[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-36122

IFAN Financial, Inc.

(Name of small business issuer in its charter)

5694 Mission Center Road, Suite 602-660,

San Diego, CA, 92108-4312

 (Address of principal executive offices)

Phone: (619) 537-9998

 (Registrant’s telephone number)

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 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]

As of July 13, 2015, there were 84,486,774 shares of the registrant’s $0.001 par value common stock issued and outstanding.

IFAN Financial, Inc.*

TABLE OF CONTENTS

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Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of IFAN Financial, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we,"”IFAN,” "our," "us,”, the "Company," refers to IFAN Financial, Inc.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

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IFAN Financial, Inc.

Notes to the consolidated financial statements

May 31, 2015
(Unaudited)

NOTE 1 – NATURE OF BUSINESS

The Company was incorporated in the State of Nevada on June 11, 2010 and established a fiscal year end of August 31. The initial business plan was to develop and distribute an organic clothing line designed for children.

On April 2014, the Company abandoned the business plan as an organic children’s clothing company.  In June 2014, the Company signed an agreement with MobiCash America, Inc. to develop technology solutions in the mobile payment and social media markets. The Company acquired MobiCash America on October 3, 2014.

The accompanying unaudited interim consolidated financial statements of IFAN Financial, Inc. and subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K filed with the SEC on December 16, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended

August 31, 2014, as reported in Form 10-K, have been omitted.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MobiCash America, Inc. Intercompany balances are eliminated upon consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.  

Goodwill

Goodwill represents the excess of the cost over the fair value of net tangible and intangible assets of acquired businesses.  Goodwill is assessed for impairment by applying fair value based tests annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable.  The goodwill impairment test consists of a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit to its carrying value, including goodwill.  The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the

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reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basic and Diluted Net Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Because the Company incurred a net loss during the periods ended May 2015 and 2014, respectively, diluted loss excludes all potential common shares from diluted loss per share.  At May 31, 2015 and August 31, 2014, the Company had 673,300,600 and 630,000,000, respectively, potentially issuable shares upon the conversion of Series A preferred stock into common stock.  At May 31, 2015 and August 31, 2014, the Company had 1,175,926 and 0, respectively, of potentially issuable shares upon the conversion of warrants into common stock.

Recently Issued Accounting Pronouncements

In April, the FASB issued ASU 2015-03 to simplify the presentation of debt issuance costs. Debt issuance costs are specific incremental third party costs—other than those paid to the lender—that are directly attributable to issuing a debt instrument. Under the new guidance, debt issuance costs will be presented as a direct deduction from the carrying value of the associated debt, consistent with the existing presentation of a debt discount. Before the FASB issued this simplification, debt issuance costs were capitalized as an asset (i.e., a deferred charge).  Early adoption is permitted. The Company has adopted this accounting pronouncement effective immediately.

NOTE 3 – GOING CONCERN

The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – ACQUISITION

On October 3, 2014, the Company acquired Mobicash America, Inc. (“Mobicash” d/b/a “Quidme”), a company incorporated under the laws of the State of California, through a Share Exchange Agreement whereby the Company issued 61,858 shares of Series A convertible preferred stock convertible into common stock at a conversion ratio of 700 common shares for 1 Series A preferred stock (the “Conversion Ratio”) to the shareholders of Mobicash.  The Company determined that the fair value of the Series A convertible preferred stock was $4,330,060 on October 3, 2014.

The acquisition was accounted for as a business combination. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on estimates of their respective fair values at the date of acquisition. The Company’s purchase price allocation for the acquired company is preliminary and subject to revision as a more detailed analysis is completed and additional information about the fair value of assets and liabilities becomes available. The amounts related to the acquisition were allocated to the assets acquired and the liabilities assumed on the date of acquisition as follows:

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NOTE 5 – LICENSE AGREEMENT

On May 15, 2014, the Company entered into a two-year License Agreement (the “License Agreement”) with IPIN Debit Network, Inc., a New Brunswick, Canada corporation (“IPIN”) for the Company’s use and distribution of IPIN’s technology, systems and products related to electronic payment processing and its United States Letters Patents.  After the two-year period, the License Agreement shall be automatically renewable for successive one-year periods up to an additional ten years provided that IPIN has received a minimum of $5,000,000 in royalty payments for each of the three (3) through twelve (12) successive years from the signing of the License Agreement.

In connection with the License Agreement, the Company was required to issue 1,000,000 shares of the Company’s common stock to IPIN and IPIN was required to issue 1,000,000 shares of IPIN common stock to the Company.  The Company was issued the IPIN common stock during the year ended August 31, 2014 and recorded the estimated fair value of the IPIN common stock of $164,521 as an investment and recorded a corresponding common stock payable.   The 1,000,000 shares of common stock of the Company was issued to IPIN during the six months ended February 28, 2015.  The Company recorded an impairment of $164,521 for its investment in IPIN common stock during the three months ended November 30, 2014.     

Pursuant to the License Agreement, the Company was required to pay $250,000 to IPIN in the following amounts upon achieving the below benchmarks:

(a)

$10,000 upon execution of the License Agreement (“Benchmark A”);

(b)

$20,000 when IPIN successfully demonstrates the integration, publishing design, and on-boarding screens of its technology with the Android application package file (“Benchmark B”);

(c)

$20,000 when IPIN successfully integrates the Android app with the IPIN device as demonstrated by transferring the transaction details to the app after a card swipe occurs (“Benchmark C”);

(d)

$60,000 when IPIN successfully demonstrates a card transaction including posting the status to the merchant call back uniform resource locator (“Benchmark D”);

(e)

$60,000 when IPIN successfully demonstrates a front end data base set up that enables an IPIN device user to affect an IPIN device transaction (“Benchmark E”);

(f)

$60,000 when IPIN successfully demonstrates the completed, back-end development of the IPIN device Android app including any and changes needed to support it (“Benchmark F”); and

(g)

$20,000 when IPIN successfully demonstrates the completed testing and deployment for in house participants applying the iPIN device Android app to the iPIN device for Apple iOS app, including testing and deployment (“Benchmark G”).

The Company pre-paid IPIN $66,620 at the inception of the License Agreement, which the Company recorded as prepaid expense.  The Company achieved Benchmarks A and Benchmark B during the year ended August 31, 2014 and applied $10,000 of its prepaid expense against the milestone payments and paid IPIN $20,000.  The Company

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achieved Benchmark C during the nine months ended May 31, 2015 and applied $10,000 of its prepaid expense against the milestone payment and paid IPIN $10,000. The Company amortizes each milestone payment using the straight line method over the term of the remaining useful life of the license agreement which ends May 15, 2016.  The Company has additional benchmarks to be achieved which aggregate to $200,000, of which $46,620 has been paid and is recorded as prepaid expense in the consolidated balance sheet as of May 31, 2015.

During the nine months ended May 31, 2015, the Company has recorded amortization related to the milestone payments of $22,000.

NOTE 6 – FIXED ASSETS

The Company’s fixed assets consist of used computer equipment acquired in connection with the acquisition of Mobicash and have a remaining estimated useful life of one year.  Property and equipment consist of the following:

The Company recorded depreciation expense of $2,772 and $0 during the nine months ended May 31, 2015 and 2014, respectively.

NOTE 7 – NOTE PAYABLE

The Company has a $5,000 note payable to an individual due in November 2015.  The note bears interest at 10% per annum.

Secured Promissory Note Agreement

On May 28, 2015, the Company and SBI Investments, LLC (“SBII”), completed a financing transaction that consisted of a Securities Purchase Agreement (the “SPA”), Two Secured Promissory Notes (the “Notes”), Stock Pledge Agreement (the “Pledge”), and Warrant Agreement, pursuant to which SBII has agreed to loan to the Company an aggregate of $550,000. The first note for $275,000 was issued by the Company on May 28, 2015 pursuant to the SPA and is due and payable on May 14, 2016 and accrues interest at 10% per annum payable at three, six and nine months from the issuance date. The second note will be issued upon the filing of a Form S-1 Registration Statement, pursuant to the SPA, and is due and payable on the one year anniversary of the filing date of the Form S-1 Registration Statement, and accrues interest at 10% per annum payable at three, six and nine months from the issuance date. Pursuant to the Pledge, the Company’s CEO and CFO pledged 11,000,000 shares of their restricted common stock to guarantee payment of the Notes issued pursuant to the SPA.

In connection with the issuance of the $275,000 note payable, the Company received cash proceeds of $235,000 and recorded a debt discount of $40,000 for the difference between the face value of the note and the cash proceeds.  The Company also issued the lender 250,000 warrants in connection with the issuance of this debt with an exercise price of $0.50 and a term of 3 years. The Company determined the relative fair value of the warrants as of their issuance date using the following inputs; 3-year term; 152% volatility; 1% risk free rate; $0 dividends and determined the fair value was $19,523, which the Company recorded as debt discount.  The Company will issue the lender an additional 250,000 warrants with a 3 year life and a $1.00 exercise price upon the issuance of the second note

During the nine months ended May 31, 2015, the Company recognized $2,766 of amortization expense and have $56,777 in unamortized debt issuance costs as of May 31, 2015.

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NOTE 8 – EQUITY

Common stock

During the nine months ended May 31, 2015, the Company received $36,600 of cash proceeds pursuant to subscription agreements with third parties to purchase the common stock of the Company for $0.25 per share.  During the nine months ended May 31, 2015, the Company has issued 128,200 shares of common stock pursuant to these subscription agreements.  As of May 31, 2015, the Company has recorded a common stock payable of $4,550 as the Company has an obligation to issue the remaining 18,000 shares of common stock pursuant to the subscription agreements.  

During the nine months ended May 31, 2015, the Company received $250,000 of cash proceeds pursuant to a subscription agreement with an investor to purchase common stock of the Company for $0.27 per share and an equal number of warrants.  As of May 31, 2015, the Company has recorded a common stock payable of $250,000 related to its obligation to issue 925,926 shares of the Company’s common stock.  See Warrants below.

During the nine months ended May 31, 2015, the Company issued 3,398,554 shares of common stock for services.  The Company recorded stock-based compensation expense of $1,425,111 based on the grant date fair value of the common stock of the Company on the issuance dates.

During the nine months ended May 31, 2015, the Company issued 1,000,000 shares of the Company’s common stock valued at $164,521 to IPIN which were recorded as common stock payable at August 31, 2014.  The 1,000,000 shares were issued in January 2015.

Equity line of Credit

During May 2015, the Company entered into a second Securities Purchase Agreement (the “Equity Line Agreement”) with SBII, pursuant to which the Company may issue and sell to SBII $2,000,000 of the Company’s registered common stock (the “Shares”).  The aggregate maximum amount of all purchases that SBII shall be obligated to make under the Equity Line Agreement shall not exceed $2,000,000.  The purchase price for the Shares to be paid by SBII shall be eighty percent (80%) of the average of the three (3) lowest closing daily prices of the Company’s common stock during the five (5) consecutive trading days prior to the date of the draw down notice from the Company to SBII or eighty five percent (85%) of the price on the fifth trading day of the draw down pricing period.

The Company did not sell any shares pursuant to the Equity Line Agreement during the nine months ended May 31, 2015.

Preferred stock

The Company issued 61,858 shares of Series A preferred stock convertible into common stock of the Company as consideration for the acquisition of Mobicash.  See Note 5.

Warrants

Pursuant to a subscription agreement with an investor to purchase the Company’s common stock at $0.27 per share, the Company also issued warrants to the investor to purchase 925,926 shares of the Company’s common stock with a $1.00 exercise price.  The warrants expire on December 31, 2015.  The Company determined the fair value of the warrants as of their issuance date using the following inputs; 1-year term; 152% volatility; 1% risk free rate; $0 dividends and determined the fair value was approximately $246,000.   

Pursuant to the Secured Promissory Note Agreement (See Note 7), the Company issued 250,000 warrants to a  lender. The Company determined the relative fair value of the warrants as of their issuance date using the following inputs; 3-year term; 170% volatility; 1% risk free rate; $0 dividends and determined the fair value was $19,523, which the Company recorded as debt discount.  

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NOTE 9 – RELATED PARTY TRANSACTIONS

As of May 31, 2015 and August 31, 2014, the Company had related party notes payable of $362,945 and $146,187, respectively, related to services provided to the Company that are non-interest bearing with no specific repayment terms. As of May 31, 2015, there were loans payable to five officers for $199,587, $128,688, $29,420, $3,250 and $2,000, respectively. As of August 31, 2014, there were loans payable to two officers for $128,554 and $17,633, respectively.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

The Company and certain former owners and officers of Mobicash are in a dispute related to the acquisition of Mobicash by the Company.  The Company has not determined if this dispute will result in additional obligations to the Company.

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FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Results for the Quarter Ended May 31, 2015 Compared to the Quarter Ended May 31, 2014

Revenues:

The Company’s revenues were $0 for the quarter ended May 31, 2015 compared to $0 in 2014.  

Expenses:

General and administrative expenses for the quarters ended May 31, 2015 and 2014 were $574,577 and $27,328, respectively. General and administrative expenses consisted primarily of stock-based compensation, consulting fees, professional fees, management fees, office expenses and preparing reports and SEC filings relating to being a public company. The increase was primarily attributable to an increase in marketing consulting due to increased corporate activity as a result of the acquisition of Mobicash and stock-based compensation.  The Company incurred $11,284 and $0 of research and development expense during the three months ended May 31, 2015 and 2014, respectively. During the three months ended May 31, 2015, the Company recorded license fee amortization of $7,000 and $0, respectively.

Net Loss:

Net loss for the quarter ended May 31, 2015 was $595,627 compared with a net loss of $26,328 for the quarter ended February 28, 2014.  The increased net loss is largely due to cost related to share-based compensation and license fee amortization.

Results for the Nine Months Ended May 31, 2015 Compared to the Nine Months Ended May 31, 2014

Revenues:

The Company’s revenues were $0 for the nine month ended May 31, 2015 compared to $0 in 2014.  

Expenses:

General and administrative expenses for the nine months ended May 31, 2015 and 2014, were $1,721,224 and $37,534, respectively. General and administrative expenses consisted primarily of stock-based compensation, consulting fees, professional fees, management fees, office expenses and preparing reports and SEC filings relating to being a public company. The increase was primarily attributable to an increase in marketing consulting due to increased corporate activity as a result of the acquisition of Mobicash and stock-based compensation.  The Company incurred $186,701 and $0 of research and development expense during the nine months ended May 31, 2015 and

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2014, respectively. The Company recorded an impairment expense on its investment of $164,621 during the nine months ended May 31, 2015.  During the nine months ended May 31, 2015, the Company recorded license fee amortization of $22,000 and $0, respectively.

Net Loss:

Net loss for the nine months ended May 31, 2015, was $2,097,212 compared with a net loss of $36,534 for the nine months ended May 31, 2014.  The increased net loss is largely due to higher stock-based compensation and cost related to debt issuance.

Impact of Inflation

We believe that the rate of inflation has had a negligible effect on our operations.

Liquidity and Capital Resources

Working Capital

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing funds.

As of May 31, 2015, total current assets were $301,972.

As of May 31, 2015, total current liabilities were $1,192,407, which consisted of notes payable, accrued expenses and accounts payable, related party payables and common stock payable.  We had negative net working capital of $890,435 as of May 31, 2015.

Cash Flows

Cashflows from Operating Activities

During the nine months ended May 31, 2015, cash used in operating activities was $423,795 compared to $95,729 for the nine months ended May 31, 2014.  The increase in the amounts of cash used for operating activities was primarily due a higher loss incurred by the Company.  

Cashflows from Investing Activities

During the nine months ended May 31, 2015 cash used in investing activities was $10,000 compared to $10,000 for the nine months ended May 31, 2014.

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Cashflows from Financing Activities

During the nine months ended May 31, 2015, cash provided by financing activities was $689,147 compared to $104,374 for the nine months ended May 31, 2014.  The increase in cash provided by financing activities is due to receiving proceeds for the sale of common stock and the third party borrowing.

Quarterly Events

On April 3, 2015, the Company terminated the private placement agreement with the accredited investor due to a lack of performance. The Company worked diligently with the investor to try and find a solution but ultimately the investor was no longer able to provide the funds as agreed to. The investor ended up funding the Company $250,000 out of the total of $1,000,000. As per the terms of the private placement there are no penalties against the Company for the termination of private placement agreement.

Termination of the private placement means that the accredited investor will no longer have the option to purchase the remaining 2,777,777 shares of stock at $0.27 per share.

On April 3, 2015, the Company accepted the resignation of Mr. Christopher Menya, from his positions as Chief Technical Officer and as a Director with the Company. Mr. Menya has indicated that he may still consider a consulting role with the Company in the future. In recognition of his service Mr. Menya will keep his Preferred Shares in the Company and the Company will compensate him for his time spent with the Company. In his letter of resignation, Mr. Menya, stated that his resignation was due to his interest in pursuing other business opportunities.

On April 8, 2015, the Board of Directors of the Company appointed Mr. John De Puy as a Director of the Company.

The following sets forth biographical information for Mr. John De Puy is set forth below:

John De Puy, Age 83, Since 1993, Mr. De Puy has been the founder and President of OakTree Ventures, a financial services firm that specializes in capital formation. Mr. De Puy’s business background includes more than 25 years as an entrepreneur, CEO, management consultant and civic leader. He has been instrumental in investing in and advising more than 600 technology companies.  John has also authored three books on aspects of entrepreneurial leadership.  John completed the advanced management program at the Wharton School of Business at the University of Pennsylvania.  He is a member Wharton Alumni Club, Los Angeles Ventures Association, Southern California Software Council, San Diego Software and Internet Council, and Association for Corporate Growth.  He has also served as President and Chairman of the Board of USA Volleyball and is listed in Who’s Who in Leading Americans.  As a Director of IFAN, he will advise the Company on capital formation and marketing strategy. Due to Mr. De Puy’s strong background in management and entrepreneurial ventures, we are excited to add his talents to our Company.

Secured Promissory Note Agreement

On May 28, 2015, the Company and SBI Investments, LLC (“SBII”), completed a financing transaction that consisted of a Securities Purchase Agreement (the “SPA”), Two Secured Promissory Notes (the “Notes”), Stock Pledge Agreement (the “Pledge”), and Warrant Agreement, pursuant to which SBII has agreed to loan to the Company an aggregate of $550,000. The first note for $275,000 was issued by the Company on May 28, 2015 pursuant to the SPA and is due and payable on May 14, 2016 and accrues interest at 10% per annum payable at three, six and nine months from the issuance date. The second note will be issued upon the filing of a Form S-1 Registration Statement, pursuant to the SPA, and is due and payable on the one year anniversary of the filing date of the Form S-1 Registration Statement, and accrues interest at 10% per annum payable at three, six and nine months from the issuance date. Pursuant to the Pledge, the Company’s CEO and CFO pledged 11,000,000 shares of their restricted common stock to guarantee payment of the Notes issued pursuant to the SPA.  

In connection with the issuance of the $275,000 note payable, the Company received cash proceeds of $235,000 and recorded a debt discount of $40,000 for the difference between the face value of the note and the cash proceeds.  The Company also issued the lender 250,000 warrants in connection with the issuance of this debt with an exercise price

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of $0.50 and a term of 3 years. The Company determined the relative fair value of the warrants as of their issuance date using the following inputs; 3-year term; 152% volatility; 1% risk free rate; $0 dividends and determined the fair value was $19,523, which the Company recorded as debt discount.  The Company will issue the lender an additional 250,000 warrants with a 3 year life and a $1.00 exercise price upon the issuance of the second note

Equity Line Agreement and Registration Rights Agreement with SBI Investments, LLC.

Completed on May 28, 2015, effective as of May 14, 2015, the Company has entered into a second Securities Purchase Agreement (the “Equity Line Agreement”) with SBII, pursuant to which the Company may issue and sell to SBII Two Million Dollars ($2,000,000) of the Company’s registered common stock (the “Shares”). The parties also entered into a Registration Rights Agreement dated May 14, 2015, whereby the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state laws (the “Registration Agreement”, and together with the Equity Line Agreement, the “Agreements”). Pursuant to the Agreements, the Company shall register the Shares pursuant to a registration statement on Form S-1 (or on such other form as is available to the Company within 60 days of the execution of the Agreements) (the “Registration Statement”). In addition, the Company agreed to use its best efforts to cause such registration statement to be declared effective within one hundred eighty (180) days after the initial filing with the Securities Exchange Commission (“SEC”).  Pursuant to the terms of the agreements, the Company shall reserve a sufficient number of shares of the Company’s common stock for the purpose of enabling the Company to issue Shares pursuant to the Agreements.

Subject to the terms and conditions of the Equity Line Agreement, the Company, at its sole and exclusive option, may issue and sell to SBII, and SBII shall purchase from the Company, the Shares upon the Company’s delivery of written notices to SBII.  The aggregate maximum amount of all purchases that SBII shall be obligated to make under the Equity Line Agreement shall not exceed $2,000,000.  Once a written notice is received by SBII, it shall not be terminated, withdrawn or otherwise revoked by the Company.

The amount for each purchase of the Shares as designated by the Company in the applicable draw down notices shall be equal to the lesser of (i) $25,000 or, (ii) two hundred percent (200%) of the average daily volume of the Company’s common stock based on the trailing ten (10) trading days preceding the first day of the draw down notice period delivery by the Company to SBII,  and that the draw down amount requested will not cause the aggregate holdings of SBII shares of common stock of the Company to be greater than 4.99% of the issued and outstanding shares of common stock of the Company.

The purchase price for the Shares to be paid by SBII shall be eighty percent (80%) of the average of the three (3) lowest closing daily prices of the Company’s common stock during the five (5) consecutive trading days prior to the date of the Draw Down Notice from the Company to SBII or eighty five percent (85%) of the price on the fifth trading day of the Draw Down Pricing Period. During such five (5) consecutive trading day period, the Company shall not subdivide or combine its common stock, or pay a common stock dividend or make any other purchase of its common stock.

During the term of the Equity Line Agreement (18 months unless sooner terminated), the Company shall not enter into any purchase or sale of future priced securities of any type whatsoever that are, or may become, convertible or exchangeable into shares of its common stock pursuant to any equity line financing registered with the SEC on a Form S-1.

Also, during such term, the Company shall not enter into, amend, modify, or permit any transaction or arrangement with any of its officers, directors, persons who were officers or directors at any time during the previous two years, shareholders (and any of their family members) who beneficially own 5% or more of the common stock, or affiliates, except for (i) customary employment arrangements and benefit programs on reasonable terms, (ii) any arms-length agreement or transaction on terms no less favorable than terms which would have been obtainable from a disinterested third party, or (iii) any transaction or arrangement approved by a majority of the disinterested directors of the Company.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We

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did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

For all the terms and provisions of the Secured Promissory Note, Stock Pledge Agreement, Warrant Agreement, Equity Line of Credit, and Registration Rights Agreement, reference is hereby made to such documents that were filed with the SEC on June 2, 2015, as part of our Current Report on Form 8-K. All statements made herein concerning the foregoing are qualified in their entirety by reference to said exhibits.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is 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 by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of May 31, 2015, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Amended Annual Report on Form 10-K/A as filed with the SEC on December 17, 2014, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

Changes in Internal Control over Financial Reporting

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation except for the following:  There was a change in control of the majority owners and officers of the Company.  Internal controls in place with the prior officers were continued by the new owners.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A.  RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K, for the fiscal year ended August 31, 2014. The information set forth in these Reports could materially affect the Company’s business, financial position and results of operations. There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Forms 10-K for the fiscal year ended August 31, 2014.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Quarterly Issuances:

During the nine months ended May 31, 2015, the Company received $36,600 of cash proceeds pursuant to subscription agreements with third parties to purchase the common stock of the Company for $0.25 per share.  During the nine months ended May 31, 2015, the Company has issued 128,200 shares of common stock pursuant to these subscription agreements.  As of May 31, 2015, the Company has recorded a common stock payable of $4,550 as the Company has an obligation to issue the remaining 18,000 shares of common stock pursuant to the subscription agreements.  

During the nine months ended May 31, 2015, the Company received $250,000 of cash proceeds pursuant to a subscription agreement with an investor to purchase common stock of the Company for $0.27 per share and an equal number of warrants.  As of May 31, 2015, the Company has recorded a common stock payable of $250,000 related to its obligation to issue 925,926 shares of the Company’s common stock.  See Warrants below.

During the nine months ended May 31, 2015, the Company issued 3,398,554 shares of common stock for services.  The Company recorded stock-based compensation expense of $1,425,111 based on the grant date fair value of the common stock of the Company.

During the nine months ended May 31, 2015, the Company issued 1,000,000 shares of the Company’s common stock valued at $0 to IPIN which were recorded as common stock payable at August 31, 2014.  The 1,000,000 shares were issued in January 2015.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.  OTHER INFORMATION

Changes In Registrant’s Certifying Accountant.

(a)           Dismissal of Independent Registered Public Accounting Firm.

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On April 3, 2015, the Company, after review and recommendation by its board of directors, dismissed Kyle L. Tingle, CPA, LLC (“Tingle”) as the Registrant’s independent registered public accounting firm.  

During the two most recent fiscal years and through the date of this report, there were no (1) disagreements with Tingle on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to its satisfaction would have caused Tingle to make reference in its reports on the Company’s financial statements for such years to the subject matter of the disagreement, or (2) “reportable events,” as such term is defined in Item 304(a)(1)(v) of Regulation S-K.

The audit reports of Tingle on the financial statements of the Company, during the periods from August 31, 2011 through April 3, 2015, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that the reports stated there is substantial doubt about the Company’s ability to continue as a going concern. 

The Company has requested that Tingle furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements and, if not, stating the respects in which it does not agree.  When received, a copy of Tingle’s response letter will be filed as an Exhibit to an amendment of this Current Report.

(b)           Engagement of New Independent Registered Public Accounting Firm.

On April 3, 2015, the Board of Directors approved the appointment of GBH CPAs, PC as the independent registered public accounting firm of the Company.

During the Company’s two most recent fiscal years and the subsequent interim periods preceding GBH CPAs, PC engagement, neither the Company nor anyone on behalf of the Company consulted with GBH CPAs, PC regarding the application of accounting principles to any specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company’s financial statements, and GBH CPAs, PC did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue or any matter that was the subject of a “disagreement” or a “reportable event,” as such terms are defined in Item 304(a)(1) of Regulation S-K.

ITEM 6.  EXHIBITS

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SIGNATURES

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

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

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