UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

X .

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

For the quarter ended December 31, 2015

Commission File number 333-172825

I-WELLNESS MARKETING GROUP 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.)

3651 Lindell Road, Suite D612

Las Vegas, NV 89103

(Address of principal executive offices)

702-318-7545

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.


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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes . No X .

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PROCEEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities subsequent to the distribution of securities under a plan confirmed by a court. Yes . No . N/A X .

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of February 26, 2016: 66,937,187


		Page Number
PART 1.	FINANCIAL INFORMATION

ITEM 1.	Financial Statements	3

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk.	9

ITEM 4.	Controls and Procedures.	9

PART 2.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	10

ITEM 1A.	Risk Factors	10

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10

ITEM 3.	Defaults Upon Senior Securities	10

ITEM 4.	Mine Safety Disclosures	10

ITEM 5.	Other Information	10

ITEM 6.	Exhibits	11

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

I-WELLNESS MARKETING GROUP INC.

(Formerly Monarchy Ventures Inc.)

CONSOLIDATED BALANCE SHEETS


		December 31, 2015		June 30, 2015
		(Unaudited)
ASSETS
Current Assets
Cash or cash equivalents	$	18,063	$	20,043
Inventory		4,536		5,033
Total current assets		22,599		25,076

Non-current Assets
Deposits		2,988		3,315
Property and equipment		148,216		176,184
Total non-current assets		151,204		179,499

TOTAL ASSETS	$	173,803	$	204,575

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities
Bank indebtedness	$	13,242	$	16,629
Accounts payable		167,135		160,745
Accrued liabilities		1,788		1,985
Convertible notes payable		388,660		388,892
Due to related parties		449,358		493,283
Current portion of deferred lease incentive		1,361		1,510
Total current liabilities		1,021,544		1,063,044
Long Term Liabilities
Deferred lease incentive		7,487		9,062

TOTAL LIABILITIES		1,029,031		1,072,106

STOCKHOLDERS’ DEFICIENCY
Common stock 300,000,000 shares authorized, at $0.001 par value; 66,937,845 shares issued and outstanding at December 31, 2015 (56,937,845 at June 30, 2015)		66,938		56,937
Additional paid-in capital		76,728		67,018
Accumulated other comprehensive income		85,148		54,982
Accumulated deficit		(1,084,042)		(1,046,468)

Total stockholders’ deficiency		(855,228)		(867,531)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY	$	173,803	$	204,575

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

I-WELLNESS MARKETING GROUP INC.

(Formerly Monarchy Ventures Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		For the three months ended				For the six months ended
		December 31				December 31
		2015		2014		2015		2014

REVENUE	$	105,608	$	99,186	$	204,337	$	182,695
COST OF GOODS SOLD		(74,696)		(69,565)		(140,695)		(128,253)
GROSS MARGIN		30,912		29,621		63,642		54,442

EXPENSES
Depreciation		746		7,521		11,064		15,366
General and administrative		26,671		17,506		49,013		32,136
Management wages		7,867		9,248		14,757		17,545
Professional fees		6,543		4,692		9,768		7,020
Rent		7,623		9,794		16,615		25,862
TOTAL OPERATING EXPENSES		49,450		48,761		101,217		97,929
NET LOSS		(18,538)		(19,141)		(37,575)		(43,487)
OTHER COMPREHENSIVE INCOME
Foreign exchange translation gain		9,208		351		30,167		1,713

COMPREHENSIVE LOSS	$	(9,330)	$	(18,790)	$	(7,408)	$	(41,774)

NET LOSS PER COMMON SHARE	$	-	$	-	$	-	$	-

WEIGHTED AVERAGE OUTSTANDING SHARES – basic and diluted		66,937,845		30,437,843		65,035,671		30,437,843

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

I-WELLNESS MARKETING GROUP INC.

(Formerly Monarchy Ventures Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Six months ended
		December 31, 2015		December 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(37,575)	$	(43,487)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		11,064		15,366
Professional fees		9,768		-
Amortization of deferred lease incentive		(713)		(565)
Changes in operating assets and liabilities:
Prepaid expenses		-		938
Accounts payable and accrued expenses		9,514		8,055
Net cash used in operating activities		(7,941)		(19,693)

CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment		-		(2,751)
Net cash used in investing activities		-		(2,751)

CASH FLOWS FROM FINANCING ACTIVITIES
Bank borrowings		(1,827)		(195)
Advances for convertible debt		9,768		-
Advances from related parties		-		19,970
Net cash provided by financing activities		7,941		19,775
Effect of foreign exchange		(1,980)		801
Net decrease in cash		(1,980)		(2,669)

CASH, BEGINNING OF PERIOD		20,043		23,418
CASH, END OF PERIOD	$	18,063	$	21,550

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

I-WELLNESS MARKETING GROUP INC.

(Formerly Monarchy Ventures Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015

(Unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

On October 20, 2014 the Company completed the acquisition of The Spud Shack Fry Company Ltd. (“Spud Shack”), a restaurant located in British Columbia, Canada.

On December 21, 2015, the Company entered into an exclusive marketing agreement and was granted the exclusive worldwide marketing rights to a health and fitness application called 60K which is currently under development for iPhone, Android, tablets and desktop computers. Pursuant to the exclusive marketing agreement the Company will provide $100,000 in initial financing to complete the application as well as for marketing the release of a prototype. The Company will retain 30% of all revenue generated by the application.

In January 2016, the Company merged with its wholly owned subsidiary, I-Wellness Marketing Group Inc. which is a Nevada corporation incorporated during the six months ended December 31, 2015.

In February 9, 2016, the Company changed its name from Monarchy Ventures Inc. to I-Wellness Marketing Group Inc.

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 increasing revenue, and 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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Form 10-K of the Company for the period ended June 30, 2015. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the year ending June 30, 2016. For further information, these unaudited financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for period ended June 30, 2015 included in the Company’s transition report on Form 10-K.

2. RELATED PARTIES

As of December 31, 2015, amounts of $449,358 were owing to related parties (June 30, 2015: $493,283). These amounts are unsecured, and have no fixed interest or repayment terms.

During the six months ended December 31, 2015 and 2014, $14,757 and $17,545, respectively, was incurred as remuneration to a shareholder of the Company who serves as the manager of the restaurant operation.

3. PROPERTY AND EQUIPMENT


December 31, 2015	Cost	Accumulated Depreciation	Net Book Value December 31, 2015
Computer equipment	$ 5,092	$ 4,436	$ 656
Furniture and fixtures	86,436	42,876	43,560
Leasehold improvements	143,392	39,392	104,000
	$ 234,920	$ 86,704	$ 148,216

June 30, 2015	Cost	Accumulated Depreciation	Net Book Value June 30, 2015
Computer equipment	$ 5,650	$ 4,646	$ 1,004
Furniture and fixtures	95,912	42,206	53,706
Leasehold improvements	159,110	37,636	121,474
	$ 260,672	$ 84,488	$ 176,184

4. LEASE INCENTIVE

In February 2013, the Company received CAD $18,840 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.

5. COMMITMENT

The minimum lease payments over the next five years are as follows:


2016	CAD$ 23,550
2017	47,100
2018	47,100
2019	50,868
2020	50,868
	CAD$ 219,486

6. CONVERTIBLE PROMISSORY NOTES

As at December 31, 2015, the Company has $388,660 (June 30, 2015 - $388,892) in convertible promissory notes that are due on demand, bear interest at 5% and are unsecured. $75,000 of these promissory notes are convertible at $0.01, while the remaining are convertible at $0.001.

During the six months ended December 31, 2015, $9,768 of convertible notes issued were issued with beneficial conversion features with intrinsic values in excess of the principal balance. As a result, the Company recorded a debt discount of $9,768. In addition, as these promissory notes are payable on demand, the debt discounts were fully amortized to interest expense during the period.

During the six months ended December 31, 2015, $10,000 was converted into $10,000,000 common shares.

7. SUBSEQUENT EVENT

On February 26, 2016, the Company received CAD $1,846 in convertible debt financing.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in the consolidated financial statements of I-Wellness Marketing Group Inc. (“I-Wellness” or the “Company”) and the notes which form an integral part of the consolidated financial statements which are attached hereto.

The financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.

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

As of December 31, 2015, we had a working capital deficit of $998,945, an improvement over the working capital deficit of $1,037,967 at June 30, 2015. This improvement resulted primarily from fluctuations in the USD/CAD exchange rate. We also settled a portion of convertible debt by converting the debt to shares.

For the 6 months ending December 31, 2015 we had a net loss from operations of $37,574 compared to a net loss of $43,486 from operations for the 6 months ending December 31, 2014. This improvement resulted from increased sales and a reduction of some operating expenses. Our comprehensive income for the 6 months ending December 31, 2015 was a net profit of $30,167 as a result of foreign exchange translation gains.

Foreign Currency and Exchange Rates

Our Company has assets in Mexico and Canada and, when applicable, will pay 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.

Requirements for Cash over the next twelve months

Despite the commitment of our director to advance us funds over the next twelve months, our future financial success will be dependent on our ability to obtain third party debt or equity financing and ultimately on the ability of the restaurant in Canada to generate profits. As of the date of this Form 10-Q, we have not generated sufficient revenues, and have experienced negative cash flow from operations. We may not be able to secure other sources of financing or any available sources may not be on favourable terms.

Critical Accounting Policies and Estimates

In presenting our financial statements in conformity with U.S. generally accepting accounting principals, 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 consolidated financial statements contained in this quarterly report on Form 10-Q.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with generally 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.

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 material impact on its financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures

Our principal executive officer, who is also our principal financial officer, has evaluated the Company’s disclosure controls and procedures as of December 31, 2015. Based on this evaluation, we have concluded that because of the material weakness in our internal control over financial reporting discussed below, the disclosure controls and procedures were not effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 are accumulated and communicated to Company’s management as appropriate to allow timely decisions regarding required disclosure.

Notwithstanding the material weakness discussed below, our management has concluded that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Management’s annual report on internal control over financial reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f). The Company’s internal control over financial reporting is a process affected by the Company’s management 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 U.S. generally accepted accounting principles.

In designing and evaluating our internal controls and procedures, our management recognized that internal controls and procedures, no matter how well conceived and operated, can provide only a reasonable, not absolute, assurance that the objectives of the internal controls and procedures are met.

The Company’s management assessed the effectiveness of its internal control over financial reporting as of December 31, 2015. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission’s 2013 Internal Control—Integrated Framework. Based on its assessment, management identified deficiencies in both the design and operating effectiveness of the Company’s internal control over financial reporting, which when aggregated, represent a material weakness in internal control. The most significant of these are: (1) lack of segregation of duties; (2) lack of accounting expertise; and (3) lack of timely closing of books; (4) inability to get accounting information and schedules to our auditors in a timely manner.

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 our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified above result from insufficient qualified personnel in our finance department. This results in an inability to provide effective oversight and review of financial transactions with regard to accumulating and compiling financial data in the preparation of financial statements. The lack of sufficient personnel also results in a lack of segregation of duties and the accounting technical expertise necessary for an effective system of internal control. As soon as our finances allow, we plan on hiring additional finance staff and, where necessary, utilizing competent outside consultants to provide a layer of review and technical expertise that is currently lacking in our internal controls over financial reporting.

As a result of these material weaknesses, management concluded that the Company did not maintain effective control over financial reporting as of December 31, 2015.

PART 2 – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On October 7, 2015, we received a letter from an attorney demanding repayment of $171,803 of principal and accrued interest on funds allegedly advanced to the company by his client. Although this historical debt was recorded on our consolidated financial statements and confirmed by our auditors, there are some discrepancies in the documents provided by the attorney in support of the demand for repayment. We have requested further evidence of the advances so that we can make a determination as to the validity of the debt and what terms and conditions may apply. As of the date of this report, we have not received a response.

ITEM 1A. RISK FACTORS

Not required for a smaller reporting companies.

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

In December 2015, the Company issued 10,000,000 shares in satisfaction of $10,000 in debt.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURE

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.

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS


The following exhibits are included as part of this report:

3		Corporate Charter*

3(i)		Articles of Incorporation*

3(ii)		By-laws*

10.1		Transfer Agent and Registrar Agreement*

10.2		Share Exchange Agreement dated May 14, 2013 (incorporated by reference to the Form 8 filed on May 14, 2013.

10.3		Share Exchange Agreement dated July 9, 2013 (incorporated by reference to the Form 8 filed on July 9, 2013)

31		Certification of Principal Executive Officer and Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Principal Executive Officer and Principal Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * Incorporated by reference to our Registration Statement on Form S-1 filed on March 15, 2011

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	I-WELLNESS MARKETING GROUP INC.


Date: March 17, 2016	/s/ Timothy Ferguson
	Timothy Ferguson Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director

I-WELLNESS MARKETING GROUP INC. 10-Q