|
|



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A

Amendment No. 1



(Mark One)



|x | ANNUAL REPORT PURSUANT TO SEC TION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------





For the fiscal year ended January 31, 2017





|o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------





For the transition period from  ____________ to ____________



Commission file number 000-55499





|GAWK INCORPORATED                                     
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)





|Nevada                                                         |  | 33-1220317                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)





|5300 Melrose Avenue, Suite 42, Los Angeles, CA |  | 90038     
|---------------------------------------------- |  | ----------
|(Address of principal executive offices)       |  | (Zip Code)



Registrant’s telephone number, including area code:(632) 893-8909



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





|Title of Each Class |  | Name of Each Exchange On Which Registered
|------------------- |  | -----------------------------------------
|N/A                 |  | N/A                                      



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





|Common Stock, $0.01 par value per share
|---------------------------------------
|(Title of class)                       



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes xNo 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 last 90 days. Yes   ̈No x



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (§229.405 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 xNo o



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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.





|Large accelerated filer | o | Accelerated filer                             | o                        
|----------------------- | - | --------------------------------------------- | -------------------------
|Non-accelerated filer   | o | (Do not check if a smaller reporting company) | Smaller reporting company
|                        |   |                                               | Emerging Growth Company  



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o



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



The aggregate market value of Common Stock held by non-affiliates of the Registrant on July 31, 2016, was approximately $9,900,000 based on a $0.0285 average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.



Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.



6,342,546,507 common shares as of October 20, 2017.



DOCUMENTS INCORPORATED BY REFERENCE



None.





|
|



|
|
|
|
|



EXPLANATORY NOTE



We are filing this Amendment No. 1 (“Form 10-K/A”) to our Annual Report on Form 10-K for the fiscal year ended January 31, 2017, as filed with the Securities and Exchange Commission on October 23, 2017 (the “Form 10-K”), solely for the purpose of filing the Report of Independent Public Accounting Firm, which was omitted by error in the original filing. Item 8. Financial Statements and Supplementary Data has been updated to include the report of MaloneBailey, LLP.



This Form 10-K/A speaks as of the original filing date of the Form 10-K and does not reflect any events that may have occurred subsequent to the original filing date. Except as described above, no other changes have been made to the Form 10-K and we are not amending any other part of, or updating any other disclosures made in, the Form 10-K.









|
|
|
|
|



TABLE OF CONTENTS





|Item 1.  | Business                                                                                                     |  | 3   | 
|-------- | ------------------------------------------------------------------------------------------------------------ |  | --- | 
|         |                                                                                                              |  |     | 
|Item 1B. | Unresolved Staff Comments                                                                                    |  | 10  | 
|         |                                                                                                              |  |     | 
|Item 2.  | Properties                                                                                                   |  | 10  | 
|         |                                                                                                              |  |     | 
|Item 3.  | Legal Proceedings                                                                                            |  | 10  | 
|         |                                                                                                              |  |     | 
|Item 4.  | Mine Safety Disclosures                                                                                      |  | 10  | 
|         |                                                                                                              |  |     | 
|Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 10  | 
|         |                                                                                                              |  |     | 
|Item 6.  | Selected Financial Data                                                                                      |  | 11  | 
|         |                                                                                                              |  |     | 
|Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        |  | 11  | 
|         |                                                                                                              |  |     | 
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 18  | 
|         |                                                                                                              |  |     | 
|Item 8.  | Financial Statements and Supplementary Data                                                                  |  | F-1 | 
|         |                                                                                                              |  |     | 
|Item 9.  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 19  | 
|         |                                                                                                              |  |     | 
|Item 9A. | Controls and Procedures                                                                                      |  | 19  | 
|         |                                                                                                              |  |     | 
|Item 9B. | Other Information                                                                                            |  | 20  | 
|         |                                                                                                              |  |     | 
|Item 10. | Directors, Executive Officers and Corporate Governance                                                       |  | 21  | 
|         |                                                                                                              |  |     | 
|Item 11. | Executive Compensation                                                                                       |  | 25  | 
|         |                                                                                                              |  |     | 
|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 27  | 
|         |                                                                                                              |  |     | 
|Item 13. | Certain Relationships and Related Transactions, and Director Independence                                    |  | 28  | 
|         |                                                                                                              |  |     | 
|Item 14. | Principal Accounting Fees and Services                                                                       |  | 29  | 
|         |                                                                                                              |  |     | 
|Item 15. | Exhibits, Financial Statement Schedules                                                                      |  | 30  | 





| 
|-
|2
| 
| 





PART I



Item 1. Business



Some of our statements under "Business," "Properties," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," “the Notes to Financial Statements” and elsewhere in this report constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to certain events, risks and uncertainties that may be outside our control. Some of these forward-looking statements include statements of:





| | · | management's plans, objectives and budgets for its future operations and future economic performance;                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| | · | capital budget and future capital requirements;                                                                                                   
| | · | meeting future capital needs;                                                                                                                     
| | · | realization of any deferred tax assets;                                                                                                           
| | · | the level of future expenditures;                                                                                                                 
| | · | impact of recent accounting pronouncements;                                                                                                       
| | · | the outcome of regulatory and litigation matters;                                                                                                 
| | · | the assumptions described in this report underlying such forward-looking statements; and                                                          
| | · | Actual results and developments may materially differ from those expressed in or implied by such statements due to a number of factors, including:
| | · | those described in the context of such forward-looking statements;                                                                                
| | · | future service costs;                                                                                                                             
| | · | changes in our incentive plans;                                                                                                                   
| | · | the markets of our domestic operations;                                                                                                           
| | · | the impact of competitive products and pricing;                                                                                                   
| | · | the political, social and economic climate in which we conduct operations; and                                                                    
| | · | the risk factors described in other documents and reports filed with the Securities and Exchange Commission.                                      



In some cases, forward-looking statements are identified by terminology such as "may," "will," "should," "could," "would," "expects," "plans," "intends," "anticipates," "believes," "estimates," "approximates," "predicts," "potential" or "continue" or the negative of such terms and other comparable terminology.



Although we believe that the expectations reflected in these forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor anyone else assumes responsibility for the accuracy and completeness of such statements and is under no duty to update any of the forward-looking statements after the date of this report.



Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.



In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.



As used in this current report and unless otherwise indicated, the terms “we”, “us”, “our” and "Gawk" mean Gawk Incorporated and our subsidiaries, unless otherwise indicated.





|                 
|-----------------
|3                
|                 
|Table of Contents



General Overview



Our company was incorporated on January 6, 2011 in the State of Nevada. We offer a suite of cloud communications, cloud connectivity, cloud computing, and managed cloud-based applications solutions to small, medium, and large businesses; and offers domestic and international voice services to communications carriers worldwide. It offers a suite of advanced data center and cloud-based services, including fault tolerant, high availability cloud servers, which comprise platform as a service, infrastructure as a service, and a content delivery network; managed network services that converge voice and data applications, structured cabling, wireless, and security services, as well as include Internet access via Ethernet or fiber at speeds ranging from 10 Mbps to 10 Gbps; and data center solutions, including cloud services, colocation services, and business continuity services, such as storage and security. www.gawkinc.com.



Our Current Business



We offer a comprehensive suite of cloud communications, cloud connectivity, cloud computing, and managed cloud-based applications solutions to small, medium and large businesses, and offers domestic and international voice services to communications carriers worldwide. Our advanced, cloud services platforms enable the integration of leading edge solutions in the cloud, increasing customer collaboration and productivity by seamlessly connecting employees, partners, customers and vendors.



In the Business Services segment, Gawk is focused on becoming our business customers’ single source for leveraging the increasing power of the cloud, providing a robust package of what we believe to be the essential services that form the foundation for their successful migration to, and efficient use of, the cloud. Our cloud computing and Infrastructure as a Service (“IaaS”) solutions are designed to provide our customers with a platform on which additional cloud services can be layered. Complemented by Software as a Service (“SaaS”) solutions such as storage, security and business continuity, our advanced cloud offerings allow our customers to experience the increased efficiencies and agility delivered by the cloud. Gawk's cloud-based services are flexible, scalable and rapidly deployed, reducing our customers’ cost of ownership while increasing their productivity.



As a result of our growth through acquisition strategy, Gawk continues to expand its business customer base, revenue stream and added a significant number of network facilities and points of presence expanding its geographic reach. Through these acquisitions, we acquired advanced systems and infrastructure, augmented our management team and employee base with talented, experienced, well-trained professionals, while continuing to provide a strong platform for further acquisitions.



Gawk is pursuing a three-tiered growth strategy: developing specialized solutions for key vertical markets, targeting cloud services companies for acquisition, and accelerating organic growth. Our continuing effort to deliver advanced cloud solutions to companies with more complex requirements is supported by our cloud solutions platform that allows us to rapidly respond to our customers and potential customers’ needs for customized or enhanced solutions. We also intend to continue to develop vertically oriented solutions to expand our revenue opportunities and further differentiate our service suite. We intend to acquire additional cloud services companies that can further expand our customer base, allow us to introduce additional cloud products and services, and gain scale. Our strategy to organically grow our Business Services revenue includes securing large strategic distribution partners, increasing our direct as well as indirect channel sales efforts, upselling solutions to our existing base and leveraging our management, Board of Directors and shareholder relationship network.



Business Services



Our Cloud-based services are designed to meet the communications, network and computing requirements of growing businesses, while maximizing the price-performance ratio. We believe that giving our customers access to the Cloud provides a more cost-effective, reliable and secure communications and IT experience, and relieves them of the capital and support burdens associated with more traditional services. Additionally, customers can reduce costs while adding features and functionality and improving productivity across the enterprise. Gawk is increasingly focused on providing specialized, market-based solutions to important verticals and larger enterprises, matching our advanced solutions to key industry-specific customer requirements.



We offer a suite of advanced data center and cloud-based services, including fault tolerant, high availability cloud servers, which encompasses PaaS (platform as a service), IaaS (infrastructure as a service) and a worldwide CDN (content delivery network). In-building connectivity provides diverse and redundant access to the cloud for our Irvine location customers. The Company’s managed network services converge voice and data applications, structured cabling, wireless, security services, and includes Internet access via Ethernet or Fiber at speeds ranging from 10 Mbps to 10 Gbps. Our data center solutions include cloud services, colocation services, and business continuity services such as storage, and security.





|                 
|-----------------
|4                
|                 
|Table of Contents



Gawk’s services are designed to provide significant benefits to businesses of all sizes, with single or multiple locations. The integration of cloud solutions on our advanced services platform allows customers to seamlessly connect people with the information they need to collaborate effectively, regardless of the device they use.



Our cloud solutions are also designed to minimize upfront capital costs, increase the scalability and flexibility of the customer’s communications network and service environment, provide robust features and functionality to increase productivity, and reduce the overall cost of communications.



Our cloud platform allows us to quickly respond to customer requirements for new or enhanced products and services as well as provide for maximum flexibility and cost containment for our clients. Gawk’s growing suite of business services includes.



Carrier Services



Gawk operates a robust and reliable carrier grade network and infrastructure that delivers high quality, diverse and secure connections to our Cloud services. Our Managed Network Services, Internet Access, Ethernet, Fiber and Cloud based solutions can be provided either on-net leveraging our own extensive network, or off-net using the networks of our carrier partners, for truly diverse and redundant connections.



SIP Trunking



Gawk's state of the art SIP softswitches offers a full suite of wholesale services with all US services supporting ANI, G711, RFC 2833 and T.38 specializing in high call per second with short term duration and maximum capacity availability.



Hosted PBX



Gawk now offers a complete phone system with the power of an enterprise-class phone system without the cost and complexity of bulky hardware. Set up in minutes, and command your system to work the way you do. You can access and manage it from anywhere, connect remote personal as if they are in the same room, and give your employees access to all the phone and features they need. Some of the key features of our Cloud Hosted PBX:



· 24/7 CUSTOMER SUPPORT· No set up or activation fees· Voicemail to Email· Unlimited inbound Internet faxes· HD Video Calling· Free Conference Calling· Auto Attendant and dial-byname directory· Toll-Free Minutes Included· Keep your existing phone numbers

Unified Communications



The Gawk Unified Communications platform compliments our Cloud and Data Center solutions with integrated service features that seamlessly combine, voice, PBX, SIP trunks, wireless, messaging, and targeted automated dialing solutions. Our integrated suite of services are device and location agnostic, allowing clients of all sizes to increase productivity, lower costs by simplifying communications over the most preferred or available device.





|                 
|-----------------
|5                
|                 
|Table of Contents



Cloud Computing



Gawk’s Cloud Computing service centralizes information management, hardware, network and infrastructure in an off-premise location, hosted and managed by Gawk. Offered as private, hybrid or community solutions, Gawk’s secure offerings drive efficiencies in both costs and resources allowing for rapid scalability and deployment of applications. These offerings provide a predictable, utility-based OpEx model, which eliminates significant capital expenditures, removes obsolescence concerns and future-proofs customer investments.



Cloud-Based Storage



Gawk offers a solution that addresses the explosive growth of data across all industries with a cost-effective and secure storage solution hosted in the cloud. This scalable, fully redundant solution is hosted off-premise, reduces customer data center footprints and resource requirements, and facilitates additional SaaS solutions that can be accommodated on the same cloud platform. Gawk delivers a storage and data back-up assessment service as part of its storage offering, measuring growth and duplication benchmarked against best practices. The solution consolidates requirements across the enterprise, increases efficiency and achieves economies of scale designed to reduce overall customer costs.



Service Plans



Gawk’s business communications services generally offer several different service packages designed to meet specific customer needs and requirements. Base level plans offer a basic service package for a low monthly recurring charge. Additional charges, such as SIP, PBX, wireless, security or network consulting are charges on an individual case basis. Optional value-added features for basic services are available for an incremental monthly charge appropriate for the service. Cloud connectivity services such as In Building Internet access services and/or private line services are charged on a fixed monthly basis, and are generally based on the bandwidth utilized and the endpoints involved. Cloud computing services are based on a utility pricing model, and charges for managed cloud solutions are generally composed of an upfront charge and a monthly recurring charge. Gawk’s business customer contracts range from one to five years.



Network



Gawk operates a robust and reliable carrier-grade network and infrastructure that delivers high quality, diverse and secure connections to our Cloud services. Our Managed Network Services, Internet Access, Ethernet, Fiber and Cloud based solutions can be provided either on-net leveraging our own extensive network, or off-net using the networks of our carrier partners, for truly diverse and redundant connections.



Our Data Center and Business Services network operations centers are highly automated and monitored 24 hours per day, 7 days per week. Our centers employ state-of-the-art monitoring and alert systems that are designed to ensure quality of service and a proactive response to potential customer service issues.



The Gawk network is characterized by its low cost of deployment and low recurring costs. It has been constructed to meet actual, rather than speculative, customer demand with on-net and off-net connections to provide ubiquitous access, delivering maximum cost efficiency without sacrificing quality. Our robust network is designed as a fully meshed OSPF (Open Shortest Path First) running BGP with multiple peers. OSPF automatically detects changes in the topology, such as link failures, and selects a new routing structure within seconds.



Gawk’s centralized network elements are housed in carrier-grade facilities located in secure carrier buildings that house many other carriers and are interconnected to other major carrier buildings. These locations allow for cost-effective and rapid interconnection and capacity expansion to carrier customers, as well as major enterprise customers. Gawk believes its selected locations and equipment choices provide the platform required to support its envisioned growth and will allow it to quickly embrace emerging technologies as they become commercially available and viable.





|                 
|-----------------
|6                
|                 
|Table of Contents



Cloud Services Platform



Our custom Cloud services platform was designed and developed by our own team of experienced technicians with many years using advanced, yet proven technology. This platform is scalable, flexible and secure, delivering an integrated portfolio of Cloud-based communications services that enable businesses of every size to increase productivity and efficiency while controlling costs. Information management, hardware, network and infrastructure are centralized off-premise, hosted and managed by us, allowing customers to rapidly adjust to fluctuating and unpredictable service demands, drive efficiencies in staff and space, and eliminate the need for costly technology upgrades. The architecture of our platform has been designed to allow for the seamless integration of additional Cloud-based applications, whether or not developed by Gawk. Gawk’s custom platform allows faster, easier, more cost-effective introduction of new, business-critical applications, delivering a unique feature set engineered to quickly respond to customer demands and market requirements. We differentiate ourselves from our competitors by combining our robust carrier-grade network services to enable secure connections to the Cloud, delivering true diversity and a fully integrated solution for maximum efficiency and cost savings.



Our custom platform has been engineered using advanced technologies, best of breed equipment and provides for redundancy, fault tolerance and future geographical diversity. The platform has been designed for scalability as well as resiliency, and can be easily expanded to accommodate any required number of connections and customers. Platform solutions are location and device neutral, serving multiple as well as single locations nationwide, connecting users to customers and other employees on desktops, laptops, handsets, tablets and mobile phones, wherever they may be. The platform is currently deployed in our Irvine data center; the platform has a fully functional, redundant system whose services can be replicated at additional locations in a cost effective and timely manner. Thus, should one of the data centers be hit with a catastrophic event, customers should experience no interruption of service. The result is to ensure a proven, reliable and consistent uptime, which is crucial for delivering mission critical solutions.



Sales and Marketing



We market and sell our business services to small, medium and large customers through distribution partners, direct sales personnel and inside sales representatives. Our independent distribution partners are typically paid commissions based on their sales and, thereafter, the continued use of our services by the customers sold by them. Our sales employees, including direct sales and inside sales, are typically compensated through a combination of base salary and commissions based on their actual sales performance.



Our distribution partners generally target smaller- to medium- size businesses, while our direct sales force focuses on the larger enterprise customers in our targeted verticals. We believe that our Cloud platform, infrastructure, systems and connectivity provide a strong competitive advantage in serving these larger enterprise customers, creating real value with specialized solutions that meet their more complex and rigorous requirements. Referrals, strategic relationships and the strength of our corporate relationships are also a key part of our overall sales and marketing plan. We believe that the substantial experience and relationships of our executives and directors will assist us in organically growing our business through the addition of new customers.



Strategy



Our recent acquisitions and improved financial performance are important milestones in our strategic roadmap as we work to become the industry’s leading and most successful cloud services provider. Our plans for growth are supported by an experienced and tested management team and dedicated staff, our advanced cloud services platforms, and leading edge systems and infrastructure. We believe we are well positioned to continue to execute on our strategy to organically grow our revenue from the Business Services segment, develop vertically oriented solutions and acquire additional cloud services companies.



Gawk intends to grow organically through direct as well as indirect channel sales efforts; by securing large strategic distribution partners to extend our geographic and vertical market reach; through the up-sale and cross-sale of services to our existing customer base; and by leveraging management, Board and shareholder relationships to help penetrate larger enterprises.





|                 
|-----------------
|7                
|                 
|Table of Contents



We intend to increasingly focus our sales and marketing efforts on developing vertically oriented solutions for targeted markets that require the kind of specialized solutions made possible by our state-of-the-art network and advanced services platforms. Our vertically oriented solutions offer a substantial opportunity to gain market share.



Competition



Each of Gawk’s business segments are highly competitive, rapidly evolving, and subject to constant technological change. In each of our business segments, we compete with companies that are significantly larger and have substantially greater market presence, financial, technical, operational and marketing resources than we do. In the event that such a competitor expends significant sales and marketing resources in one or several markets where we compete with them, we may not be able to compete successfully in those markets. Specialized cloud services providers, who focus on one or more cloud service or application, could adopt aggressive pricing and promotion practices that could impact our ability to compete. We also believe that competition will continue to increase, placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are not able to reduce our costs commensurate with the price reductions of our competitors. Further, the pace of technological change makes it impossible for us to predict whether we will face new competitors using different technologies to provide the same or similar services offered or proposed to be offered by us. If our competitors were to provide better and more cost effective services than ours, we may not be able to increase our revenues or capture any significant market share.



Employees



As of January 31, 2017, we had 11 full time employees. None of our employees are represented by a labor union or collective bargaining agreement. We consider our employee relations to be good, and, to date, we have not experienced a work stoppage.



Available Information



Our principal executive offices are located at 5300 Melrose Avenue, Suite 42, Los Angeles, California 90038. The telephone number at our executive offices is 888-754-6190 and our main corporate website is www.Gawkinc.com. The information on the Company’s website is neither a part of, nor incorporated by reference into, this report.



We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, free of charge on our website, www.Gawkinc.com as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission or SEC. Additionally, copies of materials filed by us with the SEC may be accessed at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549, between the hours of 10:00 am to 3:00 pm, or at the SEC’s web site www.sec.gov. For information about the SEC’s Public Reference Room, please call 1-800-SEC-0339.



The Market and Industry



Through Gawk’s recent acquisitions we have focused our efforts within the technology sector specializing in high-demand, high-availability hosting solutions and professional IT services. Gawk provides enterprise-level hosting services to businesses of any size through our carefully-planned architecture and commitment to providing excellent support. Products offered include PaaS (platform as a service), IaaS (infrastructure as service), colocation space, dedicated servers, cloud services, shared hosting, email, spam filtering and network consulting services. Additional infrastructure services at our Irvine location include in-building bandwidth services; in-building structured cabling and managed network services. At various customer sites across Southern California Gawk provides private cloud services, security services and managed network services.



Our cloud-based services are designed to meet the communications, network and computing requirements of growing businesses, while maximizing the price-performance ratio. Our experience has demonstrated that giving our customers access to the cloud provides a more cost-effective, reliable and secure IT experience; relieves them of the capital and support burdens associated with traditional services. Additionally, customers can reduce costs while adding features, functionality and improving productivity across the enterprise.





|                 
|-----------------
|8                
|                 
|Table of Contents



· “Amazon Web Services’ (AWS) continues to hold the lead in market share for cloud infrastructure services despite competition from Microsoft, according to latest figures from Synergy Research. The research, which examines infrastructure as a service (IaaS), platform as a service (PaaS), private and hybrid cloud, sees AWS’ overall share at 28%, compared to Microsoft’s 10%, IBM at 7%, Google at 5%, Salesforce 4%, and Rackspace 3%. Year on year growth saw Microsoft (96%) and Google (88%) the biggest climbers, with Amazon (51%) and IBM (48%) holding steady.· Comparative figures from Synergy in previous quarters have shown Microsoft strive to claim second position in the cloud infrastructure market, with AWS way out in front. Many actual or perceived barriers to cloud adoption have now been removed, and the worldwide market is on a strong growth trajectory.” Source: By James Bourne 03 February 2015, Cloudtech, www. cloudcomputing-news.net

AWS continues to be the provider of choice for the large enterprise customer however; the cost to scale AWS instances can be prohibitively expensive even in the wake of recent price cuts. Price sensitive customers and knowledgeable IT professions find that the cost to grow infrastructure and the ability to migrate to another platform from AWS is a major concern. The Cloud services we offer are flexible, secure, and highly portable while simultaneously price completive in the market place.



Our latest Cloud offering frees us from proprietary third party hardware and the associated cost constraints to our growth. We continue to enjoy our long standing relationships with companies like cPanel, Microsoft, Spam Experts and the Irvine Company. We welcome recent relationships with OnApp, WHMCS and Level3 .



REGULATIONS



There are no regulatory requirements for this internet medium other than as follows:



Release Management Supplement, v1.0, Published June 28, 2013



This CMS Technical Reference Architecture – Release Management Supplement, Version 1.0 complements the CMS TRA by providing rules and engineering guidance for developing, testing, and hosting CMS distributed systems and business applications within the agency’s data center Development, Test, Implementation, and Production Processing environments.



This supplement provides the rules governing the support and use of CMS data center environments for the conduct of pre-approved, scheduled Development, Validation Testing, and Implementation Testing of distributed CMS systems, infrastructure, and business applications.



The CMS Chief Technology Officer authorizes and approves the publication of the Release Management Supplement and its contents. This supplement augments and aligns with the CMS TRA Foundation 3.0, and CMS will update it on an as-needed basis.



WHERE YOU CAN FIND MORE INFORMATION



You are advised to read this Form 10-K in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.





|                 
|-----------------
|9                
|                 
|Table of Contents



Item 1A. Risk Factors



As a “smaller reporting company”, we are not required to provide the information required by this Item.



Item 1B. Unresolved Staff Comments



As a “smaller reporting company”, we are not required to provide the information required by this Item.



Item 2. Properties



Our principal place of business is at 5300 Melrose Avenue, Suite 42, Los Angeles, CA 90038. Our company pays $100 per month in rent on a month to month basis for this location.



Item 3. Legal Proceedings



Other than as set out below, we know of no material pending legal proceedings to which our company is a party or of which any of our properties, or the properties of our subsidiaries, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.



On May 26, 2016, Tarpon Bay Partners, LLC (“Tarpon Bay”) initiated action against the Company in New York State Supreme Court, case #652178/2016. The company and Tarpon Bay Partners, LLC reached a settlement on December 29, 2016 and the Company paid $50,000 in accordance with the settlement agreement.



On or about November 11, 2016 a verified complaint was filed in the Circuit Court for Howard County, Maryland being case number C-16-107586-DT against the Company by an investor known as John Boritz. The Company intends to fervently defend the foregoing action.



Item 4. Mine Safety Disclosures



Not applicable.



Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



Our common stock is traded in the over-the-counter market, and quoted in the National Association of Securities Dealers Inter-dealer Quotation System (“Electronic Bulletin Board) and can be accessed on the Internet at OTCmarkets.com under the symbol “GAWK.”



The following table sets forth for the periods indicated the high and low bid quotations for Gawk’s common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions.





|OTC Markets     
|----------------
|Quarter Ended   
|January 31, 2017
|October 31, 2016
|July 31, 2016   
|April 30, 2016  
|January 31, 2016
|October 31, 2015
|July 31, 2015   
|April 30, 2015  
|January 31, 2015



Our shares are issued in registered form. V Stock Transfer LLC, 77 Spruce Street, Suite 201, Cedarhurst, NY 11516 (Telephone: (646) 536-3179; Facsimile: (646) 536-3179) is the registrar and transfer agent for our common shares.





|                 
|-----------------
|10               
|                 
|Table of Contents



On October 19, 2017, the shareholders’ list showed 50 registered shareholders with 6,342,546,507 shares of common stock outstanding.



Dividend Policy



We may never pay any dividends to our shareholders. We did not declare any dividends for the year ended January 31, 2017. Our Board of Directors does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the Board of Directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the Board of Directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.



Equity Compensation Plan Information



We do not have any equity compensation plans.



Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities



We did not sell any equity securities which were not registered under the Securities Act during the year ended January 31, 2017 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended January 31, 2017.



Purchase of Equity Securities by the Issuer and Affiliated Purchasers



We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended January 31, 2017.



Item 6. Selected Financial Data



As a “smaller reporting company”, we are not required to provide the information required by this Item.



Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations



The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this annual report. 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 such differences include, but are not limited to those discussed below and elsewhere in this annual report.



Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.



Results of Operations



The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the year ended January 31, 2017, which are included herein.



Our operating results for the twelve months ended January 31, 2017, for the twelve months ended January 31, 2016 and the changes between those periods for the respective items are summarized as follows:





|                 
|-----------------
|11               
|                 
|Table of Contents



Overview



For the year ended January 31, 2017 we have generated losses from operations. As of January 31, 2017, our accumulated deficit was $26,361,315. Our net loss for year ended January 31, 2017 and 2016 was $12,303,664 and $6,743,113, respectively. Our cash used in operations was $635,292 and $472,072 for the year ended January 31, 2017 and 2016, respectively. Our Stockholders’ Equity (deficit) was $(22,951,460) and $(13,074,825) as of January 31, 2017 and 2016, respectively.





|                               |  | January 31, |             |   | January 31, |   |             |        |  |   |            |  
|------------------------------ |  | ----------- | ----------- | - | ----------- | - | ----------- | ------ |  | - | ---------- | -
|                               |  | 2017        |             |   | 2016        |   |             | Change |  |   | %          |  
|Cash                           |  | $           | 133,249     |   |             | $ | 64,944      |        |  | $ | 68,305     |  
|Total Assets                   |  | $           | 3,088,564   |   |             | $ | 7,249,750   |        |  | $ | (4,161,186 | )
|Total Liabilities              |  | $           | 7,940,024   |   |             | $ | 6,324,575   |        |  | $ | 1,615,449  |  
|Stockholders’ Equity (Deficit) |  | $           | (22,951,460 | ) |             | $ | (13,074,825 | )      |  | $ | (9,876,635 | )



Revenue





|                        |  | For the Year Ended, January 31 |           |   |      |   |           |        | 
|----------------------- |  | ------------------------------ | --------- | - | ---- | - | --------- | ------ | 
|                        |  | 2017                           |           |   | 2016 |   |           | Change | 
|Revenue                 |  | $                              | 5,637,900 |   |      | $ | 1,333,672 |        | 
|Cost of revenue         |  |                                | 4,391,933 |   |      |   | 1,145,278 |        | 
|Gross profit            |  | $                              | 1,245,967 |   |      | $ | 188,394   |        | 
|Gross profit percentage |  |                                | 22        | % |      |   | 14        | %      | 



Revenue increased to $5,637,900 from $1,333,672 for the years ended January 31, 2017 and 2016, respectively.



Cost of revenue increased to $4,391,933 from $1,145,278 for the years ended January 31, 2017 and 2016, respectively. We purchased one business during 2017 and two businesses during 2016 and expanded the focus to include the business of cloud communications, cloud connectivity, cloud computing, and managed cloud-based applications solutions to small, medium and large businesses.



Operating Expenses





|                              |  | For the Year Ended, January 31 |           |  |      |   |           |        | 
|----------------------------- |  | ------------------------------ | --------- |  | ---- | - | --------- | ------ | 
|                              |  | 2017                           |           |  | 2016 |   |           | Change | 
|General and administration    |  | $                              | 3,180,510 |  |      | $ | 1,805,223 |        | 
|Research and development      |  |                                | -         |  |      |   | 2,500     |        | 
|Legal settlement              |  |                                | 525,000   |  |      |   | 54,000    |        | 
|Impairment loss               |  |                                | 4,369,707 |  |      |   | 562,500   |        | 
|Depreciation and amortization |  |                                | 746,487   |  |      |   | 155,736   |        | 
|Total operating expenses      |  | $                              | 8,821,704 |  |      | $ | 2,579,959 |        | 



Operating expenses were $8,821,704 for the year ended January 31 2017, compared to $2,579,959 for the year ended January 31, 2016, an increase of $6,241,745, or 242 %. The significant increase in operating expenses was largely due to an increase in general and administrative expense of $1,375,287, legal settlement of $471,000, impairment loss of $3,807,207 and depreciation and amortization expense of $590,751.



Impairment loss increased to $4,369,707 from $562,500 for the years ended January 31, 2017 and 2016, respectively. We recognized $3,729,321 impairment loss of Goodwill and intangible assets of Net D and $77,886 of impairment loss of Goodwill of XTELUS because we determined the implied fair value of goodwill was substantially below the carrying value of the reporting unit's goodwill and intangible assets and $562,500 impairment loss of Deposit – CipherLoc (CLOK) - because the software has not been delivered to us.





|                 
|-----------------
|12               
|                 
|Table of Contents



Legal settlement expense increased to $525,000 from $54,000 for the years ended January 31, 2017 and 2016, respectively. Our legal settlement increased from the cost of legal expenses related to the settlement with Stoneridge Capital.



Depreciation and amortization expense increased to $746,487 from $155,736 for the years ended January 31, 2017 and 2016, respectively. Our depreciation and amortization expenses increase due to the business combination of Net D and Connexum whereas the assets were placed in service and depreciate over a three (3) year period starting May 1, 2015 and January 18, 2016, respectively.



General and administrative expenses





|                                         |  | For the Year Ended |           |  |      |   |           |        | 
|---------------------------------------- |  | ------------------ | --------- |  | ---- | - | --------- | ------ | 
|                                         |  | January 31,        |           |  |      |   |           |        | 
|                                         |  | 2017               |           |  | 2016 |   |           | Change | 
|Professional fees                        |  | $                  | 832,347   |  |      | $ | 507,956   |        | 
|Marketing / Advertising expense          |  |                    | 74,458    |  |      |   | 51,635    |        | 
|Salaries and wages                       |  |                    | 1,590,731 |  |      |   | 888,559   |        | 
|Other general and administrative expense |  |                    | 682,974   |  |      |   | 357,073   |        | 
|                                         |  | $                  | 3,180,510 |  |      | $ | 1,805,223 |        | 



General and administrative expenses increased to $3,180,510 from $1,805,233 for the years ended January 31, 2017 and 2016, respectively. The increase in general and administrative expenses during 2017, are primarily related to a increase in professional fees of $324,391, salaries and wages of $702,172 and other expenses of $325,901. The increase in general and administrative expenses is primarily related to the business combination of Net D and Connexum during the past year and XTELUS during current year.



Other income (expense)





|                                                |  | For the Year Ended, January 31 |            |   |      |   |            |        | 
|----------------------------------------------- |  | ------------------------------ | ---------- | - | ---- | - | ---------- | ------ | 
|                                                |  | 2017                           |            |   | 2016 |   |            | Change | 
|Other income                                    |  | $                              | 22,275     |   |      | $ | 13,200     |        | 
|Interest expense                                |  |                                | (1,808,729 | ) |      |   | (544,616   | )      | 
|Unrealized gain (loss) on marketable securities |  |                                | 24,000     |   |      |   | 49,350     |        | 
|Change in fair value of derivative liabilities  |  |                                | (1,351,818 | ) |      |   | 326,899    |        | 
|Loss on settlement of debt                      |  |                                | (1,629,773 | ) |      |   | (2,956,954 | )      | 
|                                                |  | $                              | (4,744,045 | ) |      | $ | (3,112,121 | )      | 



Other income increased to $22,275 from $13,200 for the years ended January 31, 2017 and 2016, respectively. Other income increased due to the customers abandoned calling card.



Interest expense increased to $1,808,729 from $544,616 for the years ended January 31, 2017 and 2016, respectively. Our interest expenses increase mainly due to an increase in the amortization of debt discount.



Unrealized gain decreased to $24,000 from $49,350 for the years ended January 31, 2017 and 2016, respectively. Our unrealized gain decreased due to a decrease in price of our marketable securities as of January 31, 2017 of which the Company still holds those securities and the current market value as of October 18, 2017 is $51,000 versus the booked value of $102,300 at January 31, 2017.





|                 
|-----------------
|13               
|                 
|Table of Contents



Loss on change in fair value of derivative liabilities increased to $1,351,818 from gain on change in fair value of derivative liabilities of $326,899 for the years ended January 31, 2017 and 2016, respectively. Loss on change in fair value of derivative liabilities increased due to the issuance of convertible notes payable.



Loss on settlement of debt decreased to $1,629,773 from $2,956,954 for the years ended January 31, 2017 and 2016, respectively. Loss on settlement of debt increased mainly due to a decrease in loss on issuance of stock from the conversion of all deferred compensation to the CEO and CFO to preferred shares.



Discontinued Operations





|                                               |  | For the Year Ended |         |   |      |   |            |        | 
|---------------------------------------------- |  | ------------------ | ------- | - | ---- | - | ---------- | ------ | 
|                                               |  | January 31,        |         |   |      |   |            |        | 
|                                               |  | 2017               |         |   | 2016 |   |            | Change | 
|Gain on sale of assets                         |  | $                  | 111,467 |   |      | $ | -          |        | 
|Loss from discontinued operations              |  |                    | (95,349 | ) |      |   | (1,239,427 | )      | 
|Total gain (loss) from discontinued operations |  | $                  | 16,118  |   |      | $ | (1,239,427 | )      | 



On October 31, 2016, the Company entered into the asset purchase and sale agreement (the “Agreement”) with Giggle Fiber, LLC. Pursuant to the terms of the Agreement, the Company recorded all revenues and expenses related to the Webrunner as discontinued expenses. Gain (Loss) from discontinued operations for the years ended January 31, 2017 and 2016 was $16,118 and $(1,239,427), respectively. As a result of this agreement, the Company recognized the gain on sale of asset of $111,467 during the year ended January 31, 2017.



Liquidity and Capital Resources



The following tables present selected financial information on our capital and cash flows as of and for the years ended January 31, 2017 and 2016.





|                    |  | January 31, |           |  | January 31, |   |           |        |  |   |           |  
|------------------- |  | ----------- | --------- |  | ----------- | - | --------- | ------ |  | - | --------- | -
|                    |  | 2017        |           |  | 2016        |   |           | Change |  |   | %         |  
|Current Assets      |  | $           | 521,882   |  |             | $ | 783,665   |        |  | $ | (261,783  | )
|Current Liabilities |  |             | 7,780,510 |  |             |   | 5,925,379 |        |  |   | 1,855,131 |  
|Working Deficiency  |  | $           | 7,258,628 |  |             | $ | 5,141,714 |        |  | $ | 2,116,914 |  





|                                                      |  | For the Year Ended, January 31 |         |  |      |  
|----------------------------------------------------- |  | ------------------------------ | ------- |  | ---- | -
|                                                      |  | 2017                           |         |  | 2016 |  
|Cash Flows used in Operating Activities               |  | $                              | 635,292 |  |      | $
|Cash Flows provided by (used in) Investing Activities |  |                                | 401,449 |  |      |  
|Cash Flows from Financing Activities                  |  |                                | 302,148 |  |      |  
|Foreign currency translation adjustment               |  |                                | -       |  |      |  
|Net Increase (Decrease) in Cash During the Period     |  | $                              | 68,305  |  |      | $



As of January 31, 2017 and 2016 our cash was $133,249 and $64,944, respectively. Our company does not believe its existing balances of cash and cash equivalents will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations over the 12 months.





|                 
|-----------------
|14               
|                 
|Table of Contents



As of January 31, 2017, we experienced an increase in working capital deficiency of $2,116,914 or 41%, as compared to January 31, 2016. The change in working capital deficiency during 2016 was primarily from a reduction in current assets by $261,783 or 33% as compared to January 31, 2016, due to a reduction of deposit of $562,500 offset by an increase in accounts receivable of $186,584 and an increase in current liabilities by $1,855,131 as compared to January 31, 2016, due to an increase in accounts payable and accrued liabilities of $1,235,932, increase in derivative liabilities of $1,468,447, offset by a decrease in contingent consideration of $1,000,000.



Cash flows from operations.



Our cash used in operating activities were $635,292 and $472,072 for the years ended January 31, 2017 and 2016, respectively. During the year ended January 31, 2017, cash used in operating activities of $635,292 was a result of $12,303,664 of net loss, non-cash adjustments to net loss of $9,952,160 and a decrease in the net change in operating assets and liabilities of $1,716,212. During the year ended January 31, 2016, cash used in operating activities of $472,072 was a result of $6,743,113 of net loss, non-cash adjustments to net loss of $5,742,680 and a decrease in the net change in operating assets and liabilities of $528,361.



Cash flows from investing activities.Cash provided by investing activities were $401,449 and $(134,531) for the years ended January 31, 2017 and 2016, respectively. This generation of cash is majorly due to the sale of asset (Discontinued Operations) for $401,052 during the year ended January 31, 2017. Net cash paid for acquisition of Connexum and Net D’s assets was $134,531 during the year ended January 31, 2016.



Cash flows from financing activities.Cash provided by financing activities were $302,148 and $415,650 for the years ended January 31, 2017 and 2016, respectively. We received cash from notes payable of $147,050,, note payable – related party of $25,000 convertible note of $785,858, issuance of Series B Preferred stock of $20,000 and paid notes payable – related party of $582,903, convertible notes of $33,333 and note payable of $59,524 for the year ended January 31, 2017. We received cash from notes payable of $75,000, convertible note of $380,900, issuance of Series B Preferred stock of $47,500 and contributions of $5,000 and paid notes payable of $92,750 for the year ended January 31, 2016.



Contractual Obligations



As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.



Going Concern



Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. We intend to finance operating costs over the next twelve months through continued financial support from our shareholders and private placements of common stock.



Off-Balance Sheet Arrangements



We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.



Critical Accounting Policies



We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact on our business operations and any associated risks related to these policies are discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported or expected financial results.





|                 
|-----------------
|15               
|                 
|Table of Contents



In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.



The material estimates for our company are that of the valuation of intangibles, goodwill impairment, derivatives, stock-based compensation recorded for options and warrants issued, and the income tax valuation allowance recorded for deferred tax assets. The fair values of options are determined using the Black-Scholes option pricing model. We have no historical data on the accuracy of these estimates. The estimated sensitivity to change is related to the various variables of the Black-Scholes option pricing model stated below. The specific quantitative variables are included in the notes to the consolidated financial statements. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the expected life, dividend yield, expected volatility, and risk-free interest rate weighted-average assumptions used for options and warrants granted. Expected volatility for 2017 and 2016 was estimated using the average historical volatility of Gawk’s historical common stock prices. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of options is based on the life of the instrument on grant date.



Basis of Accounting and Going Concern



Our consolidated financial statements have been prepared on the accrual basis of accounting in conformity with GAAP. In addition, the accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We generated accumulated losses of approximately $26 million through January 31, 2017 and have insufficient working capital and cash flows to support operations. These factors raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from this uncertainty.



Marketable securities and other investments



We adopted ASC 825, “The Fair Value Option for Financial Assets and Financial Liabilities. Under this statement, an entity may elect to use fair value to measure eligible items. The adoption of this statement did not have an impact on our results of operations or financial condition. We classify these investments as current assets and carry them at fair value. We recognize all unrealized and realized gains and losses on our available-for-sale securities in other income in the accompanying statement of operations.



Revenue Recognition



Our company pursues opportunities to realize revenues from consulting services. It is our company’s policy that revenues and gains will be recognized in accordance with ASC Topic 605-10-25, “Revenue Recognition.” Under ASC Topic 605-10-25, revenue earning activities are recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.





|                 
|-----------------
|16               
|                 
|Table of Contents



Our Business Services revenue includes monthly recurring charges (“MRC”) to customers, for whom charges are contracted over a specified period of time, and variable usage fees charged to customers that purchase our business products and services. Revenue recognition commences after the provisioning, testing and acceptance of the service by the customer. MRC continue until the expiration of the contract, or until cancellation of the service by the customer. To the extent that payments received from a customer are related to a future period, the payment is recorded as deferred revenue until the service is provided or the usage occurs.



Our Carrier Services revenue is primarily derived from usage fees charged to other carriers that terminate voice traffic over our network. Variable revenue is earned based on the length of a call, as measured by the number of minutes of duration. It is recognized upon completion of the call, and is adjusted to reflect the allowance for billing adjustments. Revenue for each customer is calculated from information received through our network switches. Our customized software tracks the information from the switches and analyzes the call detail records against stored detailed information about revenue rates. This software provides us with the ability to complete a timely and accurate analysis of revenue earned in a period. We believe that the nature of this process is such that recorded revenues are unlikely to be revised in future periods.



Share-Based Compensation



Our company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Employee awards are accounted for under ASC 718 - where the awards are valued at grant date. Awards given to nonemployees are accounted for under ASC 505 where the awards are valued at earlier of commitment date or completion of services. Compensation cost for employee awards is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted.



Convertible Notes



Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method.



Derivative Financial Instruments



The fair value of an embedded conversion option that is convertible into a variable amount of shares and warrants that include price protection reset provision features are deemed to be “down-round protection” and, therefore, do not meet the scope exception for treatment as a derivative under ASC 815 “Derivatives and Hedging”, since “down-round protection” is not an input into the calculation of the fair value of the conversion option and warrants and cannot be considered “indexed to our company’s own stock” which is a requirement for the scope exception as outlined under ASC 815.



The accounting treatment of derivative financial instruments requires that our company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. Our company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.





|                 
|-----------------
|17               
|                 
|Table of Contents



The Black-Scholes option valuation model was used to estimate the fair value of the conversion options. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of our common stock, equal to the weighted average life of the options.



Conversion options are recorded as debt discount and are amortized as interest expense over the life of the underlying debt instrument.



Also, refer Note 3 – Summary of Significant Accounting Policies in the consolidated financial statements that are included in this Report.



Recent accounting pronouncements



During the fourth quarter of January 31, 2016, our company adopted Accounting Standards Update (“ASU”) 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. This standard requires retrospective application. There were no debt issuance costs in the prior year that required reclassification.



For discussion of other recently issued and adopted accounting pronouncements, please see Note 3 to the consolidated financial statements included herein.



Item 7A. Quantitative and Qualitative Disclosures About Market Risk



As a “smaller reporting company”, we are not required to provide the information required by this Item.





|                 
|-----------------
|18               
|                 
|Table of Contents



Item 8. Financial Statements and Supplementary Data



GAWK INCORPORATED



TABLE OF CONTENTS



|                                                                                                           |  | Page | 
|---------------------------------------------------------------------------------------------------------- |  | ---- | 
|                                                                                                           |  |      | 
|Report of Independent Registered Public Accounting Firm                                                    |  | F-2  | 
|                                                                                                           |  |      | 
|Consolidated Balance Sheets at January 31, 2017 and 2016                                                   |  | F-3  | 
|                                                                                                           |  |      | 
|Consolidated Statements of Operations and Comprehensive Loss for the years ended January 31, 2017 and 2016 |  | F-4  | 
|                                                                                                           |  |      | 
|Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended January 31, 2017 and 2016    |  | F-5  | 
|                                                                                                           |  |      | 
|Consolidated Statements of Cash Flows for the years ended January 31, 2017 and 2016                        |  | F-6  | 
|                                                                                                           |  |      | 
|Notes to the Consolidated Financial Statements                                                             |  | F-7  | 





|   
|---
|F-1
|   
|   



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors and Stockholders

Gawk Inc.



We have audited the accompanying consolidated balance sheets of Gawk Inc. and its subsidiaries (collectively, the “Company”) as of January 31, 2017 and 2016, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits 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 about 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 audits 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, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Gawk Inc. and its subsidiaries as of January 31, 2017 and 2016, and the consolidated results of their operations and their cash flows for the years then ended, 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 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

October 23, 2017







|                 
|-----------------
|F-2              
|                 
|Table of Contents



GAWK INCORPORATED

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                            |  | January 31, |             |   | January 31, |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ----------- | - | ----------- | -
|                                                                                                                                                            |  | 2017        |             |   | 2016        |  
|ASSETS                                                                                                                                                      |  |             |             |   |             |  
|Current Assets                                                                                                                                              |  |             |             |   |             |  
|Cash and cash equivalents                                                                                                                                   |  | $           | 133,249     |   |             | $
|Accounts receivable, net                                                                                                                                    |  |             | 232,305     |   |             |  
|Marketable securities - available for sale                                                                                                                  |  |             | 102,300     |   |             |  
|Deposit - CipherLoc                                                                                                                                         |  |             | -           |   |             |  
|Prepaid and other current assets                                                                                                                            |  |             | 54,028      |   |             |  
|Total Current Assets                                                                                                                                        |  |             | 521,882     |   |             |  
|                                                                                                                                                            |  |             |             |   |             |  
|Equipment, net of accumulated depreciation of $0 and $73,740                                                                                                |  |             | -           |   |             |  
|Intangible assets and proprietary technology, net of accumulated amortization of $656,244 and $312,173                                                      |  |             | 1,149,831   |   |             |  
|Goodwill                                                                                                                                                    |  |             | 1,416,851   |   |             |  
|TOTAL ASSETS                                                                                                                                                |  | $           | 3,088,564   |   |             | $
|                                                                                                                                                            |  |             |             |   |             |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                       |  |             |             |   |             |  
|Current Liabilities                                                                                                                                         |  |             |             |   |             |  
|Accounts payable and accrued liabilities                                                                                                                    |  | $           | 1,953,401   |   |             | $
|Note payable, net of unamortized discounts of $1,546 and $0                                                                                                 |  |             | 98,930      |   |             |  
|Current portion of notes payable -related party                                                                                                             |  |             | 614,085     |   |             |  
|Current portion of convertible notes payable, net of unamortized discounts of $598,790 and $148,069                                                         |  |             | 2,061,952   |   |             |  
|Investor payable - common shares                                                                                                                            |  |             | 658,000     |   |             |  
|Preferred shares payable                                                                                                                                    |  |             | -           |   |             |  
|Contingent consideration                                                                                                                                    |  |             | -           |   |             |  
|Due to related parties                                                                                                                                      |  |             | 305,458     |   |             |  
|Derivative liabilities                                                                                                                                      |  |             | 2,088,684   |   |             |  
|Total Current Liabilities                                                                                                                                   |  |             | 7,780,510   |   |             |  
|Long-Term Liabilities                                                                                                                                       |  |             |             |   |             |  
|Convertible notes payable, net of unamortized discounts of $0 and $56,358                                                                                   |  |             | -           |   |             |  
|Notes payables -related party, less current portion                                                                                                         |  |             | 159,514     |   |             |  
|TOTAL LIABILITIES                                                                                                                                           |  |             | 7,940,024   |   |             |  
|                                                                                                                                                            |  |             |             |   |             |  
|Series C Convertible Preferred stock, $0.001 par value, 100 shares designated; 16 and 14 shares issued and outstanding, respectively                        |  |             | 16,000,000  |   |             |  
|Series D Convertible Preferred stock, $0.001 par value, 1,000 shares designated; 21 and 0 shares issued and outstanding, respectively                       |  |             | 2,100,000   |   |             |  
|                                                                                                                                                            |  |             | 18,100,000  |   |             |  
|                                                                                                                                                            |  |             |             |   |             |  
|Stockholders' Deficit                                                                                                                                       |  |             |             |   |             |  
|Preferred stock, $0.001 par value; authorized 100,000,000 shares                                                                                            |  |             |             |   |             |  
|Series A Preferred stock, $0.001 par value, 1,000 shares designated; 1,000 shares issued and outstanding                                                    |  |             | 1           |   |             |  
|Series B Convertible Preferred stock, $0.001 par value, 95,000,000 shares designated; 68,187,500 and 50,000,000 shares issued and outstanding, respectively |  |             | 68,188      |   |             |  
|Common stock, $0.001 par value, 14,900,000,000 shares authorized; 2,357,089,633 and 261,863,258 shares issued and outstanding, respectively                 |  |             | 2,357,089   |   |             |  
|Additional paid-in capital                                                                                                                                  |  |             | 984,577     |   |             |  
|Accumulated deficit                                                                                                                                         |  |             | (26,361,315 | ) |             |  
|Total Stockholders' Deficit                                                                                                                                 |  |             | (22,951,460 | ) |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                 |  | $           | 3,088,564   |   |             | $



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





|                 
|-----------------
|F-3              
|                 
|Table of Contents



GAWK INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS



|                                                                        |  | For the Year Ended |            
|----------------------------------------------------------------------- |  | ------------------ | -----------
|                                                                        |  | January 31,        |            
|                                                                        |  | 2017               |            
|                                                                        |  |                    |            
|Revenue                                                                 |  | $                  | 5,637,900  
|Cost of revenue                                                         |  |                    | 4,391,933  
|Gross profit                                                            |  |                    | 1,245,967  
|                                                                        |  |                    |            
|Operating expenses                                                      |  |                    |            
|General and administration                                              |  |                    | 3,180,510  
|Research and development                                                |  |                    | -          
|Legal settlement                                                        |  |                    | 525,000    
|Impairment loss                                                         |  |                    | 4,369,707  
|Depreciation and amortization                                           |  |                    | 746,487    
|Total operating expenses                                                |  |                    | 8,821,704  
|                                                                        |  |                    |            
|Net loss from operations                                                |  |                    | (7,575,737 
|                                                                        |  |                    |            
|Other income (expense)                                                  |  |                    |            
|Other income                                                            |  |                    | 22,275     
|Interest expense, net                                                   |  |                    | (1,808,729 
|Unrealized gain on marketable securities                                |  |                    | 24,000     
|Change in fair value of derivative liabilities                          |  |                    | (1,351,818 
|Loss on settlement of debt                                              |  |                    | (1,629,773 
|Total other expense                                                     |  |                    | (4,744,045 
|                                                                        |  |                    |            
|Loss from continuing operations                                         |  |                    | (12,319,782
|                                                                        |  |                    |            
|Gain (loss) from discontinued operations, net of tax benefits           |  |                    |            
|Gain on sale of assets                                                  |  |                    | 111,467    
|Loss from discontinued operations                                       |  |                    | (95,349    
|Total gain (loss) from discontinued operations                          |  |                    | 16,118     
|                                                                        |  |                    |            
|Net loss                                                                |  | $                  | (12,303,664
|                                                                        |  |                    |            
|Dividend on Series B Preferred Stock                                    |  |                    | (23,344    
|Net loss attributable to common stockholders                            |  | $                  | (12,327,008
|                                                                        |  |                    |            
|Other comprehensive income                                              |  |                    | -          
|                                                                        |  |                    |            
|Comprehensive Loss                                                      |  | $                  | (12,327,008
|                                                                        |  |                    |            
|Basic and diluted loss per common share from continued operation        |  | $                  | (0.02      
|Basic and diluted loss per common share from discontinued operation     |  | $                  | 0.00       
|                                                                        |  |                    |            
|Weighted average number of common shares outstanding, basic and diluted |  |                    | 724,811,630



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





|                 
|-----------------
|F-4              
|                 
|Table of Contents



GAWK INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED JANUARY 31, 2017 AND 2016



|                                                                                              |  | Series A Preferred Stock |   | Series B Preferred Stock |   | Common Stock       |  | Additional Paid in |  | Accumulated Other Comprehensive |        |  |        |               |                      |   |             
|--------------------------------------------------------------------------------------------- |  | ------------------------ | - | ------------------------ | - | ------------------ |  | ------------------ |  | ------------------------------- | ------ |  | ------ | ------------- | -------------------- | - | ------------
|                                                                                              |  | Shares Outstanding       |   | Amount                   |   | Shares Outstanding |  | Amount             |  | Shares Outstanding              |        |  | Amount |               | Capital (Deficiency) |   | Income(Loss)
|                                                                                              |  |                          |   |                          |   |                    |  |                    |  |                                 |        |  |        |               |                      |   |             
|Balance, January 31, 2015                                                                     |  | 1,000                    |   | $                        | 1 |                    |  | -                  |  | $                               | -      |  |        | 161,732,000   |                      | $ | 161,732     
|                                                                                              |  |                          |   |                          |   |                    |  |                    |  |                                 |        |  |        |               |                      |   |             
|Common stock issued to directors                                                              |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 21,000,000    |                      |   | 21,000      
|Common stock issued for services, financing fees and to settle accounts payable               |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 22,282,156    |                      |   | 22,282      
|Common stock issued for legal settlement                                                      |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 2,700,000     |                      |   | 2,700       
|Common stock issued in exchange for warrants                                                  |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 4,960,000     |                      |   | 4,960       
|Series A Preferred Shares returned and cancelled                                              |  | (500                     | ) |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Series A and B Preferred shares issued for acquisition - Net D’s assets                       |  | 500                      |   |                          | - |                    |  | 11,562,500         |  |                                 | 11,562 |  |        | 5,000,000     |                      |   | 5,000       
|Series B Preferred shares issued for cash                                                     |  | -                        |   |                          | - |                    |  | 8,437,500          |  |                                 | 8,438  |  |        | -             |                      |   | -           
|Series B Preferred shares issued for acquisition - Connexum                                   |  | -                        |   |                          | - |                    |  | 5,000,000          |  |                                 | 5,000  |  |        | -             |                      |   | -           
|Series B Preferred shares issued for due to related parties                                   |  | -                        |   |                          | - |                    |  | 25,000,000         |  |                                 | 25,000 |  |        | -             |                      |   | -           
|Contribution                                                                                  |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Common stock issued from conversion of debt                                                   |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 44,189,102    |                      |   | 44,189      
|Foreign currency translation                                                                  |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Reclassification of derivative liability from additional paid in capital                      |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Derivative Resolution                                                                         |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Net loss                                                                                      |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|                                                                                              |  |                          |   |                          |   |                    |  |                    |  |                                 |        |  |        |               |                      |   |             
|Balance, January 31, 2016                                                                     |  | 1,000                    |   | $                        | 1 |                    |  | 50,000,000         |  | $                               | 50,000 |  |        | 261,863,258   |                      | $ | 261,863     
|                                                                                              |  |                          |   |                          |   |                    |  |                    |  |                                 |        |  |        |               |                      |   |             
|Stock-based compensation                                                                      |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Common stock issued for exercise of stock options                                             |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 41,000,000    |                      |   | 41,000      
|Series B Preferred shares issued for –preferred stock payable                                 |  | -                        |   |                          | - |                    |  | 13,437,500         |  |                                 | 13,438 |  |        | -             |                      |   | -           
|Series B Preferred shares issued for cash                                                     |  | -                        |   |                          | - |                    |  | 4,750,000          |  |                                 | 4,750  |  |        | -             |                      |   | -           
|Beneficial conversion feature on Series B Preferred share                                     |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Deemed dividend on amortization of beneficial conversion feature on Series B Preferred shares |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Common stock issued for conversion of debt                                                    |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | 2,054,226,375 |                      |   | 2,054,226   
|Derivative resolution                                                                         |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|Net loss                                                                                      |  | -                        |   |                          | - |                    |  | -                  |  |                                 | -      |  |        | -             |                      |   | -           
|                                                                                              |  |                          |   |                          |   |                    |  |                    |  |                                 |        |  |        |               |                      |   |             
|Balance, January 31, 2017                                                                     |  | 1,000                    |   | $                        | 1 |                    |  | 68,187,500         |  | $                               | 68,188 |  |        | 2,357,089,633 |                      | $ | 2,357,089   



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





|                 
|-----------------
|F-5              
|                 
|Table of Contents



GAWK INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                    |  | For the Year Ended |            
|--------------------------------------------------------------------------------------------------- |  | ------------------ | -----------
|                                                                                                    |  | January 31,        |            
|                                                                                                    |  | 2017               |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                               |  |                    |            
|Net loss                                                                                            |  | $                  | (12,303,664
|Adjustments to reconcile net loss to net cash used in operating activities:                         |  |                    |            
|Common stock, options, and warrants issued for services                                             |  |                    | 177,000    
|Common stock issued for legal settlement                                                            |  |                    | -          
|Stock-based compensation                                                                            |  |                    | 361,000    
|Amortization of debt discount and deferred financing fees                                           |  |                    | 1,110,707  
|Unrealized gain on marketable securities                                                            |  |                    | (24,000    
|Amortization expense of intangible assets                                                           |  |                    | 746,487    
|Depreciation expense from discontinued operations                                                   |  |                    | 44,244     
|Amortization expense from discontinued operations                                                   |  |                    | 89,766     
|Bad debt expense                                                                                    |  |                    | 18,876     
|Loss on impairment of goodwill                                                                      |  |                    | 3,626,635  
|Loss on impairment of intangible assets                                                             |  |                    | 180,572    
|Write off of Deposit                                                                                |  |                    | 562,500    
|Loss on stock for liabilities                                                                       |  |                    | 1,564,800  
|Loss on settlement of liabilities                                                                   |  |                    | 64,973     
|Prepayment penalty                                                                                  |  |                    | 188,249    
|Change in fair value of derivative liabilities                                                      |  |                    | 1,351,818  
|Gain on sale of asset                                                                               |  |                    | (111,467   
|Changes in operating assets and liabilities:                                                        |  |                    |            
|(Increase) decrease in operating assets:                                                            |  |                    |            
|Accounts receivable                                                                                 |  |                    | (175,232   
|Prepaid expenses and other assets                                                                   |  |                    | (1,079     
|Increase (decrease) in operating liabilities:                                                       |  |                    |            
|Accounts payable and accrued liabilities                                                            |  |                    | 910,520    
|Due to related parties                                                                              |  |                    | 712,716    
|Accrued expenses                                                                                    |  |                    | 269,287    
|Net Cash Used In Operating Activities                                                               |  |                    | (635,292   
|                                                                                                    |  |                    |            
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                               |  |                    |            
|Acquisition of XTELUS, net of cash acquired                                                         |  |                    | 397        
|Proceeds from sale of asset                                                                         |  |                    | 401,052    
|Net cash paid for acquisition of Net D’s assets                                                     |  |                    | -          
|Net Cash Provided by (Used in) Investing Activities                                                 |  |                    | 401,449    
|                                                                                                    |  |                    |            
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                               |  |                    |            
|Proceeds from notes payable                                                                         |  |                    | 147,050    
|Proceeds from convertible notes, net of original issue discounts and deferred financing fees        |  |                    | 785,858    
|Proceeds from notes payable - related party                                                         |  |                    | 25,000     
|Payment of notes payable - related party                                                            |  |                    | (582,903   
|Payment of convertible notes payable                                                                |  |                    | (33,333    
|Payment of notes payable                                                                            |  |                    | (59,524    
|Proceeds from issuance of Series B Preferred stock                                                  |  |                    | 20,000     
|Proceeds from issuance of common stock                                                              |  |                    | -          
|Net Cash Provided By Financing Activities                                                           |  |                    | 302,148    
|                                                                                                    |  |                    |            
|Effect of exchange rate changes                                                                     |  |                    | -          
|                                                                                                    |  |                    |            
|Net increase (decrease) in cash and cash equivalents                                                |  |                    | 68,305     
|Cash and cash equivalents, beginning of period                                                      |  |                    | 64,944     
|Cash and cash equivalents, end of period                                                            |  | $                  | 133,249    
|                                                                                                    |  |                    |            
|Supplemental cash flow information                                                                  |  |                    |            
|Cash paid for interest                                                                              |  | $                  | 242,902    
|Cash paid for taxes                                                                                 |  | $                  | -          
|                                                                                                    |  |                    |            
|Non-cash financing transactions:                                                                    |  |                    |            
|Series B and Series C Preferred shares issued for due to related parties                            |  | $                  | -          
|Acquisition of Net D’s assets through issuance of preferred shares, common shares and note payable  |  | $                  | -          
|Acquisition of XTELUS through issuance of Series D Preferred shares                                 |  | $                  | 100,000    
|Series B Preferred shares issued to settle preferred share payable                                  |  | $                  | 13,438     
|Acquisition of Connexum/Webrunner through issuance of preferred shares and note payable             |  | $                  | -          
|Contingent consideration related to acquisition of Connexum                                         |  | $                  | -          
|Issuance of investor payable for acquisition                                                        |  | $                  | -          
|Issuance of common stock for conversion of debt and accrued interest                                |  | $                  | 615,528    
|Common shares issued for deferred financing fees                                                    |  | $                  | -          
|Common stock issued for exercise of options and warrants                                            |  | $                  | 41,000     
|Debt discount from derivative liability                                                             |  | $                  | 1,356,692  
|Reclassification of derivative liability from additional paid in capital due to tainted instruments |  | $                  | -          
|Derivative resolution                                                                               |  | $                  | 1,417,063  
|Accrued interest added to principal                                                                 |  | $                  | 5,517      
|Replacement of note payable to Convertible note                                                     |  | $                  | 75,000     
|Acquisition of Connexum through contingent issuance of Series D Preferred shares                    |  | $                  | 2,000,000  
|Series C Preferred shares issued to settle preferred share payable                                  |  | $                  | -          
|Beneficial conversion feature on Series B Preferred shares                                          |  | $                  | 23,344     



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





|                 
|-----------------
|F-6              
|                 
|Table of Contents



GAWK INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JANUARY 31, 2017 AND 2016



NOTE 1 – DESCRIPTION OF BUSINESS



Gawk Incorporated (“we”, “our”, the “Company”) was incorporated in the state of Nevada on January 6, 2011 with principal business address at 5300 Melrose Avenue, Suite 42, Los Angeles, CA. The Company offers a suite of cloud communications, cloud connectivity, cloud computing, and managed cloud-based applications solutions to small, medium, and large businesses; and offers domestic and international voice services to communications carriers worldwide. It offers a suite of advanced data center and cloud-based services, including fault tolerant, high availability cloud servers, which comprise platform as a service, infrastructure as a service, and a content delivery network; managed network services that converge voice and data applications, structured cabling, wireless, and security services, as well as include Internet access via Ethernet or fiber at speeds ranging from 10 Mbps to 10 Gbps; and data center solutions, including cloud services, colocation services, and business continuity services, such as storage and security. Our website is located at www.gawkinc.com



NOTE 2 – GOING CONCERN



The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has an accumulated deficit at January 31, 2017 of $26,361,315, a net loss for the year ended January 31, 2017 of $12,303,664, cash flows used in operating activities of $635,292 and needs additional cash to maintain its operations.



These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations, continued contributions from the Company’s executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company’s products and business.



NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:



Use of Estimates and Assumptions



The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. The Company’s most significant estimates relate to the valuation of its intangible assets, goodwill impairment, derivative liabilities, and the valuation of its common stock.



Principles of Consolidation



The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. We currently have no investments accounted for using the equity or cost methods of accounting.





|                 
|-----------------
|F-7              
|                 
|Table of Contents



Reclassifications



Certain prior year amounts have been reclassified to conform with the current year presentation.



Cash and Cash Equivalents



The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At January 31, 2017 and 2016, cash and cash equivalents include cash on hand and cash in the bank.



Goodwill and Other Intangible Assets



We account for goodwill and intangible assets in accordance with ASC 350 "Intangibles-Goodwill and Other" ("ASC 350"). ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. In addition, ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units; assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or goodwill impairment at future reporting dates.



We completed an evaluation of intangible assets and goodwill at January 31, 2017 and 2016, and recognized an impairment loss of $3,807,207 and $1,200,003 during the year ended January 31, 2017 and 2016.



The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. Customer relationships, brands and other non-contractual intangible assets with determinable lives are amortized over periods 3 years. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.



Long-Lived Assets



Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.



Property and Equipment



Property and equipment, consisting mostly of computer equipment, is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets’ estimated useful lives of three years using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.



Accounts Receivable and Allowance for Uncollectible Accounts



Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. As of January 31, 2017 and 2016, the Company had a valuation allowance for doubtful accounts of $18,876 and $0, respectively, for the Company’s accounts receivable. During the years ended January 31, 2017 and 2016, the Company recorded bad debt expense for uncollectible amounts of $18,876 and $11,782, respectively.





|                 
|-----------------
|F-8              
|                 
|Table of Contents



Marketable securities and other investments



We adopted ASC 825, “The Fair Value Option for Financial Assets and Financial Liabilities. Under this statement, an entity may elect to use fair value to measure eligible items. The adoption of this statement did not have an impact on our results of operations or financial condition.



We classify these investments as current assets and carry them at fair value. We recognize all unrealized and realized gains and losses on our available-for-sale securities in other income in the accompanying consolidated statements of operations and comprehensive income (loss).



Revenue Recognition



The Company pursues opportunities to realize revenues from consulting services. It is the company’s policy that revenues and gains will be recognized in accordance with ASC Topic 605-10-25, “Revenue Recognition.” Under ASC Topic 605-10-25, revenue earning activities are recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.



Our Business Services revenue includes monthly recurring charges (“MRC”) to customers, for whom charges are contracted over a specified period of time, and variable usage fees charged to customers that purchase our business products and services. Revenue recognition commences after the provisioning, testing and acceptance of the service by the customer. MRCs continue until the expiration of the contract, or until cancellation of the service by the customer. To the extent that payments received from a customer are related to a future period, the payment is recorded as deferred revenue until the service is provided or the usage occurs.



Our Carrier Services revenue is primarily derived from usage fees charged to other carriers that terminate voice traffic over our network. Variable revenue is earned based on the length of a call, as measured by the number of minutes of duration. It is recognized upon completion of the call, and is adjusted to reflect the allowance for billing adjustments. Revenue for each customer is calculated from information received through our network switches. Our customized software tracks the information from the switches and analyzes the call detail records against stored detailed information about revenue rates. This software provides us with the ability to complete a timely and accurate analysis of revenue earned in a period. We believe that the nature of this process is such that recorded revenues are unlikely to be revised in future periods.



Income Taxes



The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.



The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At January 31, 2017 and 2016, the Company did not record any liabilities for uncertain tax positions.





|                 
|-----------------
|F-9              
|                 
|Table of Contents



Research and Development and Software Development Costs



Capitalization of certain software development costs are recorded after the determination of technological feasibility. Based on our product development process, technological feasibility is determined upon the completion of a working model. To date, costs incurred by us from the completion of the working model to the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and development expense in the period incurred. Our research and development costs for the years ended January 31, 2017 and 2016 were $0 and $2,500, respectively.



Share-Based Compensation



The Company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Employee awards are accounted for under ASC 718 - where the awards are valued at grant date. Awards given to nonemployees are accounted for under ASC 505 where the awards are valued at earlier of commitment date or completion of services. Compensation cost for employee awards is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted.



Related Parties



The Company follows ASC 850, "Related Party Disclosures," for the identification of related parties and disclosure of related party transactions. See note 16.



Basic and Diluted Net Loss per Common Share



Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. For the year ended January 31, 2017 and 2016, respectively, the following options, warrants, convertible notes and Series A convertible preferred stock were excluded from the computation of diluted net loss per shares as the result of the computation was anti-dilutive.

Diluted loss per share is the same as basic loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss.



Concentration of Credit Risk



All of the Company’s cash and cash equivalents are maintained in regional and national financial institutions. The Company has exposure to credit risk to the extent that its cash and cash equivalents exceed amounts covered by the U.S. federal deposit insurance; however, the Company has not experienced any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions are such that the likelihood of material loss is remote.



Derivative Financial Instruments



The fair value of an embedded conversion option that is convertible into a variable amount of shares and warrants that include price protection reset provision features are deemed to be “down-round protection” and, therefore, do not meet the scope exception for treatment as a derivative under ASC 815 “Derivatives and Hedging”, since “down-round protection” is not an input into the calculation of the fair value of the conversion option and warrants and cannot be considered “indexed to the Company’s own stock” which is a requirement for the scope exception as outlined under ASC 815.





|                 
|-----------------
|F-10             
|                 
|Table of Contents



The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.



The Black-Scholes option valuation model was used to estimate the fair value of the embedded conversion options and warrants. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of our common stock, equal to the weighted average life of the options.



Conversion options are recorded as debt discount and are amortized as interest expense over the life of the underlying debt instrument.



Fair Value of Financial Instruments



The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.



The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.



The three-level hierarchy for fair value measurements is defined as follows:



· Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;· Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;· Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following table summarizes fair value measurements by level at January 31, 2017 and January 31, 2016 for assets measured at fair value on a recurring basis:



Carrying Value at January 31, 2017



|January 31, 2017                          |  | Level 1 |         |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|----------------------------------------- |  | ------- | ------- |  | ------- | - | - | ------- |  | - | --------- | 
|                                          |  |         |         |  |         |   |   |         |  |   |           | 
|Marketable securities- available for sale |  | $       | 102,300 |  |         | $ | - |         |  | $ | -         | 
|Total assets                              |  |         | 102,300 |  |         |   | - |         |  |   | -         | 
|                                          |  |         |         |  |         |   |   |         |  |   |           | 
|Derivative liabilities                    |  |         | -       |  |         |   | - |         |  |   | 2,088,684 | 
|Total liabilities                         |  | $       | -       |  |         | $ | - |         |  | $ | 2,088,684 | 





|                 
|-----------------
|F-11             
|                 
|Table of Contents



Carrying Value at January 31, 2016



|January 31, 2016                          |  | Level 1 |        |  | Level 2 |   |   | Level 3 |  |   | Total   | 
|----------------------------------------- |  | ------- | ------ |  | ------- | - | - | ------- |  | - | ------- | 
|                                          |  |         |        |  |         |   |   |         |  |   |         | 
|Marketable securities- available for sale |  | $       | 78,300 |  |         | $ | - |         |  | $ | -       | 
|Total assets                              |  |         | 78,300 |  |         |   | - |         |  |   | -       | 
|                                          |  |         |        |  |         |   |   |         |  |   |         | 
|Derivative liabilities                    |  |         | -      |  |         |   | - |         |  |   | 620,237 | 
|Total liabilities                         |  | $       | -      |  |         | $ | - |         |  | $ | 620,237 | 



Recent Accounting Pronouncements



In September 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.



In May 2014, the FASB issued an accounting standards update which modifies the requirements for identifying, allocating, and recognizing revenue related to the achievement of performance conditions under contracts with customers. This update also requires additional disclosure related to the nature, amount, timing, and uncertainty of revenue that is recognized under contracts with customers. This guidance is effective for fiscal and interim periods beginning after December 15, 2017 and is required to be applied retrospectively to all revenue arrangements. The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial statements.



In January 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Effective for public business entities that are a SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis.



In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.



In December 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.” The amendments affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for FASB Accounting Standards Codification Topic 606. Public entities should apply Topic 606 (and related amendments) for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein.



The Company is currently evaluating the method of adoption and the potential impact that Topic 606 may have on our financial position and results of operations.



Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.





|                 
|-----------------
|F-12             
|                 
|Table of Contents



NOTE 4 – MARKETABLE SECURITIES



On September 4, 2014 Cloud issued 30,000 post-split common shares through a consulting agreement with Gawk Incorporated valued at $105,000. The common stock issued to Gawk, for consulting services, has been accounted for as a marketable security valued at $105,000. The services have been earned and completed in accordance with the agreement.



The Company fair valued the marketable security available for sale at January 31, 2017 and 2016 and recorded an unrealized gain on change in fair value of the asset of $24,000 and $49,350, respectively. Total fair value of the available for sale security at January 31, 2017 and 2016 is $102,300 and $78,300, respectively.



NOTE 5 – ACQUISITIONS



XTELUS LLC and XETLUS S.A.



On June 27, 2016, the Company entered into an acquisition agreement with NEOGEN Holdings LLC, whereby the Company acquired 100% of the membership interest of XTELUS LLC and XETLUS S.A. (“XTELUS”). The acquisition of XTELUS met the definition of a business in accordance with FASB ASC Topic 805, "Business Combinations".As such, the Company accounted for the acquisition as a business combination.



Management determined that the Company was the acquirer in the business combination in accordance with FASB ASC Topic 805, "Business Combinations," based on the following factors: (i) there was a change in control of XTELUS; (ii) the Company was the entity in the transaction that issued its equity instruments, and in a business combination, the acquirer usually is the entity that issues its equity interests; (iii) the Company's pre-transaction directors retained the largest relative voting rights of the Company post-transaction; (iv) the composition of the Company's current board of directors and management was the result of the appointment by the Company's pre-transaction directors.



The purchase price paid for the acquisition of XTELUS amounted to $100,000 and consisted of 1 Series D Preferred Stock, which is convertible into $100,000 of common shares at any time following 12 months from the issuance of such shares. The following table summarizes the fair value of the consideration paid by the Company and the fair value amounts assigned to the assets acquired on the acquisition date:



|Fair Value of Consideration:         |  | June 26,2016 |        
|------------------------------------ |  | ------------ | -------
|1 share of Series D Preferred Shares |  | $            | 100,000
|Total Purchase Price                 |  | $            | 100,000
|                                     |  |              |        
|Assets and Liabilities:              |  | June 26,2016 |        
|Current assets                       |  | $            | 51,374 
|Current liabilities                  |  |              | (29,260
|Goodwill                             |  |              | 77,886 
|Fair value of total assets           |  | $            | 100,000



Revenues of $922,912 and net loss of $58,297 since the acquisition date are included in the consolidated statements of operations and comprehensive income (loss) for the year ended January 31, 2017.





|                 
|-----------------
|F-13             
|                 
|Table of Contents



Net D Consulting Inc.



On April 24, 2015, the Company entered into an asset purchase and sale agreement with Net D Consulting Inc. ("Net D") which closed on May 1, 2015. Net D is controlled by Chris Hall, who is an officer, director, and a controlling shareholder of the Company.



The fair value of the consideration and the assets acquired is based on the aggregate value of the note payable, preferred stock and common stock issued in exchange for the software as shown below:



The acquisition consisted of the purchase of a customer list which met the definition of a business in accordance with FASB ASC Topic 805, "Business Combinations". As such, the Company accounted for the acquisition as a business combination.



Management determined that the Company was the acquirer in the business combination in accordance with ASC Topic 805, "Business Combinations", based on the following factors: it involved a transaction or other event in which an acquirer obtains control of one or more businesses, which an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants.



The purchase price paid for the assets acquired, as amended on December 21, 2015, amounted to $3,982,125 and consisted of the following: $150,000 in cash, a $350,000 note payable to a related party with 0% annual interest, 5,000,000 common shares valued at $66,500, 500 Series A Preferred shares valued at $0, 25,000,000 Series B Preferred shares valued at $415,625, and 3 Series C Preferred shares convertible into $3,000,000 common shares. The Company paid net cash of $134,531 for acquisition of Net D’s asset. The following table summarizes the fair value of the consideration paid by the Company and the fair value amounts assigned to the assets acquired on the acquisition date:



|Fair Value of Consideration:                                        |  |   |          
|------------------------------------------------------------------- |  | - | ---------
|Cash                                                                |  | $ | 150,000  
|Note payable to related party                                       |  |   | 350,000  
|5,000,000 common shares                                             |  |   | 66,500   
|500 Series A Preferred shares                                       |  |   | -        
|25,000,000 Series B Preferred shares convertible into common shares |  |   | 415,625  
|3 Series C Preferred shares convertible into common shares          |  |   | 3,000,000
|Total Purchase Price                                                |  | $ | 3,982,125
|                                                                    |  |   |          
|Recognized amounts of identifiable assets acquired:                 |  |   |          
|Assets:                                                             |  |   |          
|Customer list                                                       |  | $ | 433,376  
|Goodwill                                                            |  |   | 3,548,749
|Fair value of total assets                                          |  | $ | 3,982,125



Connexum, LLC.



On January 18, 2016, the Company entered into an acquisition agreement with Net D, whereby the Company acquired 100% of the membership interest of Connexum, LLC (“Connexum”) from Net D, a related party. The acquisition of Connexum met the definition of a business in accordance with FASB ASC Topic 805, "Business Combinations". As such, the Company accounted for the acquisition as a business combination. Net D and Connexum are controlled by Chris Hall, who is an officer, director, and a controlling shareholder of the Company.





|                 
|-----------------
|F-14             
|                 
|Table of Contents



Management determined that the Company was the acquirer in the business combination in accordance with FASB ASC Topic 805, "Business Combinations", based on the following factors: (i) there was a change in control of Connexum; (ii) the Company was the entity in the transaction that issued its equity instruments, and in a business combination, the acquirer usually is the entity that issues its equity interests; (iii) the Company's pre-transaction directors retained the largest relative voting rights of the Company post-transaction; (iv) the composition of the Company's current board of directors and management was the result of the appointment by the Company's pre-transaction directors.



On January 18, 2016, the purchase price paid for the acquisition of Connexum amounted to $2,054,375 and consisted of the following:   a $1,000,000 note with annual interest of 18% which matures on August 1, 2017 and 5,000,000 Series B Preferred shares valued at $54,375.  The note provides for monthly principal and interest payments of $63,806.  The agreement also provides for contingent consideration of 1 Series C Preferred share convertible into $1,000,000 common shares if Connexum achieves 80% of anticipated revenue and another 1 Series C Preferred share convertible into $1,000,000 common shares if Connexum achieves 100% of anticipated revenue within one year from the date of acquisition.



On January 16, 2017, the Company entered into amendment to acquisition agreement, to amend for issuing Series D Preferred Shares instead of issuing Series C Preferred shares, as follows;



10 Series D Preferred Shares of Gawk Incorporated, if Connexum achieves 80% of anticipated revenue and another 10 Series D Preferred Shares of Gawk Incorporated, if Connexum achieves 100% of anticipated revenue, for a total of 20 shares of Series D Preferred Shares of Gawk Incorporated. The Series D Preferred Shares will convert at the rate of $100,000 for each Series D Preferred Shares held.



On January 18, 2017, Connexum achieved 100% of anticipated revenue within one year from the date of acquisition. As a result, Gawk issued 20 Series D Preferred Shares and recognized additional goodwill of $1,000,000. Total goodwill generated from acquisition of Connexum was $1,416,851 as of January 31, 2017



The following table summarizes the fair value of the consideration paid by the Company and the fair value amounts assigned to the assets acquired on the acquisition date:



|Fair Value of Consideration:                            |  | January 18,2016 |          
|------------------------------------------------------- |  | --------------- | ---------
|Note payable to related party                           |  | $               | 1,000,000
|5,000,000 Series B Preferred shares                     |  |                 | 54,375   
|Contingent consideration – 20 Series D Preferred shares |  |                 | 2,000,000
|Total Purchase Price                                    |  | $               | 3,054,375
|                                                        |  |                 |          
|Fair Value of Consideration:                            |  | January 18,2016 |          
|Current assets                                          |  | $               | 86,132   
|Current liabilities assumed                             |  |                 | (172,763 
|Customer list                                           |  |                 | 1,724,155
|Goodwill                                                |  |                 | 1,416,851
|Fair value of total assets                              |  | $               | 3,054,375





|                 
|-----------------
|F-15             
|                 
|Table of Contents



Unaudited combined proforma results of operations for the year ended January 31, 2017 and 2016 as though the Company acquired Connexum, Net D, and XTELUS on February 1, 2015, are set forth below:



|                                         |  | January 31, |            
|---------------------------------------- |  | ----------- | -----------
|                                         |  | 2017        |            
|Revenues                                 |  | $           | 6,054,109  
|Cost of revenues                         |  |             | 4,711,771  
|Gross profit                             |  |             | 1,342,338  
|                                         |  |             |            
|Operating expenses                       |  |             | 8,992,236  
|Operating loss                           |  |             | (7,649,898 
|                                         |  |             |            
|Other expense                            |  |             | (4,744,045 
|                                         |  |             |            
|Gain (loss) from discontinued operations |  |             | 16,118     
|Net Loss                                 |  | $           | (12,377,825



WebRunner, LLC



On October 30, 2014, the Company, through a comprehensive agreement with Webrunner, LLC (“Webrunner”), has purchased a complete data center. The Company sold WebRunner on October 31, 2016 (see Note 6).



The fair value of the consideration and the assets acquired is based on the aggregate value of the common stock issued in exchange for the software as shown below:



The acquisition consisted primarily of the purchase of a data center and all of its business, which are considered to meet the definition of a business in accordance with FASB ASC Topic 805, "Business Combinations". As such, the Company accounted for the acquisition as a business combination.



Management determined that the Company was the acquirer in the business combination in accordance with ASC Topic 805, "Business Combinations", based on the following factors: (i) there was a change in control of Webrunner; (ii) the Company was the entity in the transaction that issued its equity instruments, and in a business combination, the acquirer usually is the entity that issues its equity interests; (iii) the Company’s pre-transaction directors retained the largest relative voting rights of the Company post-transaction; (iv) the composition of the Company’s current board of directors and management was the result of the appointment by the Company’s pre-transaction directors.



The purchase price paid for the acquisition was $2,104,932 which included $225,000 in cash, 1 Series C Preferred share convertible into $1,000,000 of common stock and 9,100,000 options to purchase stock at an exercise price of $0.10 valued at $879,932 using the Black Scholes option pricing model. The assumptions used to value the options were as follows: a) stock price of $0.0978; b) strike price of $0.10, c) term of 5 years and d) volatility of 268%. The following table summarizes the fair value of the consideration paid by the Company and the fair value amounts assigned to the assets acquired on the acquisition date:



|                                                          |  | October 30, 2014 |          
|--------------------------------------------------------- |  | ---------------- | ---------
|Fair Value of Consideration:                              |  |                  |          
|Cash                                                      |  | $                | 225,000  
|1 Series C Preferred share convertible into common shares |  |                  | 1,000,000
|9,100,000 options at an exercise price of $0.10           |  |                  | 879,932  
|Total Purchase Price                                      |  | $                | 2,104,932
|                                                          |  |                  |          
|Recognized amounts of identifiable assets acquired:       |  |                  |          
|Assets:                                                   |  |                  |          
|Cash                                                      |  | $                | 190,931  
|IP Address                                                |  |                  | 81,920   
|Customer list                                             |  |                  | 359,067  
|Equipment                                                 |  |                  | 176,975  
|Goodwill                                                  |  |                  | 1,310,908
|Fair value of total assets                                |  |                  | 2,119,801
|Note payable RND Media                                    |  |                  | (10,000  
|Accounts payable and accrued liabilities                  |  |                  | (4,869   
|Fair value of net assets                                  |  | $                | 2,104,932





|                 
|-----------------
|F-16             
|                 
|Table of Contents



Webrunner, Inc. assets includes IP Address space assigned to it through American Registry for Internet Numbers (ARIN) which consists of a /19, pronounced “Slash Nineteen”, which contains 8192 IP Addresses that are used in conjunction with our services provided to our customers.



An Internet Protocol address (IP address) is a numerical label assigned to each device (e.g., computer, printer) participating in a computer network that uses the Internet Protocol for communication. An IP address serves two principal functions: host or network interface identification and location addressing.



The designers of the Internet Protocol defined an IP address as a 32-bit number and this system, known as Internet Protocol Version 4 (IPv4), is still in use today. However, because of the growth of the Internet and the predicted depletion of available addresses, a new version of IP (IPv6), using 128 bits for the address, was developed in 1995. IPv6 was standardized as RFC 2460 in 1998, and its deployment has been ongoing since the mid-2000s.



IP addresses are usually written and displayed in human-readable notations, such as 172.16.254.1 (IPv4), and 2001:db8:0:1234:0:567:8:1 (IPv6).



The Internet Assigned Numbers Authority (IANA) manages the IP address space allocations globally and delegates five regional Internet registries (RIRs) to allocate IP address blocks to local Internet registries (Internet service providers) and other entities.



The expected of the Equipment, IP Addresses and Customer List is 3 years of which we will be applying both amortization and depreciation on a quarterly basis in a straight line format.



The comprehensive agreement call for the implementation of three employment agreement and three management agreements for the members of Webrunner LLC. The Company has not adopted an employee stock option plan which has been approved by the shareholders.



NOTE 6 – DISCONTINUED OPERATIONS



On October 31, 2016, the Company entered into the asset purchase and sale agreement (the “Agreement”) with Giggle Fiber, LLC. Pursuant to the terms of the Agreement, the Company sold the equipment, customer list of Webrunner and bank accounts related to Webrunner for $413,861, payable in installments. The Company recorded gain on sales of assets of $111,467 as discontinued operations during the year ended January 31, 2017. The total consideration received was $401,052.



The following table shows the results of operations of Webrunner for fiscal years 2017 and 2016 which are included in the gain (loss) from discontinued operations:



|                                  |  | Years Ended |         
|--------------------------------- |  | ----------- | --------
|                                  |  | July 31,    |         
|                                  |  | 2017        |         
|Revenue                           |  | $           | 225,575 
|                                  |  |             |         
|Operating expenses                |  |             |         
|General and administration        |  |             | (186,913
|Impairment loss                   |  |             | -       
|Depreciation and amortization     |  |             | (134,011
|Loss from discontinued operations |  | $           | (95,349 





|                 
|-----------------
|F-17             
|                 
|Table of Contents



NOTE 7 – EQUIPMENT



Equipment at January 31, 2017 and 2016 consist of the following:



|                                            |  | January 31, 2017 |   |  | January 31, 2016 |  
|------------------------------------------- |  | ---------------- | - |  | ---------------- | -
|Acquisition of Webrunner - Equipment        |  |                  | - |  |                  |  
|Total tangible assets                       |  |                  | - |  |                  |  
|Accumulated depreciation of tangible assets |  |                  | - |  |                  |  
|Total tangible assets                       |  | $                | - |  |                  | $



Depreciation expense for the years ended January 31, 2017 and 2016 amounted to $44,244 and $58,992, respectively. All depreciation expenses are included in loss from discontinued operations.



On October 31, 2016, the Company entered into the asset purchase and sale agreement (the “Agreement”) with Giggle Fiber, LLC. Pursuant to the terms of the Agreement, the Company sold the equipment, customer list of Webrunner and bank accounts related to the Webrunner for $413,861, payable in instalments. The total consideration received was $401,052. The Company recorded gain on sales of asset of $111,467 as discontinued operations during the year ended January 31, 2017 (See Note 16).



The following table summarizes the carrying amounts of the sold assets;



|                                                |  | October 31, |        
|----------------------------------------------- |  | ----------- | -------
|Assets                                          |  | 2016        |        
|Bank accounts related to Webrunner              |  | $           | 12,809 
|Equipment, net of depreciation of $117,984      |  |             | 58,991 
|Intangible assets, net of amortization $239,378 |  |             | 119,689
|Goodwill                                        |  |             | 110,905
|Total assets                                    |  | $           | 302,394



NOTE 8 – INTANGIBLES AND GOODWILL



Intangible assets at January 31, 2017 and 2016 consist of the following:



|                                              |  | January 31, 2017 |           |   | January 31, 2016 |  
|--------------------------------------------- |  | ---------------- | --------- | - | ---------------- | -
|Customer list - Webrunner                     |  | $                | -         |   |                  | $
|IP Address - Webrunner                        |  |                  | 81,920    |   |                  |  
|Customer list - Net D                         |  |                  | -         |   |                  |  
|Customer list - Connexum                      |  |                  | 1,724,155 |   |                  |  
|Total intangible assets                       |  |                  | 1,806,075 |   |                  |  
|Accumulated amortization of intangible assets |  |                  | (656,244  | ) |                  |  
|Total intangible assets                       |  | $                | 1,149,831 |   |                  | $



The intangible assets are amortized over an estimated useful life of 3 years. Amortization expense from continuing operations amounted to $746,487 and $155,736 for the years ended January 31, 2017 and 2016, respectively. Amortization expense from discontinued operations amounted to $89,766 and $119,688 for the years ended January 31, 2017 and 2016, respectively.





|                 
|-----------------
|F-18             
|                 
|Table of Contents



Goodwill at January 31, 2017 and 2016 consist of the following:



|                      |  | January 31, 2017 |           |  | January 31, 2016 |  
|--------------------- |  | ---------------- | --------- |  | ---------------- | -
|Goodwill of Webrunner |  | $                | -         |  |                  | $
|Goodwill of Net D     |  |                  | -         |  |                  |  
|Goodwill of Connexum  |  |                  | 1,416,851 |  |                  |  
|                      |  | $                | 1,416,851 |  |                  | $



During the year ended January 31, 2017, we determined that the carrying value of Net D and XTELUS, which are separate reporting units, exceeded its fair value at the measurement date, requiring step two in the impairment test process. The fair value of the Net D and XTELUS reporting unit were determined primarily using an income approach based on the present value of discounted cash flows. We determined the implied fair value of intangible asset and goodwill were substantially below the carrying value of the reporting unit. Accordingly, we recognized impairment loss of $180,572 in intangible asset and $3,548,749 in goodwill for Net D and $77,886 in goodwill for XTELUS, which resulted in no intangible asset and goodwill remaining for Net D and XTELUS as of January 31, 2017.



During the year ended January 31, 2016, we determined that the carrying value of Webrunner, which is a separate reporting unit, exceeded its fair value at the measurement date, requiring step two in the impairment test process. The fair value of the Webrunner reporting unit was determined primarily using an income approach based on the present value of discounted cash flows. We determined the implied fair value of goodwill was substantially below the carrying value of the reporting unit's goodwill. Accordingly, we recognized a goodwill impairment loss of $1,200,003, which resulted in goodwill of $110,905 remaining for Webrunner as of January 31, 2016.



NOTE 9 – NOTES PAYABLE



The Company had the following notes payable and notes payable - related party outstanding as of January 31, 2017 and 2016:



Notes Payable



|                                                |  | January 31, 2017 |         |   | January 31, 2016 |  
|----------------------------------------------- |  | ---------------- | ------- | - | ---------------- | -
|Dated – October 30, 2014                        |  | $                | 10,000  |   |                  | $
|Dated – June 3, 2015                            |  |                  | -       |   |                  |  
|Dated – December 11, 2015                       |  |                  | -       |   |                  |  
|Dated – August 4, 2016                          |  |                  | 25,000  |   |                  |  
|Dated – September 30, 2016                      |  |                  | 65,476  |   |                  |  
|Total notes payable                             |  |                  | 100,476 |   |                  |  
|Less: debt discount and deferred financing fees |  |                  | (1,546  | ) |                  |  
|                                                |  |                  | 98,930  |   |                  |  
|Less: current portion of notes payable          |  |                  | 98,930  |   |                  |  
|Long-term notes payable                         |  | $                | -       |   |                  | $



The Company recognized amortization expense related to the debt discount and deferred financing fees of $1,404 and $0 for the year ended January 31, 2017 and 2016, respectively. The total borrowings and principal repayment on note payable during the year ended January 31, 2017 was $147,050 and $59,524, respectively.





|                 
|-----------------
|F-19             
|                 
|Table of Contents



Dated - October 30, 2014



On October 30, 2014, the Company exercised the comprehensive acquisition agreement of Webrunner, LLC (“Webrunner”) and in the acquisition the Company assumed the debt of RNC Media in the amount of $10,000. The Note does not have any interest payable and is due upon demand.



Dated - June 3, 2015 and December 11, 2015



The two notes were issued to Mr. Doyle Knudson, are subject to annual interest of 15% and are convertible into a total of 863,000 common shares. The note issued on June 3, 2015 matured in December 2015. On August 4, 2016, the Company entered into the new agreement with Crossover Capital Fund I, LLC, which the Company issued a new convertible note of $75,000 for the payment of the two notes totaling $75,000. As a result of this agreement, the Company recognized gain on debt settlement of $9,279 for the year ended January 31, 2017.



Dated – August 4, 2016



The note was issued to Mr. Doyle Knudson, are subject to annual interest of 15% and are secured by 250,000 shares of common stock. The note matured in February 2017.  The total cash proceeds received from the note was $25,000



Dated – September 30, 2016



The Company entered into the revenue based factoring agreement with Powerup Lending Group, Ltd. and received cash of $125,000. The note includes an original issue discount and financing fee of $2,950 and the Company received cash of $122,050. The Company is required to make weekly principal and interest payments of $4,560 for a period of 34 weeks through May 30, 2017.



Notes Payable - related party



|                                       |  | January 31, 2017 |         |  | January 31, 2016 |  
|-------------------------------------- |  | ---------------- | ------- |  | ---------------- | -
|Dated – April 23, 2015                 |  | $                | 231,250 |  |                  | $
|Dated - January 18, 2016               |  |                  | -       |  |                  |  
|Dated - December 21, 2016              |  |                  | 542,349 |  |                  |  
|Total notes payable                    |  |                  | 773,599 |  |                  |  
|Less: current portion of notes payable |  |                  | 614,085 |  |                  |  
|Long-term notes payable                |  | $                | 159,514 |  |                  | $



The total borrowings and principal repayment on related party note payable during the year ended January 31, 2017 was $25,000 and $582,903, respectively



Dated - April 23, 2015



On May 1, 2015, in connection with the acquisition of the assets of Net D Consulting, Inc. (“Net D”), the Company issued a $350,000 note which bears no interest and matures on October 7, 2016. The Company made repayments on the note of $51,000 during the year ended January 31, 2017.





|                 
|-----------------
|F-20             
|                 
|Table of Contents



Dated - January 18, 2016



On January 18, 2016, in connection with the acquisition of Connexum, the Company issued a $1,000,000 note to Net D which bears annual interest of 18%. The Company is required to make monthly principal and interest payments of $63,806 for a period of 18 months through August 1, 2017. The company incurred additional $25,000 borrowing from Net D during the year ended January 31, 2017. The Company paid principal and interest payments of $574,252 for the year ended January 31, 2017. On December 21, 2016, the Company entered into the new agreement which the company issued a note payable of $574,252 for payment of the old Note of $500,000. As a result, the Company recorded loss on debt extinguishment of $74,252 for the year ended January 31, 2017.



Dated – December 21, 2016



On December 21, 2016, the Company entered into the new agreement which the company issued a note payable of $574,252 for payment of the Note dated January 18, 2016. The Note bears interest rate of $7.29% for 1st 12 months and then 3.25% for 13 through 18 months. The Company is required to make monthly principal and interest payments of $226,985 for a period of 18 months through June 20, 2018. The Company paid principal and interest payments of $48,956 for the year ended January 31, 2017.



NOTE 10 – CONVERTIBLE NOTES PAYABLE



The Company had the following convertible notes payable outstanding as of January 31, 2017 and 2016:



|                                                                                                                                        |  | January 31,2017 |           |   | January 31,2016 |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | --------- | - | --------------- | -
|Promissory Note - Issued August 22, 2014, with a fixed conversion price of $0.10 per common share or 17,000,000 shares of common stock. |  | $               | 1,700,000 |   |                 | $
|Promissory notes – Issued in fiscal year 2016, with variable conversion features.                                                       |  |                 | 83,951    |   |                 |  
|Promissory notes – Issued in fiscal year 2017, with variable conversion features.                                                       |  |                 | 876,791   |   |                 |  
|Total convertible notes payable                                                                                                         |  |                 | 2,660,742 |   |                 |  
|Less: debt discount and deferred financing fees                                                                                         |  |                 | (598,790  | ) |                 |  
|                                                                                                                                        |  |                 | 2,061,952 |   |                 |  
|Less: current portion of convertible notes payable                                                                                      |  |                 | 2,061,952 |   |                 |  
|Long-term convertible notes payable                                                                                                     |  | $               | -         |   |                 | $



The Company recognized amortization expense related to the debt discount and deferred financing fees of $1,109,303 and $342,831 for the year ended January 31, 2017 and 2016, respectively.



Promissory Note - August 22, 2014



In connection with the settlement agreement entered into with Doyle Knudson, an investor, in 2014, the Company issued a $1.8 million convertible promissory note with a fixed conversion price of $0.10 per share or 18,000,000 shares of common stock. The note is subject to annual interest of 10%, matured in August 2015 and is currently past due. In May and December 2015, a total of $100,000 note principal was transferred to another lender.



The Company initially recorded a discount on the convertible note due to a beneficial conversion feature of $358,200 and amortized $208,950 for the year ended January 31, 2016. Due to the variable conversion rates in the other convertible notes (see below), the $1,700,000 balance of the note became tainted and the embedded fixed conversion option was bifurcated and accounted for as a derivative liability.





|                 
|-----------------
|F-21             
|                 
|Table of Contents



Promissory Notes - Issued in fiscal year 2016



During the year ended January 31, 2016, the Company issued a total of $449,666 notes with the following terms:



· Terms ranging from 9 months to 2 years· Annual interest rates ranging from 5% to 12%· Convertible at the option of the holders either at issuance or 180 days from issuance. The note dated September 29, 2015 is convertible at the later of the maturity date or date of default.· Conversion prices are typically based on the discounted (50% to 60% discount) lowest trading prices of the Company’s shares during various periods prior to conversion. Certain notes allow for the conversion price to be the lower of $0.01 or the discounted trading price

Certain notes allow the Company to redeem the notes at rates ranging from 118% to 148% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, certain notes include original issue discounts totaling to $24,166. During the year ended January 31, 2016, the Company also recognized deferred financing fees totaling $55,142



The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.



The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible during the year amounted to $459,733. $209,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $250,733 was recognized as a day 1 derivative loss.



Promissory Notes - Issued in fiscal year 2017



During the year ended January 31, 2017, the Company issued a total of $1,266,417 notes with the following terms:



· Terms ranging from 9 months to 20 months· Annual interest rates ranging from 8% to 12%· Convertible at the option of the holders either at issuance or 180 days from issuance.· Conversion prices are typically based on the discounted (50% to 60% discount) lowest trading prices of the Company’s shares during various periods prior to conversion. Certain notes allow for the conversion price to be a floor of $0.0005 and $0.00005 per share.

Certain notes allow the Company to redeem the notes at rates ranging from 118% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, certain notes include original issue discounts and deferred financing cost totaling to $146,976. The Company received cash of $785,858. During the year ended January 31, 2017, the Company repaid notes with principal amounts totaling to $33,333 and a total of $5,517 accrued interest was also added to principal.



The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.



The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended January 31, 2017 amounted to $3,245,991. $1,356,692 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $1,889,299 was recognized as a “day 1” derivative loss.



During the year ended January 31, 2017, the Company converted notes with principal amounts of $579,784 and accrued interest of $35,744 into 2,054,226,375 shares of common stock. The corresponding derivative liability at the date of conversion of $1,258,063 was credited to additional paid in capital.





|                 
|-----------------
|F-22             
|                 
|Table of Contents



Replacement of Notes



During the year ended January 31, 2017, the Company assigned 16 notes with outstanding principal amounts totaling to $424,178 to two lenders which resulted to the payment of prepayment penalties amounting to $156,809 and recognized loss on debt settlement of $267,646 due to the modification of the replacement note conversion feature, and the difference between the fair value of derivative of the conversion feature.



The following table summarizes the detail of assigned 16 notes;



|                                              |  | AssignedNotes |    |  | Principalamount |   |         | Accruedinterest |  |   | Prepayment penalties | 
|--------------------------------------------- |  | ------------- | -- |  | --------------- | - | ------- | --------------- |  | - | -------------------- | 
|Tranches in effect as of January 31, 2017     |  |               | 5  |  |                 | $ | 147,741 |                 |  | $ | 12,992               | 
|                                              |  |               |    |  |                 |   |         |                 |  |   |                      | 
|Tranches in not effect as of January 31, 2017 |  |               |    |  |                 |   |         |                 |  |   |                      | 
|Tranches in effect as of February 12, 2017    |  |               | 5  |  |                 |   | 69,549  |                 |  |   | 5,472                | 
|Tranches in effect as of March 12, 2017       |  |               | 2  |  |                 |   | 60,000  |                 |  |   | 6,401                | 
|Tranches in effect as of April 12, 2017       |  |               | 2  |  |                 |   | 71,131  |                 |  |   | 5,188                | 
|Tranches in effect as of May 12, 2017         |  |               | 2  |  |                 |   | 75,757  |                 |  |   | 7,827                | 
|Total                                         |  |               | 16 |  |                 | $ | 424,178 |                 |  | $ | 37,880               | 



During the year ended January 31, 2017, the Company assigned an additional 10 notes with principal amounts totaling to $375,750 to two lenders. Prepayment of $142,670 was paid by cash and recognized in interest expense, and $31,440 was non-cash and recognized as prepayment penalties.



NOTE 11 – DERIVATIVE LIABILITIES



The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.



ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.



The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of January 31, 2017. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in the January 31, 2017 and 2016:



|                            |  | Year Ended      |   |  | Year Ended      |  
|--------------------------- |  | --------------- | - |  | --------------- | -
|                            |  | January 31,2017 |   |  | January 31,2016 |  
|Expected term               |  | 0 - 1.50 years  |   |  | 0.4 - 2 years   |  
|Expected average volatility |  | 120% - 716      | % |  | 249% - 328      | %
|Expected dividend yield     |  |                 | - |  |                 |  
|Risk-free interest rate     |  | 0.18% - 0.84    | % |  | 0.05% - 0.83    | %





|                 
|-----------------
|F-23             
|                 
|Table of Contents



At January 31, 2017, the estimated fair values of the liabilities measured on a recurring basis are as follows:



|January 31, 2017                              |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | Total     | 
|--------------------------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | --------- | 
|Promissory Note – Issued August 22, 2014      |  | $       | - |  |         | $ | - |         |  | $ | 3,400     | 
|Promissory Notes – Issued in fiscal year 2016 |  |         | - |  |         |   | - |         |  |   | 164,794   | 
|Promissory Notes – Issued in fiscal year 2017 |  |         | - |  |         |   | - |         |  |   | 1,920,490 | 
|Total liabilities                             |  | $       | - |  |         | $ | - |         |  | $ | 2,088,684 | 



The following table summarizes the changes in the derivative liabilities during the year ended January 31, 2017:



|Fair Value Measurements Using Significant Observable Inputs (Level 3) | 
|--------------------------------------------------------------------- | 
|                                                                      | 
|Balance - January 31, 2015                                            | 
|Addition of new derivatives recognized as debt discounts              | 
|Addition of new derivatives recognized as options compensation        | 
|Addition of new derivatives recognized as day one loss on derivatives | 
|Derivatives settled upon conversion of debt and exercise of warrants  | 
|Reclassification from APIC to derivative due to tainted instruments   | 
|Loss on change in fair value of the derivative                        | 
|Balance - January 31, 2016                                            | 
|                                                                      | 
|Addition of new derivatives recognized as debt discounts              | 
|Addition of new derivatives recognized as options compensation        | 
|Addition of new derivatives recognized as day one loss on derivatives | 
|Derivatives settled upon conversion of debt and exercise of warrants  | 
|Loss on change in fair value of the derivative                        | 
|Balance - January 31, 2017                                            | 



The net gain on derivatives during the year ended January 31, 2017 and 2016 was $1,351,818 and $326,899, respectively.



NOTE 12 – STOCK PAYABLE



Investor payable - common shares



In December 2013 and January 2014, the Company entered into stock purchase agreements with third parties for 100,000 and 250,000 Series B Preferred shares, respectively, for a total consideration of $100,000 and $250,000, respectively. The Company was unable to issue the preferred shares and has accounted for the amounts received as investor payable.



The Company also issued 8,000,000 Preferred B Warrants with the acquisition of Poker Junkies LLC. These Preferred Series B Warrants once exercised would require the Company to issue Series B Preferred shares. From November 2013 through January 31, 2014 the Company issued 1,028,000 of Series B Preferred stock valued at $1,028,000 for the exercise of the Preferred B warrants. From February 2014 through April 2014 the Company issued 699,200 of Series B Preferred stock valued at $699,200 for the exercise of the Preferred B warrants. On June 18, 2014, the Company rescinded this transaction due to the failure of the holder to deliver the Preferred B warrants. The Company decided to issue common shares in lieu of issuing the Series B Preferred shares related to the acquisition of Poker Junkies LLC and those issued in connection with the stock purchase agreements disclosed above. The Company agreed to issue common stock at 125% of the value of the Series B Preferred shares. During the years ended January 31, 2017 and 2016, the Company issued 0 and 4,960,000 common shares, respectively, for a total consideration of $0 and $496,000, respectively.



As of January 31, 2017, and 2016, investor payable – common stock totaled $658,000, respectively.





|                 
|-----------------
|F-24             
|                 
|Table of Contents



Preferred Stock Payable



On December 21, 2015, the Company recorded preferred stock payable of $13,438 for 13,437,500 Series B Preferred shares related to the acquisition of the assets of Net D (see Note 5). During the year ended January 31, 2017, the Company issued 13,437,500 Series B Preferred shares to settle this payable.



On October 30, 2014, the Company recorded $1,000,000 as preferred share payable which shall be converted to 1 Series C Preferred share for the acquisition of Webrunner. On April 9, 2015, the Company issued 1 Series C Preferred Share to settle this payable.



As of January 31, 2017 and 2016, preferred stock payable totaled $0 and $13,438, respectively.



NOTE 13 – EQUITY



Amendment to Articles of Incorporation or Bylaws



On April 10, 2016, the Company filed a Certificate of Amendment with the state of Nevada, to the Company’s Articles of Incorporation, to increase the number of authorized shares of capital stock to 15,000,000,000 shares. With 14,900,000,000 shares of common stock, par value $0.001 and 100,000,000 shares of preferred stock, par value $0.001.



Preferred Stock



Series A Preferred Stock



The Company is authorized to issue 1,000 shares of series A Preferred Stock at a par value of $0.001. The terms of the Certificate of Designation of the Series A Preferred Stock, include the right to vote in aggregate, on all shareholder matters equal to 51% of the total vote (“Super Majority Voting Rights”). The Series A Preferred Stock will be entitle to this 51% voting right no matter how many shares of common stock or other voting stock of the Company are issued or outstanding in the future.



As of January 31, 2017, and 2016, 1,000 shares of series A Preferred Stock were issued and outstanding, respectively.



Series B Convertible Preferred Stock



On March 11, 2016, the Company amended its Articles of Incorporation to increase the number of preferred shares designated Series B Convertible Shares (the “Series B”) from 50,000,000 to 95,000,000. Holders of the Series B Preferred shares shall be entitled to receive dividends or other distributions with the holders of the Company’s common shares on an “as converted” basis when, as, and if declared by the directors of the Company.



The Holders have the right to convert each Series B Preferred share, at any time after 6 months from the date of issuance, into fully paid and non-assessable common shares on the basis of 1 Series B Preferred share for 1.25 common shares (1:1.25).



During the year ended January 31, 2017, the Company issued Series B Preferred shares, as follows:



· On December 21, 2015, the Company recorded preferred stock payable of $13,438 for 13,437,500 Series B Preferred shares related to the acquisition of the assets of Net D. During the nine months ended October 31, 2016 the Company issued 13,437,500 Series B Preferred shares to settle this payable.· On February 3, 2016, 4,750,000 shares were sold for cash of $20,000. On issuance, value of the underlining common stock represented a beneficial conversion feature of $23,344. The beneficial conversion feature will be recognized when the preferred stock becomes convertible on August 3, 2016 as a deemed dividend. F-25Table of Contents



During the year ended January 31, 2016, the Company issued Series B Preferred shares, as follows:



· 437,500 shares were sold for cash on June 22, 2015 for a total consideration of $17,500.· 25,000,000 shares with fair value of $415,625 in connection with the acquisition of Net D’s assets (see Note 5). Of this amount, the par value of $13,438 related to the 13,437,500 shares in excess of the authorized shares at January 31, 2016 is reported as preferred stock payable in the consolidated balance sheets· 5,000,000 shares with a fair value of $54,375 in connection with the acquisition of Connexum (see Note 5).· 25,000,000 shares with a fair value of $415,625 as settlement of amounts due to the CEO totaling $438,854. As a result, the Company recorded a loss on settlement of liabilities of $2,976,771 (see also below).· 8,000,000 shares were sold for cash in January 2016 for a total consideration of $30,000

As of January 31, 2017, and 2016, 68,187,500 and 50,000,000 shares of Series B Preferred Stock were issued and outstanding, respectively.



Series C Convertible Preferred Stock



The Series C Preferred Stock consists of 100 shares, at a par value of $0.001 per share, with certain rights, privileges, preferences and restrictions as set forth in Series C Preferred Stock Certificate of Designation. Holders of the Series C Preferred shares shall be entitled to receive dividends or other distributions with the holders of the Company’s common share on an “as converted” basis when, as and if, declared by the directors of the Company.



Each share of the Series C Preferred Stock shall be convertible, at the option of the holder thereof and subject to notice requirements at any time following 12 months from the issuance of such shares, into such number of fully paid and non-assessable common shares worth $1,000,000.



During the year ended January 31, 2017, the Company determined the Series C Convertible Preferred Stock is considered to be contingently redeemable convertible and as a result, has been classified as mezzanine equity in the Company's balance sheet, as of January 31, 2017 and 2016.



During the year ended January 31, 2017, the Company issued Series C Preferred shares, as follows:



· 1 share with a fair value of $1,000,000 as settlement of amounts due to the CEO totaling $271,200· 1 share with a fair value of $1,000,000 as settlement of amounts due to the CFO totaling $164,000

As a result, the Company recorded a loss on settlement of debt of $1,564,800.



During the year ended January 31, 2016, the Company issued Series C Preferred shares, as follows:



· 1 share to settle the preferred stock payable of $1,000,000 recorded in connection with the acquisition of Webrunner· 3 shares with a fair value of $3,000,000 in connection with the acquisition of Net D’s assets (see Note 5).· 3 shares with a fair value of $3,000,000 as settlement of amounts due to the CEO totaling $438,854. As a result, the Company recorded a loss on settlement of debt of $2,976,771.

On April 11, 2014, the Company and Doyle Knudson entered into a Series C Preferred Stock Purchase Agreement dated as of April 10, 2014, pursuant to which the Company sold 7 Series C Preferred shares for an aggregate purchase price of $3,300,000.



As of January 31, 2017, and 2016, 16 and 14 shares of Series C Preferred Stock were issued and outstanding, respectively.





|                 
|-----------------
|F-26             
|                 
|Table of Contents



Series D Convertible Preferred Stock



On June 23, 2016, pursuant to its Articles of Incorporation and Bylaws, the Board of Directors of the Company, unanimously approved the designation of a new series of preferred stock, "Series D Convertible Preferred Stock.



Each share of the Series D Preferred Stock shall be convertible, at the option of the holder thereof and subject to notice requirements at any time following 12 months from the issuance of such shares, into such number of fully paid and non-assessable common shares worth $100,000.



During the year ended January 31, 2017, the Company determined the Series D Convertible Preferred Stock is considered to be contingently redeemable convertible and as a result, has been classified as mezzanine equity in the Company's balance sheet, as of January 31, 2017 and 2016.



During year ended January 31, 2017, the Company issued Series D Preferred shares, as follows:



· 1 share with a fair value of $100,000 in connection with the acquisition of XTELUS (see Note 5).· 20 shares with a fair value of $2,000,000 in connection with the acquisition of Connexum (See Note 5)

As of January 31, 2017 and 2016, 21 and 0 shares of Series D Preferred Stock were issued and outstanding, respectively.



Common stock



The Company is authorized to issue 14,900,000,000 shares of common stock at a par value of $0.001.



During the year ended January 31, 2017, the Company issued common shares, as follows:



· 2,054,226,375 common shares were issued for the conversion of debt and accrued interest of $615,528.· 41,000,000 common shares in exchange for the exercise of options for no consideration

During the year ended January 31, 2016, the Company issued common shares, as follows:



· 2,700,000 common shares with a fair market value of $54,000 to James E McCrink Trust in accordance with a settlement agreement reached with the latter on January 19, 2015 in connection with a complaint filed on November 4, 2014.· 21,000,000 shares with a fair value of $161,100 as compensation to board members and employees.· 16,150,000 shares with a fair value of $134,960 as compensation to consultants.· 4,587,156 shares with a fair value of $20,183 to settle a $40,000 payable. The Company recognized a gain on settlement of liabilities of $19,817.· 1,545,000 shares with a fair value of $13,042 as deferred financing fees· 4,960,000 shares in exchange for warrants for a total consideration of $496,000 (see Note 11).· 5,000,000 shares with fair value of $66,500 in connection with the acquisition of Net D’s assets (see Note 5).· 44,189,102 common shares were issued for the conversion of debt, accrued interest and associated fees of $121,958.

As of January 31, 2017, and 2016, 2,357,089,633 and 261,863,258 shares of common stock were issued and outstanding, respectively.





|                 
|-----------------
|F-27             
|                 
|Table of Contents



Warrants and Options



Warrants



As of January 31, 2017, and 2016, there are no warrants outstanding.



Options



The Company has 9,100,000 options issued in connection with the acquisition of Webrunner.



During year ended January 31, 2017, the Company entered into three separate agreements with consultants to provide the Company with consulting services in exchange for options of 17,000,000, 5,000,000 and 17,000,000 with an exercise price of $0, respectively. The options can be exercised by the holder any time prior to June 30, August 31, and September 30, 2016. These options were tainted as a result of the convertible notes with variable conversion rates (see Note 7) and were accounted for as derivative instruments at the time of issuance. The fair value of the derivatives related to the options amounting to $177,000 was recorded as stock compensation expense during the year ended January 31, 2017, with a corresponding credit to derivative liability (see Note 11).



On October 21, 2015, the Company entered into two separate agreements with consultants to provide the Company with consulting services in exchange for common shares of 20,000,000 and 7,000,000, respectively. In November 2015, the Company amended these two agreements. As a result of the amendment, the Company issued 27,000,000 stock options with an exercise price of $0.005 per share instead of the common shares. The options can be exercised by the holder any time prior to December 1, 2016. These options were tainted as a result of the convertible notes with variable conversion rates (see Note 9) and were accounted for as derivative instruments at the time of issuance. The fair value of the options amounting to $340,200 was recorded as stock compensation expense during the year ended January 31, 2016, with a corresponding credit to derivative liability (see Note 11).



During the year ended January 31, 2017, 41,000,000 options were exercise and the corresponding derivative liability at the date of exercise of $159,000 was credited to additional paid in capital.



During the year ended January 31, 2017, 25,000,000 options were forfeited, as a result, the company recorded gain on change in fair value of derivative of $81,472.



The following table summarizes information relating to outstanding and exercisable stock options as of January 31, 2017:



|                              |  | Options Outstanding |            
|----------------------------- |  | ------------------- | -----------
|                              |  |                     |            
|                              |  | Shares              |            
|                              |  |                     |            
|Outstanding, January 31, 2015 |  |                     | 9,100,000  
|Granted                       |  |                     | 27,000,000 
|Exercised                     |  |                     | -          
|Forfeited/canceled            |  |                     | -          
|Outstanding, January 31, 2016 |  |                     | 36,100,000 
|                              |  |                     |            
|Granted                       |  |                     | 39,000,000 
|Exercised                     |  |                     | (41,000,000
|Forfeited/canceled            |  |                     | (25,000,000
|Outstanding, January 1, 2017  |  |                     | 9,100,000  



|Options Outstanding |           |  | Options Exercisable                                    | 
|------------------- | --------- |  | ------------------------------------------------------ | 
|Number of Shares    |           |  | Weighted Average Remaining Contractual life (in years) | 
|                    | 9,100,000 |  |                                                        | 



The options have no intrinsic value at January 31, 2017.





|                 
|-----------------
|F-28             
|                 
|Table of Contents



Employee Incentive Bonus Plan



On June 27, 2016, the Company entered into employee agreement with two employees that contain preferred share issuance incentive bonuses based on various sales targets for XTELUS, for the 12- month period ending June 27, 2017. The first award contains cash compensation of $10,000 per month and the ability to earn 500,000 shares of Series B preferred stock if XTELUS revenue of $1,000,000 is generated within 12 months. The second award contains cash compensation of $20,000 per month, 5 shares of Series D preferred stock earned on June 27, 2017 (with 1 share earned immediately upon revenue of $100,000 being generated within first six months) and the ability to earn up to 6,500,000 shares of Series B preferred stock based upon XTELUS revenue targets up to $1,000,000 over 12 months and up to an additional 3,000,000 shares of Series B preferred stock based upon XTELUS revenue targets up between $1,000,000 and greater than $7,000,000 over 12 months. The Company assessed the probability that the revenue targets will be met and determined that the target revenue will most likely meet $1,000,000 and based on the stock awards, estimated the fair value of 6,500,000 shares of Preferred B stock at $32,500, 5 shares of Preferred D stock at $500,000 and 500,000 shares of Preferred B stock at $2,500, respectively. For the year ended January 31, 2017, the Company recognized stock based compensation of $361,000 under these awards, with a corresponding credit to additional paid in capital.



NOTE 14 – COMMITMENTS AND CONTINGENCIES



Rent



The lease is related to Webrunner business and on October 30, 2016, the Company entered into the sale of Webrunner business (See Note 6).



Rent expense from discontinued operations for the years ended January 31, 2017 and 2016 was $112,229 and $77,633, respectively.



Licensing Agreement / Deposit



On June 11, 2014, we entered into a license and subscription agreement with Cloud Medical Doctor Software Corporation formerly National Scientific Corporation (NSCT) which changed it’s name to Cipher Loc Corporation and ticker symbol to (CLOK) ("Cloud") for $1,125,000. The agreement grants to us a non-exclusive encryption license agreement which entitles us to utilize Cloud's encryption software solution within the Customer's business. We purchased a 48 months encryption licensing agreement to incorporate into our existing web based software. The licensing agreement will protect members of our platform from hackers and other privacy intrusion vehicles. CipherLoc has various features that will further protect our members and end users of our web developed platform. As of January 31, 2016, the software has not been delivered to the Company and as such the cash paid for the encryption licensing agreement of $1,125,000 has been accounted as a deposit. During the year ended January 31, 2016, the Company wrote off 50% of the deposit amounting to $562,500 to impairment expense and during the year ended January 31, 2017, the Company wrote off the rest of 50% of the deposit amounting to $562,500 to impairment expense.



Contingency



StoneRidge



Gawk contracted Stoneridge Capital, LLC. (“Stoneridge”) for Finance and Business Development services within the entertainment and technology sector that applies to Company’s business model. Subsequent to signing these agreements Gawk pivoted the company’s focus from the streaming media market to the telecommunications sector at which point Stoneridge’s services were no longer needed nor had any services to that point been received by the Company. Pursuant to the agreement, Gawk agreed to pay Stoneridge $750,000 but feel this amount is not owing. As of January 31, 2017 and 2016, $750,000 and $250,000 was recorded in accounts payable, respectively.





|                 
|-----------------
|F-29             
|                 
|Table of Contents



Windstream Holdings, Inc.



At the time of acquisition of Connexum, Windstream Holdings, Inc. ("Windstream"), a provider of voice and data network communications, and managed services, to businesses in the United States, claimed that Connexum owed them $600,000, which charges Connexum denies. In 2015, Connexum contracted with Windstream to purchase high cost long distance services. When receiving the initial invoices Connexum noticed the bill was not what was expected and issued a dispute for the incorrect charges and paid the non-disputed amount of just over $20,000. Then, without notice, Windstream turned off services. Shortly thereafter Windstream and Connexum disputed over high cost traffic. Windstream continued to bill Connexum for many months even after disconnecting its service, which ended up totaling nearly $580,000 of disputed fees. At the time of disconnection, there was approximately $20,000 in actual unpaid usage fees. It is unlikely that the Company would pay these fees. Windstream has not threatened litigation at this point and Connexum is actively working to settle the disputed amount.



On May 25, 2016, the Company reached a settlement with Windstream for $20,000, which the Company paid during the year ended January 31, 2017.



Tarpon Bay Partners LLC



On May 26, 2016, Tarpon Bay Partners, LLC (“Tarpon Bay”) initiated action against the Company in New York State Supreme Court, case #652178/2016. The company and Tarpon Bay Partners, LLC reached a settlement on December 29, 2016 and the Company paid $50,000 in accordance with the settlement agreement.



John Boritz



On or about November 11, 2016 a verified complaint was filed in the Circuit Court for Howard County, Maryland being case number C-16-107586-DT against the Company by an investor known as John Boritz. The Company intends to fervently defend the foregoing action.



NOTE 15 – INCOME TAXES



The benefit for income taxes from continued operations for the years ended January 31, 2017 and 2016 consist of the following:



|                                        |  | Year Ended  |           
|--------------------------------------- |  | ----------- | ----------
|                                        |  | January 31, |           
|                                        |  | 2017        |           
|Current:                                |  |             |           
|Federal                                 |  | $           | -         
|State                                   |  |             | -         
|                                        |  |             |           
|Deferred:                               |  |             |           
|Federal                                 |  | $           | 871,182   
|State                                   |  |             | 230,607   
|                                        |  |             | 1,101,789 
|Valuation allowance                     |  |             | (1,101,789
|Provision benefit for income taxes, net |  | $           | -         





|                 
|-----------------
|F-30             
|                 
|Table of Contents



The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:



|                                  |  | January 31, |   
|--------------------------------- |  | ----------- | --
|                                  |  | 2017        |   
|                                  |  |             |   
|Statutory federal income tax rate |  | (34%        | ) 
|State income taxes and other      |  |             | 9 
|Change in valuation allowance     |  |             | 34
|Effective tax rate                |  |             | - 



Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:



|                                |  | January 31, |           
|------------------------------- |  | ----------- | ----------
|                                |  | 2017        |           
|                                |  |             |           
|Net operating loss carryforward |  | $           | 4,517,999 
|Valuation allowance             |  |             | (4,517,999
|Deferred income tax asset       |  | $           | -         



Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The Company has a net operating loss carryforward of approximately $10,507,000 available to offset future taxable income through 2035. For income tax reporting purposes, the Company’s aggregate unused net operating losses are subject to limitations of Section 382 of the Internal Revenue Code, as amended. Under the Tax Reform Act of 1986, the benefits from net operating losses carried forward may be impaired or limited on certain circumstances. Events which may cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The consolidation of any limitations that may be imposed for future issuances of equity securities, including issuances with respect to acquisitions have not been determined. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company; it is more likely than not that the benefits will not be realized.



For the years ended January 31, 2017 and 2016, the difference between the amounts of income tax expense or benefit that would result from applying the statutory rates to pretax income to the reported income tax expense of $0 is the result of the net operating loss carryforward and the related valuation allowance.



The Company anticipates it will continue to record a valuation allowance against the losses of certain jurisdictions, primarily federal and state, until such time as it is able to determine it is “more-likely-than-not” the deferred tax asset will be realized. Such position is dependent on whether there will be sufficient future taxable income to realize such deferred tax assets. The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction.



Tax returns for the years ended 2011 through 2017, are subject to examination.





|                 
|-----------------
|F-31             
|                 
|Table of Contents



NOTE 16 – RELATED PARTY TRANSACTIONS



During the years ended January 31, 2017 and 2016, the CEO advanced the Company cash of $200, and $0, respectively.



During the years ended January 31, 2017, the Company paid a total of $218,500 consulting fees to Scrip2Screen, an entity owned by Scott Kettle.



On January 31, 2017, the Company issued 2 Series C Preferred shares with a fair value of $2,000,000 as settlement of amounts due to the CEO and CFO totaling $435,200. As a result, the Company recorded a loss on settlement of liabilities of $1,564,800. The Company leases executive housing for the CFO and rent expense of $44,000 was also settled by the issuance of this preferred stock.



On December 21, 2015, the Company issued 25,000,000 Series B Preferred shares with a fair value of $415,625 and 3 Series C Preferred shares with a fair value of $3,000,000 as settlement of amounts due to the CEO totaling $438,854. As a result, the Company recorded a loss on settlement of liabilities of $2,976,771.



As of January 31, 2017, and 2016, the amount owed to the CEO and CFO was $0 and $0, respectively.



As of January 31, 2017, and 2016, the Company has outstanding notes payable to Net D totaling to $773,599 and $1,257,250, respectively, in connection with the Company’s acquisition of Connexum and certain assets of Net D (see Note 8). The sole owner of Net D is a director the Company. Net D also performs certain services for the Company in connection with the latter’s Carrier Services business. During the year ended January 31, 2017 and 2016, the Company incurred total fees in connection with such services of $63,334 and $133,436, respectively. As of January 31, 2017, and 2016, the Company has an outstanding payable to Net D of $235,917 and $27,942, respectively.



NOTE 17 – SUBSEQUENT EVENTS



Subsequent to January 31, 2017 through September 28, 2017, the Company had the following transactions:



· Issued an aggregate of 3,985,956,874 common shares were issued for the conversion of debt, accrued interest and associated fees of $214,708.· The Company assigned 11 notes with principal amounts and accrued interest totaling to $301,324 to one lender which resulted to the payment of settlement premiums amounting to $90,397.· On March 30, 2017, the Company entered into a Settlement Agreement with the former directors and officers of Webrunners.· On February 27, 2017, the Company entered into an equity financing agreement. The Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, up to that number of Shares having an aggregate Purchase Price of $7,000,000.



|                 
|-----------------
|F-32             
|                 
|Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure



There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods.



Item 9A. Controls and Procedures



Evaluation of Effectiveness of Disclosure Controls and Procedures



Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, as of January 31, 2017, concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure for the reasons noted below.



Management's Report on Internal Control Over Financial Reporting



Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.



Our 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 assets of our company; and



Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and



That our receipts and expenditures are being made only in accordance with authorizations of our company's management and directors; and



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



As of January 31, 2017, management conducted an evaluation of the effectiveness of internal control over financial reporting based on criteria established in Internal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting for that period was not effective.





|                 
|-----------------
|19               
|                 
|Table of Contents



Management has identified the following material weaknesses and is taking action to remedy and remove the weakness in its internal controls over financial reporting:



· Lack of an independent board of directors, including an independent financial expert. The current board of directors is evaluating expanding the board of directors to include additional independent directors. The current board is composed of three (3) members and may be expanded to as many as seven members under our company’s Articles of Incorporation and By-Laws.· Lack of segregation of duties and adequate documentation of our internal controls.· The inability of our company to prepare and file its financial statements timely due to its limited financial and personnel resources.· Lack of multiple levels of review in our company’s financial reporting process.

Changes in internal control over financial reporting



There were no changes in our internal control over financial reporting identified by management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Limitations on the Effectiveness of Controls



Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or Board override of the control.



The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



This annual report does not include a standard internal control report by our company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our company’s registered public accounting firm pursuant to current rules of the SEC that permit our company, as a smaller reporting company, to provide only management’s report in this annual report.



Item 9B. Other Information



None.





|                 
|-----------------
|20               
|                 
|Table of Contents



PART III



Item 10. Directors, Executive Officers and Corporate Governance



All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:







|Name            |  | Position Heldwith the Company                                                        |  | Age |  | Date First Elected or Appointed
|--------------- |  | ------------------------------------------------------------------------------------ |  | --- |  | -------------------------------
|                |  |                                                                                      |  |     |  |                                
|Scott Kettle    |  | Chief Executive Officer, President, Chief Information Officer, Chairman and Director |  | 49  |  | July 31, 2013                  
|                |  |                                                                                      |  |     |  |                                
|Chris Hall      |  | Chief Financial Officer and Director                                                 |  | 60  |  | May 13, 2014                   
|                |  |                                                                                      |  |     |  |                                
|Michael Selsman |  | Secretary and Director                                                               |  | 80  |  | May 13, 2014                   
|                |  |                                                                                      |  |     |  |                                
|Vincent Cuzzo   |  | Director                                                                             |  | 59  |  | July 5, 2016                   



Business Experience



The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.



Scott Kettle – Chief Executive Officer, Chief Information Officer, Chairman, President and Director



Mr. Kettle, is the founder of a series of successful family-owned and operated public companies in the telephony and telecommunications industry in the wake of the government-mandated break-up of AT&T’s monopoly some 25 years ago. Beginning with Thrifty-Tel (TTEL) in partnership with his father William Kettle, a steeply discounted provider of long-distance telephone service and pioneer of Flat Rate Communications, Kettle moved on to the wholesale sector serving as CIO for Five Star Telecom from 1994 to 1999. In 1998, Mr. Kettle founded and served as President and CEO of Tele Com Specialists, Inc. a software company. Kettle moved into the emerging DSL area, founding SpeeDsl, Inc.



Mr. Kettle’s extensive public company experience and more than twenty-five years of executive management give him the qualifications and skills to serve as a senior executive for the Gawk team



Chris Hall – Chief Financial Officer and Director



Chris Hall is a noted VoIP Networking Leader. Chris has been designing, deploying and operating VOIP networks since 1998 and has been in telecommunications since his initial four year entry to the industry with AT&T (Pacific Telephone) beginning in 1978. He has been a serial entrepreneur for the last twenty years, starting up or advancing many telecom companies to the point where they could be sold to larger (often public) firms.



Global deregulation of telecoms and the development of VOIP technology combined to give Chris the opportunity to apply his USC undergraduate degree in International Relations and his UCLA M.B.A. in Finance to start building wholesale international simple resale (ISR) routes in 1998, he built and operated routes under FCC Section 214 license to every region of the world - a total of 15 countries, including: Costa Rica, Jamaica, Mexico, Vietnam, China, Thailand, Philippines, Japan, India, Bangladesh, Egypt, Ghana, Netherlands, the United Kingdom and most recently Panama, Uruguay and Argentina. In most cases, he visited each of these countries personally (more than once), and became familiar with the local business practices and import/export requirements. He returned with more than just "routes" and extra passport pages as he collected children’s dolls, in native costume, from each country for his youngest daughter - giving her the best doll collection in the neighborhood.





|                 
|-----------------
|21               
|                 
|Table of Contents



During this time Chris became operationally qualified on Cisco, Excel and Nuera equipment, building on top of his degree in Data Communications Engineering, as well as mastering telecom billing applications software and advanced database programs (like MS Sequel). With a staff of three people, he did most of the operational work, and sub-contracted out as required. Chris also did much of the sales, and is well known amongst the international wholesale community.



The proliferation of Competitive Local Exchange Carriers (CLEC's) made possible by the 1996 Telecom Act, the declining cost of VOIP equipment and the availability of next generation Session Border Controllers (SBC's) like Nextone and Sansay gave Chris a new challenge and opportunity in 2003 - to apply his VOIP expertise to the domestic (USA) market, this time building on his AT&T experience. This meant less travel and more stability. He built a profitable 30 million minute per month carrier with a capital investment of less than $350,000, annualized revenue reached over $3.5M from scratch in a short two year period, while still preserving his operational & sales involvement. Chris is operationally well qualified on OpenSIPS, Nextone and Sansay Session Border Controllers (aka Softswitches) and is well known to most major and minor wholesale carriers in the USA and many abroad.



Chris is a recognized VOIP industry leader, he has spoken at several trade shows and conferences such as Comptel, VON and Intelecard, and is a member of several industry associations, including Comptel, the Pacific Telecommunications Council and the West Coast Carrier Forum.



Michael Selsman – Secretary and Director



Michael Selsman has been an executive with 20th Century-Fox, Paramount, MGM, Samuel Goldwyn, Jr., at Goldwyn Studios, and Universal. He was also a talent agent, representing Judy Garland, Marilyn Monroe, Peter Sellers, Marlene Dietrich, Henry, Jane, and Peter Fonda, Mervyn LeRoy, James Stewart, Lawrence Harvey, Rock Hudson, James Mason, James Garner, Alan Arkin, and Robert Redford, as well as authors Truman Capote and Roald Dahl, among others. He also worked with Bing Crosby Productions on "Ben Casey", "Medic", "Slattery's People" and "Hogan's Heroes".



As a film producer, he associate-produced “Gotcha,” distributed by Universal, co-developed 18 motion picture projects at MGM, facilitated production of the feature film "Dirty Little Billy,” for Columbia Pictures, and was involved in developing "Bury My Heart at Wounded Knee,"by Dee Brown, 'World Without End, Amen," by Jimmy Breslin, "I, Robot," by Issac Asimov, “RFK Must Die,” and "The Fortunate Pilgrim,"by Mario Puzo. He also co- or line-produced films made in Berlin, Spain, Arizona, Florida, Montana, Wyoming, Texas and Arkansas. With Orson Welles, he developed “RFK Must Die,” a film project about the assassination of Robert Kennedy. He has written screenplays for Hemdale Pictures, MGM, Robert Halmi Production, New World Pictures, and others.



He is considered an expert source on international entertainment and has been quoted in such publications as Time, Newsweek, TV Guide, and in various newspapers and books on the subjects of contracts and changing mores and social values in the media and commenting on Hollywood studio history,. He has also appeared on national and international television programs, such as ABC-TV’s “The Dark Side of Camelot,” hosted by the late Peter Jennings, “Current Affair,” on Fox-TV, “Hard Copy,” for CBS-TV, “Marilyn: Contre-Enquette Sur Une Mort Suspect,” one-hour investigative program for French TV, “The Final Day,” one-hour investigative program for London’s Channel 4, and, most recently, filmed a segment for CBS News’ “48 Hours.”



He also served US Senator Dianne Feinstein as Deputy State Finance Director for her initial Senatorial campaign. He was recently in an advisory capacity for Marianne Williamson in her campaign for the 33rd Congressional District, and is advising Heidi Shink in her campaign for City Council, West Hollywood.



Serving for five years as Chairman of the Public Relations Committee and on the Foundation Board of Directors of St. Vincent Medical Center, Los Angeles, Selsman created and edited a quarterly, leading-edge journal, Medical-Science News.



Selsman has represented and worked with Neah Power Systems (NPWZ), where he was also a member of the Board of Directors; Buzz Technologies, Inc. (BZTG), Archer Entertainment Media Communications, Inc. (AEMC), where he also functioned as CEO; Advanced Technetix (AKYI), The Sinclair Private Fund, Signal Capital Hedge Fund, Applied DNA Sciences, Inc. (APDN), Herman Miller Workplace Resource, Inc., BKM Total Office, Investprivate.com, Alpha Spacecom, Inc. (ASPC) Creditz, Inc. (CEOA), Innovative Marketing, Inc. (INOV), Advanced Recycling (ARYC), Color Imaging, Inc.(CIMG), Electropure (ELTP), XO Communications (XOXO), Gene Cell (GCLL), Precom Technology (PMMT), Cyper Media (CYPR), Los Angeles Stars ABA franchise, Travel Dynamics (TDMN), Brilliant Digital Entertainment, Koo Koo Roo, American Technology Group, Texas Capital, Securities America, Newport West Financial, 20th Century-Fox, MGM, Donald T. Sterling Corporation, Los Angeles Clippers NBA franchise, and Fred Sands Realtors, among others.





|                 
|-----------------
|22               
|                 
|Table of Contents



He has guest-lectured at schools and universities such as UCLA, USC, Pepperdine, Westlake, Mount St. Mary's and Loyola, and has been quoted in Time, Newsweek, TV Guide and various books and newspapers, on contracts and changing social mores and values in the media. He has also appeared on national and European network television programs commenting on Hollywood studio history.



Vincent Cuzzo –Director



Mr. Cuzzo founded the CLP Group, LLC in 1997. He is a Certified Public Accountant by trade and has worked in both the public and private sector. Prior to starting the Company, Mr. Cuzzo was a Chief Financial Officer for a publicly traded equipment leasing company during which time he was a member of the Accounting Standards Board of Directors for the Computer Dealers and Lessors' Association (CDLA). His private industry experience also includes senior management positions in the Media, Graphic Arts and Telecommunications industries.



Family Relationships



There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.



Involvement in Certain Legal Proceedings



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





| | 1. | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 2. | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 3. | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 4. | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 5. | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 6. | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.                                                                                                                                                                                                                                                                              





|                 
|-----------------
|23               
|                 
|Table of Contents



Compliance with Section 16(A) of the Securities Exchange Act of 1934



Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.



To date, our former and current executive officers, directors and persons who own more than 10% of a registered class of our equity securities have not met the filing requirements applicable to them. Our current management and directors need to file Form 3 and /or Form 5 for the issuance of common shares.



Code of Ethics



We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller. We only have two officer’s and four directors and do not believe we need a code of ethics at this time.



Committees of the Board



Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors.



Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.



A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our President at the address appearing on the first page of this annual report.



Board and Committee Meetings



Our board of directors held no formal meetings during the year ended January 31, 2017. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.



Audit Committee Financial Expert



Currently our audit committee consists of our entire board of directors. We do not currently have a director who is qualified to act as the head of the audit committee.





|                 
|-----------------
|24               
|                 
|Table of Contents



Item 11. Executive Compensation



The particulars of the compensation paid to the following persons:





| | (a) | our principal executive officer;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (b) | each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended January 31, 2017 and 2016; and                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (c) | up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended January 31, 2017 and 2016, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:





|SUMMARY COMPENSATION TABLE                         
|---------------------------------------------------
|Name and Principal Position                        
|                                                   
|Scott Kettle President, CEO, Treasurer and Director
|                                                   
|Chris Hall CFO and Director                        
|                                                   
|Michael Selsman Secretary and Director             



Grants of Plan-Based Awards



During the fiscal year ended January 31, 2017 we did not grant any stock options.



Option Exercises and Stock Vested



During our fiscal year ended January 31, 2017 there were no options exercised by our named officers.





|                 
|-----------------
|25               
|                 
|Table of Contents



Compensation of Directors



Our current compensation policy for directors is to compensate them through options to purchase common stock or through common stock as consideration for their joining our board and/or providing continued services as a director. We do not currently provide our directors with cash compensation, although we do reimburse their expenses, with exception for a chairman of the board. No additional amounts are payable to our company’s directors for committee participation or special assignments. There are no other arrangements pursuant to which any directors was compensated during our company’s last completed fiscal year for any service provided except as follows:



On August 20, 2013 our company entered into an employment agreement with Scott Kettle the Chief Executive Officer and Christopher G. Hall. The Fixed Annual Compensation. Our company shall pay to Employee salary ("Fixed Annual Compensation") at the rate of $360,000 per annum beginning on December 21, 2016; at the rate of $420,000 per annum beginning on December 21, 2017; and at the rate of $480,000 per annum beginning on December 21, 2018. Fixed Annual Compensation is payable to the Employee in accordance with our company’s usual salary practices, but in no event less than once monthly.



The Agreement allows for Bonus of the highest bonus incentive program (hereafter “BIP”) set up by the Board. While the specific structure and trigger mechanisms for the BIP are at the sole discretion of the Board, the BIP shall afford Employee the opportunity to earn a minimum of $150,000 per year in cash bonuses through the Employee’s accomplishment of specific pre-identified reasonable milestones in the development of our company’s business, or by exceeding the approved business plan revenue and income levels. Any payments under the BIP shall be paid annually to Employee and shall be paid no later than the end of the first quarter following our company’s fiscal year-end. In addition to the BIP, Employee shall also be entitled to such additional bonus, if any, as may be granted by the Board (with Employee abstaining from any vote thereon) or compensation or similar committee thereof in the Board's (or such committee's) sole discretion based upon employee's performance of his Services under this Agreement.



Additional Compensation. The Employee shall be entitled to receive an annual bonus no less than Two Percent (2%) of Adjusted Gross Sales. For the purpose of this Agreement, Adjusted “Adjusted Gross Sales” shall mean Gross Sales minus all fixed costs. Further, the Employee shall be entitled to receive such additional bonus payments or incentive compensation as may be determined at any time or from time to time by the Board of Directors of our company (or any authorized committee thereof) in its discretion, but no less than once every quarter.



Asset Sale or Merger. In the event of a sale of all of the assets or a merger in which our company is not the surviving entity and in which our company is valued at $50,000,000 or more, Employee will be entitled to the greater of 5 of the gross proceeds of the value of the transaction or $2,500,000 in cash to be paid upon the transaction’s closing.



The Agreement allows for standard vacation, health, participation in employee benefit plan among other things.



We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.



Pension, Retirement or Similar Benefit Plans



There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.



Indebtedness of Directors, Senior Officers, Executive Officers and Other Management



None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.





|                 
|-----------------
|26               
|                 
|Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



The following table sets forth, as of October 20, 2017, certain information with respect to the beneficial ownership of our common and preferred shares by each shareholder known by us to be the beneficial owner of more than 5% of our common and preferred shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common and preferred stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common and preferred stock, except as otherwise indicated.





|Name and Address of Beneficial Owner                                         |  | Title of Class                                                                                   |  | Amount and Nature of Beneficial Ownership(1)                                                                   |  | Percentage of Class        
|---------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------- |  | ---------------------------
|Scott Kettle c/o Gawk 5300 Melrose Avenue, Suite 42 Los Angeles, CA 90038    |  | Common Stock Series A Preferred Stock(2) Series B Preferred Stock(3)Series C Preferred Stock(4)  |  | 83,000,000 500 25,000,000 4                                                                                    |  | 1.309% 50% 36.66% 25%      
|                                                                             |  |                                                                                                  |  |                                                                                                                |  |                            
|Chris Hall c/o Gawk 5300 Melrose Avenue, Suite 42 Los Angeles, CA 90038      |  | Common Stock Series A Preferred Stock(2) Series B Preferred Stock(3) Series C Preferred Stock(4) |  | 8,000,000 500 25,000,000 4                                                                                     |  | 0.126% 50% 36.66% 25%      
|                                                                             |  |                                                                                                  |  |                                                                                                                |  |                            
|Michael Selsman c/o Gawk 5300 Melrose Avenue, Suite 42 Los Angeles, CA 90038 |  | Common Stock                                                                                     |  | 3,000,000                                                                                                      |  | 0.047%                     
|                                                                             |  |                                                                                                  |  |                                                                                                                |  |                            
|Vincent Cuzzo c/o Gawk 5300 Melrose Avenue, Suite 42 Los Angeles, CA 90038   |  | Common Stock Series A Preferred Stock(2) Series B Preferred Stock(3)Series C Preferred Stock(4)  |  | - - - -                                                                                                        |  | - - - -                    
|                                                                             |  |                                                                                                  |  |                                                                                                                |  |                            
|Directors and Executive Officers as a Group                                  |  |                                                                                                  |  | 94,000,000Common 1,000 Series A Preferred Stock 25,000,000 Series B Preferred Stock 8 Series C Preferred Stock |  | 1.482% 100% 45.118% 43.750%
|                                                                             |  |                                                                                                  |  |                                                                                                                |  |                            
|7TCNW General Partnership 26475 Rancho Parkway South Lake Forest CA 92630    |  | Series B Preferred Stock(3)                                                                      |  | 5,000,000                                                                                                      |  | 7.333%                     
|                                                                             |  |                                                                                                  |  |                                                                                                                |  |                            
|Doyle Knudson 8923 N. Martingale Rd Paradise Valley AZ 85253-2052            |  | Series C Preferred Stock(4)                                                                      |  | 7                                                                                                              |  | 43.750%                    

________



|(1) | Under Rule 13d-3, a beneficial owner 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 20, 2017. As of October 20, 2017 there were 6,342,546,507 shares of our company’s common stock issued and outstanding.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | As at October 20, 2017 there were 1,000 shares of Series A Preferred stock issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | As at October 20, 2017 there were 68,187,500 shares of Series B Preferred stock issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | As at October 20, 2017 there were 16 shares of Series C Preferred stock issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





|                 
|-----------------
|27               
|                 
|Table of Contents



Changes in Control



We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.



Item 13. Certain Relationships and Related Transactions, and Director Independence



Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended January 31, 2017, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.



Director Independence



We currently act with four directors, Scott Kettle, Chris Hall, Michael Selsman and Vincent Cuzzo.



We have determined that Vincent Cuzzo is an independent director, as that term is used in Rule 4200(a)(15) of the Rules of National Association of Securities Dealers.



Currently our audit committee consists of Vincent Cuzzo and Scott Kettle who also serve on the board of directors. We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.



From inception to present date, we believe that the members of our audit committee and the board of directors have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.





|                 
|-----------------
|28               
|                 
|Table of Contents



Item 14. Principal Accounting Fees and Services



The aggregate fees billed for the most recently completed fiscal year ended January 31, 2017 and for fiscal year ended January 31, 2016 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 these fiscal periods were as follows:





|                   |  | Year Ended       |       
|------------------ |  | ---------------- | ------
|                   |  | January 31, 2017 |       
|Audit Fees         |  | $                | 39,000
|Audit Related Fees |  | Nil              |       
|Tax Fees           |  | Nil              |       
|All Other Fees     |  | Nil              |       
|Total              |  | $                | 39,000



Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.



Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.





|                 
|-----------------
|29               
|                 
|Table of Contents



PART IV



Item 15. Exhibits, Financial Statement Schedules





|(a) | Financial Statements
|--- | --------------------





| | (1) | Financial statements for our company are listed in the index under Item 8 of this document.                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                               
| | (2) | All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.





|(b) | Exhibits
|--- | --------





|Exhibit Number |  | Description                                                                                  
|-------------- |  | ---------------------------------------------------------------------------------------------
|(31)           |  | Rule 13a-14 (d)/15d-14d) Certifications                                                      
|31.1*          |  | Section 302 Certification by the Principal Executive Officer                                 
|31.2*          |  | Section 302 Certification by the Principal Financial Officer and Principal Accounting Officer
|(32)           |  | Section 1350 Certifications                                                                  
|32.1**         |  | Section 906 Certification by the Principal Executive Officer                                 
|32.2**         |  | Section 906 Certification by the Principal Financial Officer and Principal Accounting Officer
|101***         |  | Interactive Data File                                                                        
|101.INS        |  | XBRL Instance Document                                                                       
|101.SCH        |  | XBRL Taxonomy Extension Schema Document                                                      
|101.CAL        |  | XBRL Taxonomy Extension Calculation Linkbase Document                                        
|101.DEF        |  | XBRL Taxonomy Extension Definition Linkbase Document                                         
|101.LAB        |  | XBRL Taxonomy Extension Label Linkbase Document                                              
|101.PRE        |  | XBRL Taxonomy Extension Presentation Linkbase Document                                       

______

* Filed herewith.

** Furnished herewith

**** Previously filed on Form 10-K on October 23, 2017*



30Table of Contents





SIGNATURES



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





|                        |  | GAWK INCORPORATED                                                          | 
|----------------------- |  | -------------------------------------------------------------------------- | 
|                        |  | (Registrant)                                                               | 
|                        |  |                                                                            | 
|Dated: October 24, 2017 |  | /s/ Scott Kettle                                                           | 
|                        |  | Scott Kettle                                                               | 
|                        |  | Chief Executive Officer, President, Chief Information Officer and Director | 
|                        |  | (Principal Executive Officer)                                              | 
|                        |  |                                                                            | 
|Dated: October 24, 2017 |  | */s/ Chris Hall*                                                           | 
|                        |  | Chris Hall                                                                 | 
|                        |  | Chief Financial Officer and Director                                       | 
|                        |  | (Principal Financial Officer and Principal Accounting Officer)             | 



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 dates indicated.





|Dated: October 24, 2017 |  | /s/ Scott Kettle                                                           | 
|----------------------- |  | -------------------------------------------------------------------------- | 
|                        |  | Scott Kettle                                                               | 
|                        |  | Chief Executive Officer, President, Chief Information Officer and Director | 
|                        |  | (Principal Executive Officer)                                              | 
|                        |  |                                                                            | 
|Dated: October 24, 2017 |  | /s/ Chris Hall                                                             | 
|                        |  | Chris Hall                                                                 | 
|                        |  | Chief Financial Officer and Director                                       | 
|                        |  | (Principal Financial Officer and Principal Accounting Officer)             | 
|                        |  |                                                                            | 
|                        |  |                                                                            | 
|Dated: October 24, 2017 |  | /s/ Michael Selsman                                                        | 
|                        |  | Michael Selsman                                                            | 
|                        |  | Secretary and Director                                                     | 
|                        |  |                                                                            | 
|                        |  |                                                                            | 
|Dated: October 24, 2017 |  | /s/ Vincent Cuzzo                                                          | 
|                        |  | Vincent Cuzzo                                                              | 
|                        |  | Director                                                                   | 







|31
|--