14. SUBSEQUENT EVENTS

12 Months Ended

Aug. 31, 2014

14. SUBSEQUENT EVENTS

On September 4, 2014, Mr. Daniel Hammett delivered his resignation as a director of the Company. Mr. Hammett delivered the resignation in writing and verbally to Mr. Paul Watson and Mr. Henry Gordon, directors of the Company acting on behalf of the board of directors. Mr. Hammett has subsequently denied that he delivered a written resignation to the board of directors of the Company and disputed with the Company that he has resigned from its board of directors. Mr. Hammett's resignation is in relation to a disagreement between the Company and Mr. Hammett regarding alleged violations by Mr. Hammett of the Company’s Code of Business and Ethical Conduct. The alleged violations have been the subject of an ongoing internal investigation by independent counsel hired by the Company.

On September 10, 2014, the Registrant's board of directors removed Mr. Hammett as Chairperson and Chief Executive Officer of the Company. Mr. Hammett's removal was in relation to the disagreement with the Company over alleged violations of the Company's Code of Business and Ethical Conduct. Mr. Hammett disputed that the board of directors has taken valid action to remove him from his offices.

On September 10, 2014, the Company's board of directors removed Mr. Daniel Miller as Chief Operating Officer and Secretary of the Company. Mr. Miller's removal was in relation to the disagreement with the Company over alleged violations of the Company's Code of Business and Ethical Conduct. The alleged violations have been the subject of an ongoing internal investigation by independent counsel hired by the Company. Mr. Miller disputed that the board of directors has taken valid action to remove him from his offices. Mr. Miller remains a director of the Company but has been asked by the remaining directors of the board of directors to resign that position, as a result of the alleged violations of the Company's Code of Business and Ethical Conduct.

On September 11, 2014 the Company filed suit against Mr. Hammett and Mr. Miller in the District Court of Travis County, Texas as a result of the internal investigation of the possible breaches of the Company's Code of Business and Ethical Conduct.

On October 31, 2014 the Company entered into a settlement agreement with Mr. Hammett and Great Outdoors, LLC (“Great Outdoors”) in relation to the disputes previously above. The Company and Mr. Hammett have agreed to the following key points:

Mr. Hammett has agreed to resign all employment with the Company and MyGO Subsidiary and withdraw all objections to his resignation from the Board of Directors of the Company on September 4, 2014, in exchange for the Registrant and MyGO Subsidiary agreeing to pay Mr. Hammett $25,000 in one lump sum payment;

Mr. Hammett has agreed for a period of one (1) year from the settlement effective date, that he will not operate, design, market, or otherwise work in the hunting games industry, either in his own name or in association with others. He further agrees that he will not offer his services as a consultant, employee, independent contractor or otherwise in the hunting games industry, whether directly or indirectly.

Mr. Hammett and/or Great Outdoors shall release and forfeit back to the Company all common stock and all of the option rights of the Company afforded to them under Mr. Hammett’s employment agreement and the merger between the Company and Great Outdoors. In addition, the parties agreed to a post-closing adjustment to the share exchange agreement between the Parties dated June 19, 2014, (i) to adjust the purchase price from 50,323,526 shares of the Registrant to 7,500,000 shares of the Company, (ii) to amend the transfer of liabilities to include claims by Umur Ozal in the amount of $500,000 in principal, Shahid Ramzan in the amount of $100,000 in principal, and certain other Great Outdoors note holders who were sent note exchange agreements on June 20, 2014, totaling $400,000 in principal, and (iii) to amend the transfer of liabilities to include certain legal expenses incurred by Great Outdoors. Mr. Hammett further agrees to a prohibition on the sale of more than 750,000 shares per quarter for a period of eighteen months;

As of August 31, 2014 all settlement liabilities were accrued.

Also, on October 30, 2014 the Company entered into a settlement agreement with Mr. Miller in relation to the disputes previously described. The Company and Mr. Miller have agreed to the following key points:

Mr. Miller has agreed to resign all employment with the Company in exchange for the Company agreeing to pay Mr. Miller severance in an amount equal to the payroll rate Mr. Miller was paid prior to his resignation ($12,500 per month minus FICA and standard payroll tax withholdings), which shall be payable in accordance with the Company’s normal pay cycle up through November 30, 2014; the Company will further ensure no lapse in health insurance coverage for Mr. Miller through November 30, 2014;

2)	Mr. Miller has agreed to resign from the Board of Directors of the Company;

Mr. Miller has agreed to release and forfeit all of his current option grants in the Company (22,500,000 stock options exercisable at $0.05 per share) in exchange for the Company issuing to Mr. Miller 1,250,000 stock options with an exercise price of $0.05 per shares exercisable for three years after the date of grant, with such options being fully vested and immediately exercisable, subject to applicable waiting periods prescribed by federal and state securities laws;

As of August 31, 2014 all settlement liabilities were accrued.

Ozal Settlement Agreement

On November 5, 2014, the Company and Umur Ozal, investor in GO, entered into a settlement agreement related to certain liabilities of Great Outdoors to Mr. Ozal under several notes purchased by Mr. Ozal from Great Outdoors totaling $500,000 to mature on May 30, 2015 and assumed by the Company on October 31, 2014 pursuant to its settlement with Mr. Hammett as described previously (the “Ozal Notes”). Pursuant to the settlement, the Company issued Mr. Ozal 11,500,000 shares of common stock at $0.05 per share in exchange for Mr. Ozal releasing the Company from all obligations and liabilities due and owing under the Ozal Notes. The transaction resulted in the company recognizing $75,000 in interest expense.

Stock and Option Grants

On September 15, 2014, the Corporation authorized and issued 25,000,000 restricted shares of common stock in the Corporation to members of the Corporation’s advisory board and to certain non-executive employees of the Corporation. The restricted common stock is subject to a vesting term of two years of service (as an advisory board member or employee, as the case may be), with 50% of the stock vested after year 1 and the other 50% after year two. In the event the employee resigns or is removed from employment or the advisory board member resigns or is removed from the advisory board, they will forfeit any shares of common stock that have not vested. The holders of the restricted stock will have the right to direct the Corporation to vote their issued but unvested shares of common stock on any matters that come before the shareholders of the Corporation for which holders of common stock have the right to vote. Restricted shares of common stock issued by the Company are valued using the Black-Scholes Option Pricing Model at the date of the grant and recognized in compensation expense over the term of two years of service.

On September 15, 2014, the Corporation authorized and issued options in the Corporation exercisable to acquire 30,730,000 shares of common stock in the Corporation. All of the options were granted to certain employees and consultants of the Corporation. 23,500,000 of the options vested immediately, have an exercise price of $0.05 per share of common stock and have a term of 10 years. 5,000,000 of the options vest on December 31, 2015, have an exercise price of $0.05 per share and a term of 10 years. 3,030,000 of the options vest in three equal tranches on December 31, 2014, 2015 and 2016, have an exercise price of $0.05 per shares and a term of 10 years. 200,000 of the options vest in three equal tranches on December 31, 2014, 2015 and 2016, have an exercise price of $0.10 per share and a term of 7 years. All of the options were issued pursuant to Section 4(a)(2) of the Securities Act based on representations of the option holders to which such options were issued. The fair value of the options granted will be measured based on the Black-Scholes Option Pricing Model. The expected volatility is estimated by considering historic weighted average share price volatility.

MyGO Games Holding Co. 10-K