockholders or until his successor is elected and qualified, or until they resign or are removed in accordance with the provisions of the Nevada Revised Statutes. Our officers are appointed by our Board of Directors and hold office until removed by the Board.

Involvement in Certain Legal Proceedings

To the knowledge of our Company, during the past ten years, none of our directors or executive officers:

(i)

engaging in any type of business practice; or

(ii)

engaging in any activities in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

Which was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated;

Or found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgement in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.

Board of Directors Audit Committee

Below is a description of the Audit Committee of the Board of Directors. The Charter of the Audit Committee of the Board of Directors sets forth the responsibilities of the Audit Committee. The primary function of the Audit Committee is to oversee and monitor the Company’s accounting and reporting processes and the audits of the Company’s financial statements.

Our audit committee is comprised of Tim Ferguson, our President and Chairman of the Audit Committee, who is not independent. Tim Ferguson can be considered an “audit committee financial expert” as defined in Item 407 of Regulation S-K. The Company does not presently have, among its officers and directors, a person meeting these qualifications and given our financial conditions, does not anticipate in seeking an audit committee financial expert in the near future. However Tim Ferguson, Chairman of the Audit Committee, is considering engaged the services of an independent Chartered Accountant as a consultant to provide advice to the Audit Committee as and when the Committee meets to review the Company’s financial statements.

Apart from the Audit Committee, the Company has no other Board committees.

Conflicts of Interest

None of our officers and directors is a director or officer of any other company involved in the mining industry. However there can be no assurance such involvement will not occur in the future. Such present and potential future, involvement could create a conflict of interest.

To ensure that potential conflicts of interest are avoided or declared to our Company and its shareholders and to comply with the requirements of the Sarbanes Oxley Act of 2002, the Board of Directors adopted, on July 23, 2010, a Code of Business Conduct and Ethics. Monarchy’s Code of Business Conduct and Ethics embodies our commitment to such ethical principles and sets forth the responsibilities of Monarchy and its officers and directors to its shareholders, employees, customers, lenders and other stakeholders. Our Code of Business Conduct and Ethics addresses general business ethical principles and other relevant issues.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of the copies of such forms received by us, we believe that, during the last fiscal year, the following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act:


Name and Principal Position	Number of Late Insider Reports	Transactions Not Timely Reported	Known Failures to File a Required Form
Tim Ferguson CEO, President, CFO, Secretary & Treasurer	None	None	1
Danny Close Control Person	None	None	1
Ambrocio Lainez-Morales Director	None	None	None

ITEM 11.

EXECUTIVE COMPENSATION.

Summary Compensation Table

We did not pay monetary compensation to our directors in 2014 however Danny Close is the manager of our restaurant operation for which he has been paid CAD 3,000 per month.

Outstanding Equity Awards

Since incorporation on June 16, 2010, we have not granted any stock options or stock appreciation rights to our executive officers or directors.

Compensation of Directors and Officers

We have no standard arrangement to compensate directors for their services in their capacity as directors. There is no compensation arrangement, either written or unwritten, to compensate our officers and directors. Directors are not paid for meetings attended. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of October 31, 2014 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities of our shares of common stock, (ii) our executive officers and directors, and (iii) our named executive officers as defined in Item 402(m)(2) of Regulation S-K. Unless otherwise indicated, the stockholder listed possess sole voting and investment power with respect to the shares shown.


Title of Class		Name and Address of Beneficial Ownership	Amount and Nature of Beneficial Ownership		Percentage of Common Stock (i)

Common Stock	Tim Ferguson		18,166,167 (Direct)	59.7%
Common Stock	Danny Close		12,000,000 (Direct)	39.4%
Common Stock	All Directors and Officers as a Group (1 people)		18,166,167 (Direct)	59.7%

A beneficial owners of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on October 31, 2014. As of October 31, 2014, there were 30,147,187 shares of our common stock issued and outstanding.

Holders of Common shares

As of the date of this Form 10-K the Company had 31 of shareholders including the officers and directors. The number of shares held by the officers and directors are 18,166,167 common shares.

Market Information

Monarchy’s symbol for the OTCBB is MONK.

There are no common shares subject to outstanding options, warrants or securities convertible into common equity of Monarchy. The number of shares presently subject to Rule 144 is 30,294,671 shares. The share certificate has the appropriate legend affixed thereto. Presently, under Rule 144, the number of shares which could be sold, if an application is made, is Nil shares. There are no shares being offered pursuant to an employee benefit plan or dividend reinvestment plan. In addition, there are no outstanding options or warrants to purchase common shares or shares convertible into common shares of Monarchy.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our Board of Directors

Equity Compensation Plans

There are no securities authorized for issuance under equity compensation plans or individual compensation arrangements.

Penny Stock Rule

Monarchy’s common stock is considered to be a “penny stock” because it meets one or more of the definitions in SEC Rule 3a51-1:


(i)		It has a price less than five dollars per share;

(ii)		It is not traded on a recognized national exchange;

(iii)		It is not quoted on a FINRA automated quotation system (NASDAQ), or even if so, has a price of less than five dollars per share; or

(iv)		It is issued by a company with net tangible assets of less than $2,000,000, if in business more than three years continuously, or $5,000,000, if the business is less than three years continuously or with average revenues of less than $6,000,000 for the past three years.

A broker-dealer will have to undertake certain administrative functions required when dealing win a penny stock transaction. Disclosure forms detailing the level of risk in acquiring Monarchy’s shares will have to be sent to an interested investor, current bid and offer quotations will have to be provided with an indication as to what compensation the broker-dealer and the salesperson will be receiving from this transaction and a monthly statement showing the closing month price of the shares being held by the investor. In addition, the broker-dealer will have to receive from the investor a written agreement consenting to the transaction. This additional administrative work might make the broker-dealer reluctant to participate in the purchase and sale of Monarchy’s shares.

From Monarchy’s point of view, being subject to the Penny Stock Rule could make it extremely difficult for it to attract new investors for future capital requirements since many financial institutions are restricted under their by-laws from investing in shares under a certain dollar amount. Ordinary investors might not be willing to subscribe to shares in the capital stock of Monarchy due to the uncertainty as to whether the share price will ever be able to be high enough that the Penny Stock Rule is no longer a concern.

In addition, the stock market in general, and the market prices for thinly traded companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These wide fluctuations may adversely affect the trading price of our shares regardless of our future performance and that of Monarchy. In the past, following periods of volatility in the market price of a security, securities class action litigation has often been instituted against such company. Such litigation, if instituted, whether successful or not, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, results of operations and financial conditions.

Any new investor purchasing shares in our Company might consider whether they will be able to sell their shares at a given price since if no broker-dealer becomes involved with Monarchy and Monarchy is unable to raise future investment capital the price per share may deteriorate to a point that an investor’s entire investment could be lost.

Outstanding Stock Opinion, Purchase Warrants and Convertible Securities

Monarch has not issued any stock options to either of its two directors and officers nor has it attached share purchase warrants to the share issued and outstanding. There are no convertible securities as of the date of this Form 10-K. Monarchy has not registered any shares for sale by security holders under the Securities Act other than as disclosed in this Form 10-K.

Our authorized capital consists of 300,000,000 shares of common stock, par value $0.001 per share, of which 30,437,187 shares are presently issued.

The holders of our common stock are entitled to receive dividends as may be declared by our Board of Directors; are entitled to a pro-rated share in all of our assets available for distribution upon winding up of the affairs our Company; and are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all Meetings of the shareholders.

The shareholders are not entitled to preference as to dividends or interest; pre-emptive rights to purchase in new issues of shares; preference upon liquidation; or any other special rights or preferences.

There are no restrictions on dividends under any loan or other financing arrangements.

Non-Cumulative Voting.

The holders of our shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our Directors.

Employment Agreements

We have no employment agreements with any of our executive officers.

Equity Compensation Plans, Stock Options, Bonus Plans

No such plans or options exist. None have been approved or are anticipated. No Compensation Committee exists either.

Pension Benefits

We do not maintain any defined benefit pension plans.

Nonqualified Deferred Compensation

We do not maintain any nonqualified deferred compensation plans.

Change in Control of Our Company

We do not know of any arrangements which might result in a change in control.

Registered Agent

We are required by Section 78.090 of the Nevada Revised Statutes (the “NRS”) to maintain a registered agent in the State of Nevada. Our registered agent for this purpose is American Corporate Enterprises, 123 W Nye Lane, Suite 129, Carson City, NV 89703. All legal process and any demand or notice authorized by law to be served upon us may be served upon our registered agent in the State of Nevada in the manner provided in NRS 14.020(2).

Transfer Agent

We have engaged the service of Pacific Stock Transfer, located in Las Vegas, Nevada, to act as transfer and registrar.

Debt Securities and Other Securities

There are no debt securities outstanding or other securities.

Rule 144 Share Restrictions

Under Rule 144, an individual who is not an affiliate of our Company and has not been an affiliate at any time during the three months preceding a sale and has been the beneficial owner of our shares for at least six months would be entitled to sell them without restriction. This is subject to the continued availability of current public information about us for the first year which can be eliminated after a one-year hold.


1.		Whereas an individual who is deemed to be an affiliate and has beneficially owned shares in our Company for at least six months clan sell their shares in a given three month period as follows::


a.		One percent of the number of shares of our Company's common stock then outstanding, which the case of our current directors and officers, will equal approximately 50,000 shares as of the date of this Form 10-K; or


b.		The average weekly trading volume of our company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale.


2.		Under Rule 405 of the Securities Act, a reporting or non-reporting shell company cannot sell shares under Rule 144, unless the company: (i) has ceased to be a shell company; (ii) is subject to the Exchange Act reporting obligations; (iii) has filed all required Exchange Act reports during the preceding twelve months; (iv) and at least one year has elapsed from the time the company filed with the SEC, current Form 10 type information reflecting its status as an entity that is not a shell company.

ANTI-TAKEOVER PROVISION

The Chapter 78 of Nevada Revised Statutes contains a provision governing "acquisition of controlling interest." This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires "control shares" whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges: 20 to 33 1/3%; 33 1/3 to 50%; or more than 50%.

A "control share acquisition" is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The shareholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from the control share acquisition act.

The control share acquisition act is applicable only to shares of "Issuing Corporations" as defined by the Nevada law. An Issuing Corporation is a Nevada corporation, which: has 200 or more shareholders, with at least 100 of such shareholders being both shareholders of record and residents of Nevada; and does business in Nevada directly or through an affiliated corporation.

At this time, we do not have 100 shareholders of record resident of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply, the provisions of the control share acquisition act may discourage companies or persons interested in acquiring a significant interest in or control of us, regardless of whether such acquisition may be in the interest of our shareholders.

The Nevada "Combination with Interested Shareholders Statute" may also have an effect of delaying or making it more difficult to effect a change in control of us. This statute prevents an "interested shareholder" and a resident domestic Nevada corporation from entering into a "combination," unless certain conditions are met. The statute defines "combination" to include any merger or consolidation with an "interested shareholder," or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an "interested shareholder" having: an aggregate market value equal to 5 percent or more of the aggregate market value of the assets of the corporation; an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or representing 10 percent or more of the earning power or net income of the corporation.

CORPORATE GOVERNANCE

Director Independence

Tim Ferguson is not independent within the meaning of Section 5605 of NASDAQ.

Board Committees

The Audit Committee

We have an Audit Committee whose members consist of Tim Ferguson who is not independent. Further, Tim Ferguson can be considered an “audit committee financial expert” as defined in Item 401 of Regulation S-K. It is our intention to seek a financial expert but with limited funds to date we might not be able to in the near future.

Apart from the Audit Committee, we have no other Board Committees. Since inception, our Board has conducted its business entirely by consent resolutions.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS’ INDEPENDENCE

Except as described below, none of the following parties have, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that have or will materially affect us, other than as noted in this section:

Any of our directors or officers;

Any person proposed as a nominee for election as a director;

Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

Any of our promoters; and

Any member of the immediate family (including spouse, parents, children, step-parents, step-children, siblings and in-laws) of any of the foregoing persons.

Directors’ Independence

Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. As Tim Ferguson is our executive officers and directors, we have determined that Tim Ferguson is not an independent director as defined under NASDAQ Rule 4200(a)(15).

The Company does not have any promoters involved with it.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

The aggregate fees billed for the two most recently completed fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal periods were as follows:


		Year Ended October 31, 2014		Year Ended October 31, 2013
Audit Fees	$	7,500	$	4,900
Audit-Related Fees		$Nil	$	Nil
Tax Fees		$Nil	$	Nil
All Other Fees		$Nil	$	Nil
Total	$	7,500	$	4,900

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following exhibits are either provided with this Annual Report or are incorporated herein by reference:


Exhibit Number	Description of Exhibits
3	Corporate Charter (1)
3.1	Articles of Incorporation. ⁽¹⁾
3.2	Bylaws, as amended. (1)
10.1	Assignment Agreement dated June 10, 2010 between Rodelio Mining Ltd. and Monarchy Resources, Inc. (1)
14.1	Code of Ethics (1)
31.1	Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*)
31.3	Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(*)
32.1	Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)
32.2	Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

(1)

Previously filed as an exhibit to our Registration Statement on Form S-1 originally filed with the SEC on March 15, 2011, as amended July 28, 2011, September 28, 2011, November 16, 2011 and February 24, 2012 and declared effective March 12, 2012.

(*) Filed herein

FINANCIAL STATEMENTS SCHEDULES


F-1	Independent Auditor’s Report;
F-2	Balance Sheets as at October 31, 2014; June 30, 2014; and June 30, 2013;

F-3	Statements of Operations for the 4 months ended October 31, 2014 and 2013 (unaudited) and the years ended June 30, 2014 and 2013;

F-4	Statement of Stockholders’ Deficiency from June 30, 2012 through October 31,2014;

F-5	Statements of Cash Flows for the 4 months ended October 31, 2014 and 2013 (unaudited) and the years ended June 30, 2014 and 2013

F-6	Notes to Financial Statements

ITEM 16.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MONARCHY VENTURES, INC.

(Registrant)

By:/s/ TIM FERGUSON

Chief Executive Officer,

President and Director

Chief Accounting Officer,

Chief Financial Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated.

By:/s/ TIM FERGUSON

Chief Executive Officer,

President and Director

Chief Accounting Officer,

Chief Financial Officer and Director

Date: May 4, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Monarchy Ventures, Inc. (Formerly Monarchy Resources, Inc.)

We have audited the accompanying consolidated balance sheets of Monarchy Ventures, Inc. (the “Company”) as at October 31, 2014, June 30, 2014 and 2013 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the period ended October 31, 2014 and the years ended June 30, 2014 and 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at October 31, 2014, June 30, 2014 and 2013 and the results of its operations and its cash flows for the period ended October 31, 2014 and the years ended June 30, 2014 and 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, to date the Company has reported losses since inception from operations and requires additional funds to meet its obligations and fund the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

May 4, 2015

F-1

MONARCHY VENTURES, INC.

(Formerly Monarchy Resources, Inc.)

CONSOLIDATED BALANCE SHEETS

(Expressed in US Dollars)


		October 31,		June 30,		June 30,
		2014		2014		2013
ASSETS
Current Assets
Cash or cash equivalents	$	22,173	$	23,418	$	10,639
Inventory		6,652		7,025		5,708
Prepaid expense		5,297		6,571		11,356
Total current assets		34,122		37,014		27,704

Non-current Assets
Property and equipment		211,597		233,558		267,424

TOTAL ASSETS	$	245,719	$	270,572	$	295,128

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities
Bank indebtedness	$	21,239	$	20,730	$	-
Accounts payable and accrued liabilities		253,641		44,081		31,818
Convertible notes payable		347,775		-		-
Current portion of deferred lease incentive		1,671		1,765		1,792
Total current liabilities		624,326		66,576		33,610

Long Term Liabilities
Deferred lease incentive		11,139		12,353		14,338
Due to related parties		515,669		481,244		423,792

TOTAL LIABILITIES		1,151,134		560,173		471,740

STOCKHOLDERS’ DEFICIENCY
Common stock
300,000,000 shares authorized, at $0.001 par value; 30,437,187 shares issued and outstanding as at October 31, 2014 (153,807 as at October 31, 2013) (Note 7)		30,437		238		238
Accumulated other comprehensive income		24,451		8,014		5,521
Accumulated deficit		(960,303)		(297,853)		(182,371)

Total stockholders’ deficiency		(905,415)		(289,601)		(176,612)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY	$	245,719	$	270,572	$	295,128

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

F-2

MONARCHY VENTURES, INC.

(Formerly Monarchy Resources, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in US Dollars)


				4 months ended						Years ended
				October 31, 2014			October 31, 2013			June 30, 2014			June 30, 2013
							(unaudited)
	REVENUE
Net sales		$	118,216		$	93,337		$	345,682		$	166,466
Cost of goods sold			(86,054)			(76,799)			(253,236)			(120,507)
TOTAL REVENUE			32,162			16,538			92,446			45,959

EXPENSES
Depreciation			11,625			14,201			41,340			26,666
General and administrative			19,634			16,520			53,886			45,365
Management wages			12,306			11,562			38,104			37,450
Professional fees			19,385			-			10,548			8,233
Rent			20,847			15,300			64,050			52,008
TOTAL OPERATING EXPENSES			83,797			57,583			207,928			169,722
NET LOSS FROM OPERATIONS			(51,635)			(41,045)			(115,482)			(123,763)
OTHER COMPREHENSIVE INCOME (EXPENSE)
Foreign exchange gain (loss)			16,437			(1,217)			2,493			5,521

COMPREHENSIVE LOSS		$	(35,198)		$	(42,262)		$	(112,989)		$	(118,242)

NET LOSS PER COMMON SHARE
Basic and diluted		$	(0.002)		$	(164)		$	(462)		$	(495)
COMPREHENSIVE LOSS PER COMMON SHARE
Basic and diluted		$	(0.001)		$	(169)		$	(452)		$	(473)
WEIGHTED AVERAGE OUTSTANDING SHARES
Basic and diluted			30,013,174			250			250			250

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

F-3

MONARCHY VENTURES, INC.

(Formerly Monarchy Resources, Inc.)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

For the period October 31, 2012 to October 31, 2014

(Expressed in US Dollars)


	Common Stock		Accumulated deficit	Accumulated other comprehensive	Total
	Number	Par value	Accumulated deficit	income	Total
Balance as of June 30, 2012	250	$ 238	$ (58,608)	$ -	$ (58,370)
Translation gain	-	-	-	5,521	5,521
Net loss for the year ended June 30, 2013	-	-	(123,763)	-	(123,763)
Balance as of June 30, 2013	250	238	(182,371)	5,521	(176,612)
Translation gain	-	-	-	2,493	2,493
Net loss for the year ended June 30, 2014	-	-	(115,482)	-	(115,482)
Balance as of June 30, 2014	250	238	(297,853)	8,014	(289,601)
Share exchange and recapitalization:
Shares issued to former shareholders of Spud Shack	30,000,000	30,000	26,970,000	-	27,000,000
Recapitalization adjustment	436,937	199	(27,580,815)	-	(27,580,616)
Translation gain	-	-	-	16,437	16,437
Net loss for the 4 months ended October 31, 2014	-	-	(51,635)	-	(51,635)
Balance as of October 31, 2014	30,437,187	$ 30,437	$ (960,303)	$ 24,451	$ (905,415)

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

F-4

MONARCHY VENTURES, INC.

(Former Monarchy Resources, Inc.)

(Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)


		4 months ended				Year ended
		October 31, 2014		October 31, 2013		June 30, 2014		June 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:				(unaudited)
Net loss	$	(51,635)	$	(41,045)	$	(115,482)	$	(123,763)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		11,625		14,201		41,340		26,666
Amortization of deferred lease incentive		(1,308)		(605)		(1,761)		(1,876)
Changes in operating assets and liabilities:
Inventory		373		-		(1,400)		(5,974)
Prepaid expense		1,274		3,737		4,600		12,719
Accounts payable and accrued expenses		4,497		19,298		12,726		28,414
Net cash used in operating activities		(35,174)		(4,414)		(59,977)		(63,814)

CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment		(1,817)		(275)		(11,633)		(306,576)
Deferred lease incentive		-		-		-		18,759
Net cash used in investing activities		(1,817)		(275)		(11,633)		(287,817)

CASH FLOWS FROM FINANCING ACTIVITIES
Bank indebtedness		510		-		20,691		(82,334)
Advances from related parties		20,233		-		63,835		436,362
Net cash provided by financing activities		20,743		-		84,526		354,028
Effect of foreign exchange		15,003		108		(137)		(97)
Net (decrease) increase in cash		(1,245)		(4,581)		12,779		2,300

CASH, BEGINNING OF PERIOD		23,418		10,639		10,639		8,339
CASH, END OF PERIOD	$	22,173	$	6,058	$	23,418	$	10,639

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

F-5

MONARCHY VENTURES, INC.

(Formerly Monarchy Resources, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2014

(Expressed in US Dollars)

1. ORGANIZATION

The Company, Monarchy Ventures, Inc. (formerly Monarchy Resources, Inc.), was incorporated under the laws of the State of Nevada on June 16, 2010.

On October 20, 2014 the Company completed the acquisition of The Spud Shack Fry Company Ltd. (“Spud Shack”), a company located in British Columbia, by the issuance of 30,000,000 common shares. As a result, the former shareholders of Spud Shack will control approximately 99% of the issued and outstanding common shares of the Company. The acquisition is a reverse takeover ("RTO") and therefore has been accounted for using the acquisition method with Spud Shack as the accounting acquirer (legal subsidiary) and continuing entity for accounting and financial reporting purposes, and the Company as the legal parent (accounting subsidiary).

On August 20, 2014 the Company completed a 100:1 reverse stock split, and on November 24, 2014 the Company completed a 3:1 reverse stock split. All shares issued have been restated to reflect the above changes.

These financial statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

At October 31, 2014, the Company has a working capital deficit, stockholders’ deficit and operating losses for past two years. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Spud Shack., a British Columbia incorporated company. All inter-company transactions and account balances have been eliminated upon consolidation.

Basic and Diluted Net Loss Per Share

Basic net loss per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net loss per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes anti-dilutive and then the basic and diluted per share amounts are the same.

F-6

Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain of the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors 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. The most significant estimates with regard to these financial statements relate to the carrying values of unproven mineral properties, expected lives of equipment, determination of fair values of stock based transactions and valuation of deferred income taxes.

Asset Retirement Obligations

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The estimated fair value of the asset retirement obligation is based on the current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability is capitalized as part of the cost of the related asset and amortized over its useful life. The liability accretes until the Company settles the obligation. To date the Company has not incurred any measurable asset retirement obligations.

Equipment

Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the statement of comprehensive loss.

Property and equipment includes leasehold improvements, furniture and fixtures, and equipment which are recorded at cost. Expenditures for major additions and improvements are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of furniture and fixtures and office equipment is computed as follows:


Furniture and fixtures	20% declining balance
Computer equipment	55% declining balance
Leasehold improvements	Term of lease

Impairment of Long-lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

Foreign Currency Translations

The books of Monarchy Ventures Inc. are maintained in United States dollars and this is the Company’s functional and reporting currency. Transactions denominated in other than the U.S. dollar are translated as follows with the related transaction gains and losses being recorded in the Statement of Operations:

(i) Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;

(ii) Non-Monetary items including equity are recorded at the historical rate of exchange; and

(iii) Revenues and expenses are recorded at the period average in which the transaction occurred.

F-7

The functional currency of the Company's wholly owned subsidiary is the Canadian dollar. The Company translates the financial statements of the subsidiary to U.S. dollars using the following method:

All assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the period-end. Revenues and expenses are translated throughout the period at the weighted average exchange rate. Exchange gains or losses from such translations are included in accumulated comprehensive income (loss), as a separate component of stockholders' equity.

Comprehensive Income

The Company presents changes in accumulated comprehensive income in its statement of stockholders' deficit. Total comprehensive income includes, in addition to net loss, changes in equity that are excluded from the Statements of Operations.

Investments

Investments in companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors, including, among others, ownership level. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s Balance Sheets and Statements of Operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the Company’s statements of operations and the Company’s carrying value in an equity method investee company is reflected in the Company’s balance sheets. The Company evaluates these investments for other-than-temporary declines in value each quarterly period. Any impairment found to be other than temporary would be recorded through a charge to earnings.

Mineral claim acquisition and exploration costs

Realization of the Company's investment in and expenditures on mineral properties is dependent upon the establishment of legal ownership, the attainment of successful production from the properties or from the proceeds of their disposal.

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristics of many mineral properties. To the best of its knowledge, the Company believes all of its unproved mineral interests are in good standing and that it has title to all of these mineral interests.

Long-lived assets are to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company is to estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. Mineral exploration costs are expensed as incurred until commercially mineable deposits are determined to exist within a particular property.

Revenue Recognition

The restaurant operation is cash, debit, and credit card based. Revenue from restaurant operations is recognized at the time of the transaction.

Revenue from the sale of minerals will be recognized when a contract is in place and minerals are delivered to the customer.

Fair Value of Financial Instruments

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, trade payables, and loans approximates their carrying value due to their short-term nature.

F-8

Income Taxes

Recent Accounting Pronouncements

Accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s financial statements upon adoption.

3. INVESTMENT IN NEW WORLD METALS S.A. de C.V.

On May 14, 2013, the Company entered into a Share Purchase Agreement (the “SPA”) with New World Metals S.A.P.I. de C.V. (“New World”). Under the terms of the SPA, the Company issued 33,333 shares of the Company’s common stock to the owners of New World in exchange for 28% of the issued and outstanding shares of New World. The shares of the Company had a fair value of $2,850,000.

New World is a mining operator in the Chihuahua region of Mexico which owns three mining interests; Morelos, La Luna, and Peneto.

On July 4, 2013, the Company entered into an agreement to increase its ownership in New World by 17%, to 45%, by issuing 16,667 shares and agreeing to pay $750,000 to New World. The shares of the Company had a fair value of $1,425,000.

On January 15, 2014, the Company settled the $750,000 owing by issuing 20,000 shares with a fair value of $1,000,000.

At October 31, 2014, the investment was fully impaired and expensed as the Company could not project any future cash flows or salvage value from the project.

4. RELATED PARTIES

As of October 31, 2014, amounts of $515,669 were owing to related parties (June 30, 2014: $481,243, June 30, 2013: $423,792). These amounts are unsecured, and have no fixed interest or repayment terms.

During the period ended October 31, 2014 and the years ended June 30, 2014 and 2013 $12,306, $38,106, and $37,450 respectively, was incurred as remuneration to officers and directors of the Company.

During the period ended October 31, 2014, the Company issued 166,667 shares in settlement of debt of $125,000 owing to a director.

F-9

5. PROPERTY AND EQUIPMENT


October 31, 2014	Cost	Accumulated Depreciation	Net Book Value October 31, 2014
Computer equipment	$ 6,250	$ 4,497	$ 1,753
Furniture and fixtures	103,605	37,744	65,861
Leasehold improvements	176,020	32,037	143,983
	$ 285,875	$ 74,278	$ 211,597


June 30, 2014	Cost	Accumulated Depreciation	Net Book Value June 30, 2014
Computer equipment	$ 6,502	$ 4,247	$ 2,255
Furniture and fixtures	107,944	34,613	73,331
Leasehold improvements	185,615	27,643	157,972
	$ 300,061	$ 66,503	$ 233,558


June 30, 2013	Cost	Accumulated Depreciation	Net Book Value June 30, 2013
Computer equipment	$ 5,620	$ 1,569	$ 4,051
Furniture and fixtures	99,418	14,514	84,904
Leasehold improvements	187,863	9,393	178,470
	$ 292,901	$ 25,476	$ 267,425

6. LEASE INCENTIVE

In February 2013, the Company received $18,759 from the landlord for tenant improvement reimbursements which has been recorded as a lease incentive. It has been amortized on a straight line basis over the lease term of 10 years. Each year’s portion of the lease incentive has been offset against the rent expense.

7. COMMITMENT

The Company is committed until May 31, 2022 for payments totaling C$372,090 for premises under lease. The minimum lease payments over the next five years are as follows:


2015	C$ 23,550
2016	47,100
2017	47,100
2018	50,868
2019	50,868
	C$ 219,486

F-10

8. INCOME TAXES

The reported income taxes differ from the amounts obtained by applying statutory rates to the loss before income taxes as follows:


	4 months ended October 31, 2014	Year ended June 30, 2014	Year ended June 30, 2013
Loss before income taxes	$ (51,635)	$ (115,482)	$ (123,763)
Corporate tax rate	34%	34%	34%
Expected income tax recovery	(17,556)	(39,262)	(42,080)
Increase resulting from:
Permanent differences and others	-	90	96
Impact of tax rate differences	3,077	9,216	9,878
Change in valuation allowance	14,479	29,956	32,106
Deferred income tax recovery	$ -	$ -	$ -

The Company’s deferred income tax assets are as follows:


	October 31, 2014	June 30, 2014	June 30, 2013
Property and equipment	$ 19,849	$ 17,291	$ 6,624
Loss carry forwards	63,102	57,674	39,015
Other	174	179	195
	83,125	75,144	45,834
Valuation allowance	(83,125)	(75,144)	(45,834)
	$ -	$ -	$ -

As the criteria for recognizing deferred income tax assets have not been met due to the uncertainty of realization, a valuation allowance of 100% has been recorded for the current and prior year.

The Company has Canadian non-capital losses of $266,247 which expire in the years 2032 to 2034 and US tax losses of $13,179 which expire in 2034.

9. CAPITAL STOCK

In July and August, 2014, the Company issued 50,000 shares to settle $150,000 of convertible promissory notes.

On September 24, 2014, the Company issued 166,667,000 shares to settle $125,000 of debt owing to a related party.

On October 20, 2014, the Company issued 30,000,000 shares to acquire The Spud Shack Fry Company Ltd., an operating British Columbia based restaurant.

10. CONVERTIBLE PROMISSORY NOTES

The Company has $347,775 in convertible promissory notes that are due on demand, bear interest at 5%, are unsecured and are convertible at $0.01.

During the year ended October 31, 2014, $150,000 of debt was converted into 150,000 common shares.

If the balance outstanding were converted into common shares, the amount of shares to be issued would be 34,777,500 common shares. The amount of accrued interest payable of these notes was $13,316 as of October 31, 2014 and is included in accounts payable.

11. SUBSEQUENT EVENTS

On November 20, 2014, the Company issued 21,500,000 shares in satisfaction of $64,500 in debt.

On April 21, 2015, the Company issued 5,000,000 shares in satisfaction of $5,000 in debt.

F-11

Attached files

I-WELLNESS MARKETING GROUP INC. Reports

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