UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended June 30, 2015





oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934





For the transition period from ______ to _______





Commission File Number:
000-55137SOLO INTERNATIONAL, INC.(Name of small business issuer in its charter)Nevada
68-0680819(State or other jurisdiction of incorporation or organization
(I.R.S. Employer Identification No.)871 Coronado Center Drive,  Suite 200, Henderson, NV 89052(Address of principal executive offices)(Zip Code)(888) 612-9246(Registrant’s telephone number)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.





Yes [X]

No [  ]





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).





Yes [  ]

No [X]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.





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





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





Yes [  ]

No [X]





As of August 14, 2015, there were 717,904,484 shares of the registrant’s $0.001 par value common stock issued


(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.)


SOLO INTERNATIONAL, INC. *





TABLE OF CONTENTS





PagePART I.             FINANCIAL INFORMATIONITEM 1.
FINANCIAL STATEMENTS
3ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
4ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
6ITEM 4.
CONTROLS AND PROCEDURES
7PART II.            OTHER INFORMATIONITEM 1.
LEGAL PROCEEDINGS
8ITEM 1A.
RISK FACTORS
8ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
8ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
8ITEM 4.
MINE SAFETY DISCLOSURES
8ITEM 5.
OTHER INFORMATION
8ITEM 6.
EXHIBITS
9SIGNATURES
10





Special Note Regarding Forward-Looking Statements





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





*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," “SLIO,” “SOLO,” the "Company," refers to Solo International, Inc.








2


PARTI - FINANCIAL INFORMATION





ITEM 1.                FINANCIAL STATEMENTS





SOLO INTERNATIONAL, INC.


Consolidated Financial Statements


(Expressed in US dollars)


June 30, 2015





Financial Statement Index
PageConsolidated Balance Sheets (unaudited)

F-1Consolidated Statements of Operations (unaudited)

F-2Consolidated Statements of Cash Flows (unaudited)

F-3Notes to the Consolidated Financial Statements (unaudited)

F-4 to F-19














3


SOLO INTERNATIONAL, INC.


CONSOLIDATED BALANCE SHEETS





June 30, 2015

(unaudited)


September 30, 2014

(audited)ASSETSCurrentCash

$
9


$
20Prepaid expense


664



882Total Current Assets


673



902Total Assets

$
673


$
902LIABILTIES  AND STOCKHOLDERS’ EQUITY (DEFICIENCY)Current liabilitiesAccounts payable and accrued liabilities

$
190,583


$
164,763Accounts payable and accrued liabilities, related party


4,922



4,592Advances from related parties


6,417



6,417Convertible promissory notes, net (Note 5)


455,000



507,344Derivate liabilities


894,113



335,918Total Current Liabilities


1,551,035



1,019,034STOCKHOLDERS’ EQUITY (DEFICIENCY)Common stock: 900,000,000 shares authorized, at $0.001 par value 685,646,419 and 497,690,625 shares issued and outstanding as at June 30, 2015 and September 30, 2014, respectively


685,646



497,691Capital in excess of par value


(323,832
)


(117,245
)Accumulated Deficit


(1,912,176
)


(1,398,578
)Total Stockholders’ Equity (Deficiency)


(1,550,362
)


(1,018,132
)Total Liabilities and Stockholders’ Equity (Deficiency)

$
673


$
902





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











F-1


SOLO INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


For the nine month periods ended June 30, 2015 and 2014


(unaudited)








Three months ended

June 30,


Nine months ended

June 30,2015


2014


2015


2014REVENUE

$



$
-


$



$
-EXPENSESProfessional fees


3,680



3,893



18,946



34,853Management fees


10,500



7,500



28,500



26,000Other general and administrative expenses


2,746



3,852



9,019



15,129OPERATING LOSS


(16,926
)


(15,245
)


(56,465
)


(75,982
)OTHER INCOME (EXPENSES)Change in fair value of derivative liabilities


(431,935
)


1,624



(389,063
)


4,064Interest expenses


(26,738
)


(31,721
)


(68,070
)


(103,159
)NET LOSS


(475,599
)


(45,342
)


(513,598
)


(175,077
)Basic and diluted loss per share

$
(0.00)
*


(0.00)
*


(0.00)
*


(0.00)
*Weighted average number of shares outstanding, basic and diluted


620,710,848



330,544,324



564,383,453



302,469,882


*
Less than $0.01 per share





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








F-2


SOLO INTERNATIONAL, INC,


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the nine month periods ended June 30, 2015 and 2014


(unaudited)





Nine Months Ended

June 30,2015


2014CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(513,598
)

$
(175,077
)Adjustment to reconcile net loss to net cash (used in) operating activities:Change in fair value of derivative liabilities


389,063



(4,064
)Interest expense-Amortization on discount of convertible promissory notes


31,656



61,763Changes in operating assets and liabilities:(Increase) decrease in prepaid expense


218



68Increase (decrease) in accounts payable and accrued liabilities


42,150



34,328Net cash provided by (used) in operating activities


(50,511
)


(82,982
)CASH FLOWS FROM INVESTING ACTIVITIES:Net cash used in investing activities


-



-CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from convertible notes payable


50,500



83,000Net cash provided by financing activities


50,500



83,000Increase (decrease) in cash during the period


(11)



18Cash, beginning of period


20



-Cash, end of period

$
9


$
18Supplemental cash flow information:Cash paid for:Interest

$
-


$
-Taxes

$
-


$
-Non-cash transactions:Shares issued for convertible notes

$
84,000


$
37,500Shares issued for accrued interest


16,000



-





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








F-3


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





1. ORGANIZATION





SOLO INTERNATIONAL, INC. was founded in the State of Nevada on April 30, 2010 as a Poland based corporation intending to provide services in interior architectural design in Poland.





On October 12, 2011, Mr. Michel Plante acquired control of three million (3,000,000) pre-split shares of the Company’s issued and outstanding common stock, representing approximately 77.32% of the Company’s total issued and outstanding common stock, from Mr. Yury Shcharbakou in accordance with a stock purchase agreement by and between Mr. Plante and Mr. Shcharbakou, thus effecting a change in control of the Company.





On October 13, 2011, the Board of Directors of the Company authorized a forward split of its issued and outstanding common shares, whereby every one (1) old share of common stock will be exchanged for one hundred (100) new shares of the Company's common stock.





The effect of the stock split has been recognized retroactively in the stockholders’ deficit accounts as of April 30, 2010, and in all shares and per share data in the financial statements.





With the change in control of the Company, management determined not to pursue its operations in Poland and determined to enter into the mining business in the Province of Quebec and incorporated a wholly-owned Quebec subsidiary, 9252-4768 Quebec Inc. On November 15, 2011, the Company, through its wholly-owned Quebec subsidiary, entered into a Property Option Agreement with 9228-6202 Quebec Inc., a Quebec corporation. Pursuant to the Option Agreement, 9252-4768 Quebec Inc. acquired the exclusive option to acquire an undivided 100% right, title and interest in and to certain mineral claims located in Portland Township, Outaouais, Quebec subject to a royalty reserved to 9228-6202 Quebec Inc.





The Company's principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable, however additional exploratory efforts are planned to be undertaken.





To date the Company has not generated any revenue and has an accumulated deficit of $1,912,176.





2. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS





The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis of Presentation


The financial statements present the balance sheets and statements of operations, stockholders' equity (deficit) and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.








F-4





SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Going Concern


The consolidated financial statements have been prepared on a going concern basis that assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $1,912,176 as of June 30, 2015 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.





Cash and Cash equivalents


For purposes of Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of six months or less to be cash equivalents.





Foreign Currency Translation


The Company's functional currency and its reporting currency is the United States dollar.





Stock-based Compensation


The Company records stock based compensation in accordance with the guidance in ASC Topic 718, which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.





Income Taxes


The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.





Basic and Diluted Loss Per Share


Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.





The Company had the following potential common stock equivalents at June 30, 2015:





Warrants


325,000Convertible Notes (Note 6(i))


973,333,333Convertible Notes (Note 6(ii))


133,333,333Convertible Notes (Note 6 (iii))


45,166,667Convertible Notes (Note 6(iv))


127,500,000Convertible Notes (Note 6(v))


100,000,0001,379,658,333





Since the Company reflected a net loss in the periods ended June 30, 2015 and 2014, respectively, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive.  A separate computation of diluted earnings (loss) per share is not presented.





F-5


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Mineral Property Costs


Mineral exploration and development costs are accounted for using the successful efforts method of accounting.





Property acquisition costs - Mineral property acquisition costs are capitalized as mineral exploration properties. Upon achievement of all conditions necessary for reserves to be classified as proved, the associated acquisition costs are reclassified to prove properties





Exploration costs - Geological and geophysical costs and the costs of carrying and retaining undeveloped properties are expensed as incurred.





Impairment of Mineral Properties


Unproved mineral properties are assessed at each reporting period for impairment of value, and a loss is recognized at the time of the impairment by providing an impairment allowance. An asset would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount by which the carrying value exceeds its fair value. Because the Company uses the successful efforts method, the Company assesses its properties individually for impairment, instead of on an aggregate pool of costs. Impairment of unproved properties is based on the facts and circumstances surrounding each lease and is recognized based on management’s evaluation. Management’s evaluation follows a two-step process where (1) recoverability of the carrying value of the asset is reviewed to determine if there is sufficient value recoverable to support the capitalized value at the report date; and, (2) If assets fail the recoverability test, impairment testing is conducted, including the evaluation of various criteria such as: prior history of successful operations; production currently in place and/or future projected cash flows (if any); reserve reports or evaluations from which management can prepare future cash flow analyses; the Company’s ability to monetize the asset(s) under evaluation; and, Management’s intent regarding future development.





Beneficial Conversion Feature


From time to time, the Company may issue convertible notes that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of any attached equity instruments, if any related equity instruments were granted with the debt. In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.





Fair value of financial instruments


The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:





F-6





SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Fair value of financial instruments(continued)





·Level 1: Quoted prices in active markets for identical assets or liabilities.





·Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.





·Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.





The following are the major categories of liabilities measured at fair value on a recurring basis as of June 30, 2015 and September 30, 2014, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):





June 30,

2015


September 30,2014Derivative liabilities
Level 3

$
894,113


$
335,918





Derivative Liabilities


Fair value accounting requires bifurcation of embedded derivative instruments, such as ratchet provisions or conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.





Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.





Recent Accounting Pronouncements


In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts. Currently, debt issuance costs are presented as a deferred asset. The recognition and measurement requirements will not change as a result of this guidance. The standard is effective for the annual reporting periods beginning after December 15, 2015 and will be applied on a retrospective basis. This amendment will not have a material impact on our financial statements.





There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of June 30, 2015, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.


F-7


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





4. MINERAL PROPERTIES





Portland Township


On November 15, 2011, the Company through its wholly-owned Quebec subsidiary, 9252-4768 Quebec Inc., entered into a Property Option Agreement with 9228-6202 Quebec Inc., a Quebec corporation (the “Optionor”). Pursuant to the option agreement, the Company received the exclusive option to acquire an undivided 100% right, title and interest in and to certain mineral claims located in Portland Township, Outaouais, Quebec subject to a royalty reserved to the Optionor.





As part of the terms of the agreement the Company was required to make cumulative cash payments of $205,000 and to issue an aggregate number of restricted shares of common stock of the Company equal to twenty thousand US dollars ($20,000).  On May 8, 2012 the Company issued a total of 200,000 shares of common stock at a deemed price of $0.10 per share.  The Company capitalized the cash and stock payments as option costs on the mineral property.   At the fiscal year ended September 30, 2012, the Company evaluated the recoverability of the amount paid for the option and determined to impair the amount in full, as the Company is currently in the exploration phase, with no proven or probable reserves having yet been determined.





On November 27, 2012, the Option Agreement was amended to revise certain property expenditure requirements, and concurrently it was agreed that the Company had earned its 100% right and interest in the Property for the payment of all expenditures up to November 27, 2012 and for allowing the Optionor to utilize a portion of the expenditures expended by the Optionee to apply to certain of the Optionor’s claims.  The Company has transferred the title to the Property to its wholly owned subsidiary, 9252-4768 Quebec Inc.





During the fiscal year ended September 30, 2014 and 2013, the Company expended $0 and $17,630 on exploration, respectively.  The Claim has been renewed based on prior expenditures, and will remain in good standing until November 28, 2015.





Overstreet Lease


On April 20, 2015 the Company entered into a Purchase Agreement (the “Agreement”) with OMR Drilling and Acquisition LLC, a Kentucky corporation with offices located in Albany, Kentucky, to acquire an oil, gas and mineral lease known as the Overstreet Lease encompassing approximately 597 acres located in Monroe County, Kentucky and Clay County Tennessee.  Under the terms of the Agreement, the Company will acquire a 100% Working Interest, equal to an 80% Net Revenue Interest for the purchase price of $25,000 to be paid within 90 days of the date of the Agreement. At July 20, 2015 the Company has not remitted the required $25,000 and the Company and OMR drilling are presently negotiating an extension to the payment date.





5. COMMON STOCK





The authorized capital of the Company is 900,000,000 common shares with a par value of $ 0.001 per share.





The following table i reflects the issuance of 187,955,794 shares in respect of Conversion Notices received for a total of $84,000 in principal and $16,000 in accrued interest  from certain convertible notes payable during the nine month period ended June 30, 2015:





Conversion Date

Original Principal Amount

($)


Accrued interest payable

($)


Conversion Price

($)


Number of shares issuedOctober 7, 2014


10,000






0.000675



14,814,815November 25, 2014


10,000






0.0006



16,666,667December 21, 2014


10,000






0.00056



17,857,143February 27, 2015


10,000






0.00042



23,809,524April 8, 2015


10,000






0.0004675



21,390,374May 12, 2015


10,000






0.00041



24,390,244May 15, 2015


15,000






0.00075



20,000,000June 8, 2015


9,000



1,000



0.00037



27,027,027June 10, 2015






15,000



0.00068



22,000,000Total


84,000



16,000







187,955,794





As of June 30, 2015, 685,646,419 shares of common stock were issued and outstanding.


F-8


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES





(i)
Craigstone Ltd. (“Craigstone”)





On November 4, 2011, the Company entered into a Securities Purchase Agreement with Craigstone pursuant to which the Company received $100,000 as a loan from Craigstone in exchange for one (1) Unit consisting of: a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and a three (3) year Warrant (the “Warrant”) to purchase two hundred fifty thousand (250,000) shares of the Company’s Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date. The Note earns simple interest accruing at ten percent (10%) per annum and was due on or before the twelfth month anniversary of the date of execution.  The due dates were extended as described further herein.





During the fiscal year ended September 30, 2012, the Company entered into additional Securities Purchase Agreements with Craigstone pursuant to which the Company received  collectively $320,000 as  loans whereby each funding received  one (1) Unit consisting of: a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and a three (3) year Warrant (the “Warrant”).   Collectively under the Securities Purchase Agreements, Craigstone was granted the rights to purchase seven hundred twelve thousand five hundred (712,500) shares of the Company’s Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date. The Notes earn simple interest accruing at ten percent (10%) per annum and were due on or before the twelfth month anniversary of the date of execution.  The due dates were extended as described further herein.





During the fiscal year ended September 30, 2013, the Company entered into three additional Securities Purchase Agreements with Craigstone pursuant to which the Company received a total of $45,000 as loans in exchange for which each funding received one (1) Unit consisting of a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and collectively received a three (3) year Warrant (the “Warrant”) to purchase one hundred twelve thousand five hundred (112,500) shares of the Company’s Common Stock exercisable at the lower of: (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date.  The Notes earn simple interest accruing at ten percent (10%) per annum and is due on or before the twelfth month anniversary of the date of execution.





The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the dates of grant to be $215,439 on the notes, and $60,439 on the warrants. This value was recorded as a discount on debt and offset to additional paid in capital. Amortization of the discount was $nil for the nine months ended June 30, 2015 (June 30, 2014 - $4,519), which amount has been recorded as interest expense.


F-9


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(i)
Craigstone Ltd. (“Craigstone”) (continued)





June 30,

2015


September 30,

2014


Issue DateConvertible Promissory Note – face value, due on March 31, 2015 (retired)

$
100,000


$
100,000


$
100,000Convertible Promissory Note – face value, due on November 4, 2014


115,000



115,000



115,000Convertible Promissory Note – face value, due on March 31, 2015


85,000



85,000



85,000Convertible Promissory Note – face value, due on March 31, 2015


35,000



35,000



35,000Convertible Promissory Note – face value, due on May 11, 2014


25,000



25,000



25,000Convertible Promissory Note – face value, due on June 19, 2014


25,000



25,000



25,000Convertible Promissory Note – face value, due on March 31, 2015


35,000



35,000



35,000Convertible Promissory Note – face value, due on March 31, 2015


15,000



15,000



15,000Convertible Promissory Note – face value, due on March 31, 2015


15,000



15,000



15,000Convertible Promissory Note – face value, due on May 30, 2014


15,000



15,000



15,000Amount-converted to shares


(100,000
)


(16,000
)


-Total convertible promissory note – face value


365,000



449,000



465,000Less: beneficial conversion feature


-



-



(215,439
)Warrant discount


-



-



(60,439
)$
365,000


$
449,000


$
189,122





Interest expenses:





For the three month period


For the nine month periodJune 30,

2015


June 30,

2014


June 30,

2015


June 30,

2014Amortization of debt discount

$
-


$
873


$
-


$
4,519Interest at contractual rate


9,592



11,593



30,794



34,779Totals

$
9,592


$
12,466


$
30,794


$
39,298





As at June 30, 2015 the entire balance of $365,000 in outstanding notes is due and payable.  As yet the Company has not negotiated any repayment terms with respect to this outstanding balance, however, the noteholder has assigned certain amounts of the total debt totaling $100,000 in principal and $16,000 in accrued interest to third parties, which amounts have been settled by the issuance of 207,183,492shares of common stock as set out below:





F-10


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(i)
Craigstone Ltd. (“Craigstone”) (continued)




Conversion Date

Original Principal Amount

($)


Accrued interest payable

($)


Conversion Price

($)


Number of

shares issuedJuly 25, 2014


8,000






0.00055



14,499,320July 31, 2014


8,000






0.00045



17,777,778October 7, 2014


10,000






0.000675



14,814,815November 25, 2014


10,000






0.0006



16,666,667December 21, 2014


10,000






0.00056



17,857,143February 27, 2015


10,000






0.00042



23,809,524April 8, 2015


10,000






0.0004675



21,390,374May 12, 2015


10,000






0.00041



24,390,244May 15, 2015


15,000






0.00075



20,000,000June 8, 2015


9,000



1,000



0.00037



27,027,027June 10, 2015


-



15,000



0.00068



22,000,000Total


100,000



16,000







207,183,492





(ii)
Adams Ale Inc.





Effective February 15, 2013, the Company entered into a Securities Purchase Agreement with Adams Ale Inc. (“Adams”) pursuant to which Adams agreed to undertake a private placement in the amount of $100,000.  On May 1, 2013, Adams had not fully funded the private placement, having funded an amount of $50,000 and agreed to convert to a Convertible Promissory Note on the same commercial terms as the Craigstone notes discussed above.   The Company agreed to enter into a Securities Purchase Agreement with Adams for the funded amount of  $50,000 in exchange for one (1) Unit consisting of: a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and a three (3) year Warrant (the “Warrant”) to purchase one hundred twenty-five thousand (125,000) shares of the Company’s Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading dayimmediately preceding the exercise date. The Note earns simple interest accruing at ten percent (10%) per annum and is due on or before the twelfth month anniversary of the date of execution.





The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the date of grant to be $17,473 on the note, and $806 on the warrants. This value was recorded as a discount on debt and offset to additional paid in capital. Amortization of the discount for the nine month ended June 30, 2015 was $nil (June 30, 2014 - $6,811), which amount has been recorded as interest expense.








F-11


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)








6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(ii)
Adams Ale Inc. (continued)





June 30, 2015


September 30, 2014


Issue DateConvertible Promissory Note – face value, due on February 15, 2014

$
50,000


$
50,000


$
50,000Total convertible promissory note – face value


50,000



50,000



50,000Less: beneficial conversion feature


-



-



(17,473
)Warrant discount


-



-



(806
)50,000



50,000



31,721





Interest expenses:





For the three month period


For the nine month periodJune 30,

2015


June 30,

2014


June 30,

2015


June 30,

2014Amortization of debt discount

$
-


$
-


$
-


$
6,811Interest at contractual rate


1,247



1,247



3,740



3,740Totals

$
1,247


$
1,247


$
3,740


$
10,551





On February 14, 2014 the aforementioned note became due and payable. As yet the Company has not negotiated any repayment terms with respect to this outstanding balance and it remains due on demand.





(iii)
Investor Growth LLC (“IG”)





On May 11, 2014, the Company entered into 5% convertible promissory note with Investor Growth LLC (“IG”) pursuant to which the Company received $8,000 as a loan from IG. The Note earns simple interest accruing at five percent (5%) per annum and is due and payable no later than November 11, 2014 (“Maturity Date”). Any amount of principal or interest on the Note which is not paid when due shall bear interest at the rate of twelve percent (12%) per annum from the due date thereof until the same is paid (“Default Interest”). At any such date as IG may desire on or after the Maturity Date of this Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price per share of $0.0005. The Company did not pay the note by the Maturity Date and is currently accruing interest at a rate of 12% on all outstanding principal and unpaid interest as at that date.





On July12, 2014, the Company entered into a 5% convertible promissory note with Investor Growth LLC (“IG”) pursuant to which the Company received $5,000 as a loan from IG. The Note earns simple interest accruing at five percent (5%) per annum and due and payable no later than January 12, 2015 (“Maturity Date”). Any amount of principal or interest on the Note which is not paid when due shall bear Default Interest from the due date thereof until the same is paid. At any such date as IG may desire on or after the Maturity Date of this Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price per share of $0.0003. The Company did not pay the note by the Maturity Date and is currently accruing interest at a rate of 12% on all outstanding principal and unpaid interest as at that date.





On October 14, 2014, the Company entered into a 5% convertible promissory note with Investor Growth LLC (“IG”) pursuant to which the Company received $5,000 as a loan from IG. The Note earns simple interest accruing at five percent (5%) per annum and due and payable no later than April 14, 2015 (“Maturity Date”). Any amount of principal or interest on the Note which is not paid when due shall bear Default Interest from the due date thereof until the same is paid. At any such date as IG may desire on or after the Maturity Date of this Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price per share of $0.0004.Subsequent to March 31, 2014 this loan became due and payable. The Company did not pay the note by the Maturity Date and is currently accruing interest at a rate of 12% on all outstanding principal and unpaid interest as at that date.





F-12


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(iii)
Investor Growth LLC (“IG”) (continued)





The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the dates of grant to be $8,000, $5,000 and $5,000, respectively, on the notes. This value was recorded as a discount on debt and offset to additional paid in capital. Amortization of the discount for the nine months ended June 30, 2015 was $9,656 (June 30, 2014 - $nil), which amount has been recorded as interest expense.





Interest expenses:





For the three

month period


For the nine

month periodJune 30,

2015


June 30,

2014


June 30,

2015


June 30,

2014Amortization of debt discount

$
361


$
2,178


$
9,656


$
2,178Interest at contractual rate


544



56



1,296



56Totals

$
905


$
2,234


$
10,952


$
2,234





(iv)
Level Up Investments, LLC. (“LUI LLC”)





On December 15, 2014, December 29, 2014, February 24, 2015 and April 9, 2015, we raised $7,500, $3,000, $7,500 and $7,500, respectively, through private offering of convertible promissory notes with LUI LLC. Under the terms of the Notes, interest shall accrue at 5% per annum until June 15, 2015, June 29, 2015, August 24, 2015, and October 9, 2015, respectively (the “Maturity Date”), at which time, unless converted, all principal and accrued interest shall be due and payable.  Any amount of principal or interest on the Notes which is not paid when due shall bear Default Interest from the due date thereof until the same is paid. Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. As at June 30, 2015 the notes payable on June 15 and June 29, 2015 were not retired as of the Maturity Date and are currently accruing interest at a rate of 12% on all outstanding principal and unpaid interest as at that date.


The holder shall have the right to convert the Notes at any such date as LUI LLC may desire on or after the Maturity Date of this Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price per share equal to 50% of the lowest posted trade price of SLIO within the last 20 trading sessions.





In our evaluation of the financing arrangement, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and it did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.





Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.





We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.





F-13


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(iv)
Level Up Investments, LLC. (“LUI LLC”)(continued)





As a result of the application of ASC No. 815 in period ended June 30, 2015 and issue dates of December 15, 2014, December 29, 2014 and February 24, 2015; the fair value of the conversion features is summarized as follows:





December 15, 2014 NOTE


December 29, 2014 NOTE


February 24,

2015 NOTE


April 9,

2015 NOTE

TOTALDerivative liabilities, issued date

$
10,700


$
6,000


$
12,000


$
12,700

$
41,400Fair value mark to market adjustment


900



(1,400
)


200



300


-Derivative liabilities, June 30, 2015

$
11,600


$
4,600


$
12,200


$
13,000

$
41,400





The Company recorded debt discount in the amount of $7,500, $3,000, $7,500 and $7,500 for each note as of the issue date.





The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of June 30, 2015 and commitment date:





Commitment Date


Revaluation DateExpected dividends


0



0Expected volatility

194,52 ~ 231.52%



228.68
%Expect term

0.50 years


0 ~0.27 yearsRisk free interest rate

0.08 ~ 0.12  %


0.01 ~ 0.02 %





Amortization of the discount over the nine months ended June 30, 2015 totaled $19,167 (June 30, 2014 - $nil), which amount has been recorded as interest expense and is reflected on the Company’s balance sheet as Convertible Note Liabilities, Net.





June 30, 2015


Issue DateConvertible Promissory Note – face value, due on June 15, 2015

$
7,500


$
7,500Convertible Promissory Note – face value, due on June 29, 2015


3,000



3,000Convertible Promissory Note – face value, due on August 24, 2015


7,500



7,500Convertible Promissory Note – face value, due on October 9, 2015


7,500



7,500Total convertible promissory note – face value


18,000



25,500Less: Debt discount


(6,333
)


(25,500)19,167



-





Interest expenses:


Three months ended

June 30,

Nine months ended

June 30,2015



2014



2015



2014Amortization of debt discount

$
11,759


$
-


$
19,167


$
-Interest at contractual rate


332







514



-Totals

$
12,091


$
-


$
19,681


$
-





F-14


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(v)
Millennial Investments LLC. (“Millennial LLC”)





On May 14, 2015, June 9, 2015, and June 30, 2015 we raised $7,500, $5,000, and $7,500, respectively, through private offering of convertible promissory notes. Under the terms of the Notes, interest shall accrue at 5% per annum until November 14, 2015, December 9, 2015, and December 30, 2015, respectively (the “Maturity Date”), at which time, unless converted, all principal and accrued interest shall be due and payable.  Any amount of principal or interest on the Notes which is not paid when due shall bear Default Interest from the due date thereof until the same is paid. Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed.





The holder shall have the right to convert the Notes at any such date as Millennial LLC may desire on or after the Maturity Date of this Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price per share equal to 50% of the lowest posted trade price of SLIO within the last 20 trading sessions.





In our evaluation of the financing arrangement, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and it did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.





Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.





We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.





As a result of the application of ASC No. 815 in period ended June 30, 2015 and  as at the issue dates of May 14, 2015, June 9, 2015, and June 30, 2015; the fair value of the conversion feature is summarized as follows:





May 14,

2015 NOTE


June 9,

2015 NOTE


June 30,

2015 NOTE

TOTALDerivative liabilities, issued date

$
10,000


$
10,500


$
9,500

$
30,000Fair value mark to market adjustment


3,600



3,400



-


7,000Derivative liabilities, June 30, 2015

$
13,600


$
13,900


$
9,500

$
37,000





The Company recorded debt discount in the amount of $7,500, $5,000, and $7,500 for each note as of the issue date.





The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of June 30, 2015 and commitment date:


F-15


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





6.  CONVERTIBLE PROMISSORY NOTE, NET and DERIVATIVE LIABILITIES (continued)





(v)
Millennial Investments LLC. (“Millennial LLC”) (continued)





Commitment Date


Revaluation DateExpected dividends


0



0Expected volatility

192.08 ~ 228.68
%


228.681
%Expect term

0.50 years


0.38~0.50 yearsRisk free interest rate

0.08 ~ 0.11  %


0.11 %





Amortization of the discount over the nine months ended June 30, 2015 totaled $2,833 (June 30, 2014 - $nil), which amount has been recorded as interest expense and is reflected on the Company’s balance sheet as Convertible Note Liabilities, Net.





June 30, 2015


Issue DateConvertible Promissory Note – face value, due on November 14, 2015

$
7,500


$
7,500Convertible Promissory Note – face value, due on December 9, 2015


5,000



5,000Convertible Promissory Note – face value, due on December 30, 2015


7,500



7,500Total convertible promissory note – face value


20,000



20,000Less: Debt discount


(17,167
)


(25,500)2,833



-





Interest expenses:


Three months ended

June 30,

Nine months ended

June 30,2015



2014



2015



2014Amortization of debt discount

$
2,833


$
-


$
2,833


$
-Interest at contractual rate


70







70



-Totals

$
2,903


$
-


$
2,903


$
-





(vi)
Derivative liabilities from exceed authorized shares of common stock





As of June 30, 2015 given the fact that the Company currently has only 900,000,000 shares of common stock authorized, the Company could exceed its authorized shares of common stock by approximately 1,165,304,752 shares (September 30, 2014 – 176,799,100 shares) if all of the financial instruments described in notes above are exercised or converted into shares of common stock. At June 30, 2015, 1,165,304,752 of these shares were in excess of the authorized share capital  and were accounted for as a derivative liability. The fair value of the1,165,304,752 common shares was determined to be $815,713 ($335,918 as to 176,799,100 shares as of September 30, 2014) based upon the closing price of the Company’s common stock. Details of the derivative liability are provided below:





Balance at September 30, 2014


335,918Derivative liabilities due to the tainting of convertible notes


123,632(Gain) on change in fair value


356,163Balance at June 30, 2015


815,713


F-16


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





7. RELATED PARTY TRANSACTIONS





On September 13, 2013, Mr. Michael Jacob Cooper Smith was appointed to the Board of Directors and as an officer of the Company.





On September 30, 2013, the Company entered a three-year employment agreement with Mr. Michael Jacob Cooper Smith. Under the terms of the agreement, the Company shall pay Mr. Smith a base salary of $30,000 per annum, paid monthly.  The amount of base salary may be increased from time to time by the Board of Directors of the Company. Mr. Smith shall be eligible for periodic bonus in amounts to be determined by the Board of Directors.





On January 1, 2015, the Company and Mr. Smith entered into a new employment contract for a term of three years increasing the amount of base salary for Mr. Smith to $42,000 per annum.





During the nine months ended June 30, 2015, Mr. Smith invoiced the Company for his services in the amount of $28,500 and $100 for the reimbursement of expenses. The Company paid $28,270 in cash, leaving $4,922 on the balance sheets as accounts payable – related party (September 30, 2014 - $4,592)





8. WARRANTS





An aggregate of 1,200,000 warrants were issued and outstanding as at September 30, 2014 as required under the terms of a series of Securities Purchase Agreements discussed above in Note 5(i).  The warrants are exercisable for a period of three years from the date of issue, exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of the Company’s common stock for the thirty (30) trading days immediately preceding the exercise date.





The fair value of the 1,200,000 warrants totaling $61,245 was recorded as a discount on the convertible notes payable upon issuance. This value was calculated using the Black-Scholes model. The key inputs for the calculation are shown below:





Stock Price on Measurement Date

$
0.0068 ~ 0.135Exercise Price of Warrants

$
0.0051 ~ 0.101Term of Warrants (years)



3.00Computed Volatility


125.84% ~ 147.91%Annual Dividends



0.00
%Discount Rate


0.33 ~ 0.49 %








F-17


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)





8. WARRANTS (continued)





A summary of the Company’s warrants as of June 30, 2015 and September 30, 2014 as follows:





June 30, 2015


September 30, 2014Warrants


Weighted average

exercise price


Warrants

Weighted average

exercise priceOutstanding at the beginning of the period


1,200,000


$
0.060



1,200,000

$
0.060Granted


-







-Exercised


-







-Expired


(875,000
)


0.0726Cancelled


-







-Outstanding at the end of the period


325,000


$
0.0257



1,200,000

$
0.060Vested and exercisable at the end of period


325,000







1,200,000Weighted average fair value per share of warrants granted during the period





$
0.0257





$
0.060





The following table summarizes information regarding stock purchase warrants outstanding at June 30, 2015:





Warrants Outstanding
Warrants ExercisableExercise prices

Number

Outstanding
Weighted

averageremaining

contractuallife (years)
Weighted

averageexercise

price
Number

exercisable
Weighted

averageremaining

contractuallife (years)
Weighted

average exercise

price$
0.005-0.03

325,000
0.47

$0.030
325,000
0.47

$0.0257





As at June 30 2015, the Company had the following warrants outstanding:





Exercise Price

Expiry Date

Weighted Average Remaining Contractual Life (Years)

Outstanding at

September 30, 2014

Issued


Exercised


Expired


Outstanding at

June 30, 2015$
0.075

November 4, 2014


-

250,000


-



-



250,000



-$
0.075

November 4, 2014


-

250,000


-



-



250,000



-$
0.101

February 3, 2015


-

177,083


-



-



177,083



-$
0.041

March 8, 2015


-

72,917


-



-



72,917



-$
0.052

May 11, 2015


-

62,500


-



-



62,500



-$
0.03

June 19, 2015


-

62,500


-



-



62,500



-$
0.03

September 11, 2015


0.20

87,500


-



-



-



87,500$
0.064

October 19, 2015


0.30

37,500


-



-



-



37,500$
0.056

October 26, 2015


0.32

37,500


-



-



-



37,500$
.008

February 15, 2016


0.63

125,000


-



-



-



125,000$
0.005

May 30, 2016


0.92

37,500


-



-



-



37,5000.47

1,200,000


-



-



875,000



325,000





F-18


SOLO INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2015


(unaudited)


9.  INCOME TAXES





The Company has losses carried forward for income tax purposes at June 30, 2015. There are no current or deferred tax expenses for the current period ended June 30, 2015 due to the Company’s loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period.





Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.





June 30, 2015


June 30, 2014Net operating loss carry forward


1,909,963



1,135,930Effective Tax Rate


35
%


35
%Deferred Tax Assets


668,400



397,576Less: Valuation Allowance


(668,400
)


(397,576
)Net deferred tax asset

$
0


$
0





The valuation allowance for deferred tax assets as of June 30, 2015 and 2014 was $668,400 and $397,576 respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment.





As a result, management determined it was more likely than not the deferred tax assets would not be realized as of June 30, 2015 and 2014, and recorded a full valuation allowance.





Reconciliation between the statutory rate and the effective tax rate is as follows at June 30, 2015 and 2014:





June 30, 2015


June 30, 2014Federal statutory tax rate


(35.0
)%


(35.0
)%Permanent difference and other


35.0
%


35.0
%Effective tax rate


-
%


-
%





The net federal operating loss carry forward will expire between 2030 and 2034. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.  All income tax years from the fiscal year ended September 30, 2011 to current are open to examination by the taxing authorities.





10. SUBSEQUENT EVENTS





On July 13, 2015, the Company received a Conversion Notice from a note holder that acquired a total of $10,000 of accrued interest in convertible loans from and existing note holder The conversion notice in the amount of $10,000 provides for the issuance of 32,258,065 shares at $0.00031.





The Company has evaluated subsequent events from the balance sheet date through August 14, 2015, and determined that there were no other events to disclose.








F-19


ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION





FORWARD-LOOKING STATEMENTS





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





RESULTS OF OPERATIONS





Working Capital





June 30,

2015

$


September 30, 2014

$Current Assets


673



902Current Liabilities


1,551,035



1,019,034Working Capital (Deficit)


(1,550,362
)


(1,018,132
)





Cash Flows





June 30, 2015

$


June 30, 2014

$Cash Flows from (used in) Operating Activities


(50,511
)


(82,982
)Cash Flows from (used in) Investing Activities


-



-Cash Flows from (used in) Financing Activities


50,500



83,000Net Increase (decrease) in Cash During Period


9



18





Operating Revenues





Operating revenues for the periods ended June 30, 2015 and 2014 were $0.





Operating Expenses and Net Loss





Comparison of three month periods ended June 30, 2015 and 2014





Operating and other expenses for the three month period ended June 30, 2015 totaled $16,926 and are comprised of $3,680 in professional fees, $10,500 in fees payable under a related party management contract, and $2,746 in other general and administrative expenses.   In addition the Company recorded $26,738 as interest expenses, $14,954 of which was from the amortization of debt discount from convertible notes, and recorded $431,935 in derivate losses as a result in the change in valuation of certain financial instruments.


Operating and other expenses for the three month period ended June 30, 2014 totaled $15,245 and are comprised of $3,893 in professional fees, $7,500 in fees paid under a related party management contract, and $3,852 in other general and administrative expenses.   In addition the Company recorded $31,721 as interest expenses, $3,051 of which was the amortization of the debt discount from the beneficial conversion feature and warrant discount resulting from convertible promissory notes and $14,842 from the amortization of debt discount from convertible notes. Further the Company recorded $1,624 as a gain as a result of the change in valuation of certain financial instruments.





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Net loss for the three month period ended June 30, 2015 was $475,599 as compared to net loss of $45,342 for the three month period ended June 30, 2014.    The increase to the net loss is predominantly as a result of the change in fair value of the derivative liabilities period of period, offset by a reduction to interest expenses.





Comparison of nine month periods ended June 30, 2015 and 2014





Operating and other expenses for the nine month period ended June 30, 2015 totaled $89,798 and are comprised of $18,946 in professional fees, $28,500 in fees payable under a related party management contract, and $9,019 in other general and administrative expenses.   In addition the Company recorded $68,070 as interest expenses, $31,656 of which was from the amortization of debt discount from convertible notes, and recorded $389,063 as a loss resulting from the change in valuation of certain financial instruments.





Operating and other expenses for the nine month period ended June 30, 2014 totaled $75,982 and are comprised of $34,853 in professional fees, $26,000 in fees paid under a related party management contract, and $15,129 in other general and administrative expenses.   In addition the Company recorded $103,159 as interest expenses, $13,508 of which was the amortization of the debt discount from the beneficial conversion feature and warrant discount resulting from convertible promissory notes and $48,255 from the amortization of debt discount from convertible notes. Further the Company recorded $4,064 as a gain as a result of the change in valuation of certain financial instruments.





Net loss for the period ended June 30, 2015 totaled $513,598 as compared to $175,077 for the nine month period ended June 30, 2014.  The decrease in operating expenses and losses is due to a substantive reduction to interest expenses period over period as the debt discounts for prior period convertible loans were fully amortized as at the current 9 month period ending June 30, 2015 resulting in a reduction from $103,159 (2014) in total interest expense to $68,070 in the current period.  In addition during the current period the Company recorded a loss as a result of the change in fair value of certain financial instruments of $389,063 as compared to a gain of only $4,064 in the prior comparative nine months ended June 30, 2014.  Finally, operating expenses were also reduced from $75,982 (2014) to $56,465 in the current nine month period as a result of a reduction to both professional and administrative fees as the Company’s operating activities were reduced period over period.





Liquidity and Capital Resources





As at June 30, 2015, the Company had total assets of $673 compared to $902 as at September 30, 2014.





As at June 30, 2015, the Company had total liabilities of $1,551,035 as compared with total liabilities of $1,019,034 as at September 30, 2014. The increase in total liabilities was mainly due to an increase to accounts payable and accrued liabilities from $164,763 as at September 30, 2014 to $190,583 at June 30, 2015, as well as an increase to related party payables from $4,592 at September 30, 2014 to $4,922 at June 30, 2015 as the Company was unable to raise sufficient funds to meet its obligations as they became due.  While the Company was able to reduce the principal balance of certain notes payable period over period, this reduction was offset by an increase to derivative liabilities.





As at June 30, 2015, the Company had a working capital deficit of $1,550,362 compared with a working capital deficit of $1,018,132 as at September 30, 2014.  The increase in working capital deficit is mainly attributable to the increase in current liabilities related to accounts payable and accrued liabilities.





The Company has commenced exploration as required under its mineral property option agreement and has earned its rights to transfer title to the property under the agreement.





In order to meet all of the current commitments and fund operations for the next twelve months the Company estimates it will require a minimum of $500,000. We intend to undertake exploration on our mineral properties of approximately $300,000 and have allocated an additional $200,000 for operations, which may include the acquisition of additional properties as well as general and administrative costs.





We do not have sufficient funds to meet our next twelve month obligations. Our ability to meet our financial liabilities and commitments is primarily dependent upon the continued issuance of equity to new stockholders, the ability to borrow funds, and ultimately upon our ability to achieve and maintain profitable operations. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. We do not currently have sufficient capital to meet our obligations as they come due and while we have been able to raise funding to ensure that we meet our filing obligations, we have been unable to raise sufficient funding to undertake any exploration on our property.  Should we be unable to continue to raise funding for our filing obligations we may have to cease operations.   If the Company cannot raise exploration funds the properties which the Company currently holds could be lost.





5


Cash flow from Operating Activities





During the nine month period ended June 30, 2015, the Company used $50,511 for operating activities compared to the use of $82,982 for operating activities during the period ended June 30, 2014. The decrease in net cash used in operating activities is attributed to the Company’s inability to raise sufficient funds to allow it to maintain and grow its operations.  Non-cash items include a substantial reduction to the amortization of the debt discount recorded in the current period of $31,656 as compared to $61,763 in the nine months ended June 30, 2014.  In addition, during the current nine month period, the Company recorded a non-cash loss on the change in fair value of certain financial instruments of $389,063 as compared to a gain of only $2,440 in the prior comparative period, which accounts for the most substantial change in cash flows from operating activities.  The increase to accounts payable at June 30, 2015 totaled $42,150 as compared to only $34,328 in the nine month ended June 30, 2014.





Cash flow from Investing Activities





During the nine month period ended June 30, 2015 and 2014 the Company has expended no cash on investing activities.




Cash flow from Financing Activities





During the nine month period ended June 30, 2015, the Company received $50,500 cash from financing activities by way of notes payable compared to $83,000 cash from notes payable for the nine month period ended June 30, 2014.





Going Concern





We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.





Off-Balance Sheet Arrangements





We have no significant 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 are material to stockholders.


Critical Accounting Policies





Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.





We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.





Recently Issued Accounting Pronouncements





In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts. Currently, debt issuance costs are presented as a deferred asset. The recognition and measurement requirements will not change as a result of this guidance. The standard is effective for the annual reporting periods beginning after December 15, 2015 and will be applied on a retrospective basis. This amendment will not have a material impact on our financial statements.





We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may cause a material impact on our financial condition, or the results of our operations.





ITEM 3.               QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





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





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ITEM 4.     CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2015, due to the material weaknesses resulting from the





Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on December 31, 2014 for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.





Changes in Internal Control over Financial Reporting





Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.





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





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PARTII - OTHER INFORMATION





ITEM 1.                LEGAL PROCEEDINGS





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





ITEM 1A.            RISK FACTORS





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





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





On April 9, 2015 the Company received a Conversion Notice from a note holder that acquired a total of $10,000 in convertible loans from and existing noteholder. The conversion notice, for a total of $10,000 in principal, provides for the issuance of 21,390,374 shares at $0.0004675.





On April 9, 2015, we raised $ $7,500, through private offering of convertible promissory notes. Under the terms of the Note, interest shall accrue at 5% per annum until October 9, 2015, respectively (the “Maturity Date”), at which time, unless converted, all principal and accrued interest shall be due and payable.  Any amount of principal or interest on the Note which is not paid when due shall bear Default Interest from the due date thereof until the same is paid. Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. The holder shall have the right to convert the Note on or after the Maturity Date of this Note, and any unpaid indebtedness shall be convertible into common shares of the Company at a price per share equal to 50% of the lowest posted trade price within the last 20 trading sessions.





The Company received a Conversion Notice from a note holder that acquired a total of $10,000 in convertible loans from an existing noteholder. The conversion notice, for a total of $10,000 in principal, provides for the issuance of 24,390,244 shares at $0.00041 on May 12, 2015.





On May 14, 2015, June 9, 2015, and June 30, 2015 we raised $7,500, $5,000, and $7,500, respectively, through a private offering of convertible promissory notes from Millenial Investments LLC ("the Millenial Notes"). Under the terms of the Millenial Notes, interest shall accrue at 5% per annum until November 14, 2015, (the “Maturity Date”), at which time, unless converted, all principal and accrued interest shall be due and payable. Any amount of principal or interest on the Millenial Notes which is not paid when due shall bear Default Interest from the due date thereof until the same is paid at a rate of 12%. Interest shall commence accruing on the date that the Millenial Notes are funded and shall be computed on the basis of a 365-day year and the actual number of days elapsed. The holder shall have the right to convert the note at any such date as they may desire on or after the Maturity Date. Any unpaid indebtedness shall be convertible into common shares of the Company at a price per share equal to 50% of the lowest posted trade price within the last 20 trading sessions.





On July 13, 2015, the Company received a Conversion Notice from a note holder that acquired a total of $10,000 of accrued interest in convertible loans from and existing note holder The conversion notice in the amount of $10,000 provides for the issuance of 32,258,065 shares at $0.00031.





The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of shares to the parties noted above pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale.





Other than as disclosed above, here were no issuances of unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in and Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.





ITEM 3.                DEFAULTS UPON SENIOR SECURITIES





None.





ITEM 4.                MINE SAFETY DISCLOSURES





None.





ITEM 5.               OTHER INFORMATION





On April 20, 2015 the Company entered into a Purchase Agreement (the “Agreement”) with OMR Drilling and Acquisition LLC, a Kentucky corporation with offices located in Albany, Kentucky, to acquire an oil, gas and mineral lease known as the Overstreet Lease encompassing approximately 597 acres located in Monroe County, Kentucky and Clay County Tennessee.  Under the terms of the Agreement, the Company will acquire a 100% Working Interest, equal to an 80% Net Revenue Interest for the purchase price of $25,000 to be paid within 90 days of the date of the Agreement. At July 20, 2015 the Company has not remitted the required $25,000 and the Company and OMR drilling are presently negotiating an extension to the payment date.


8


ITEM 6.                EXHIBITS





Exhibits:





Exhibit Number
Description of Exhibit
Filing3.01
Articles of Incorporation
Filed with the SEC on October 22, 2010 as part of our Registration Statement on Form S-1.3.01(a)
Certificate of Change
Filed with the SEC on November 7, 2012 as part of our Current Report on Form 8-K.3.02
Bylaws
Filed with the SEC on October 22, 2010 as part of our Registration Statement on Form S-1.10.01
Securities Purchase Agreement between Solo International, Inc. and Craigstone Ltd., dated November 4, 2012
Filed with the SEC on November 15, 2012 as part of our Current Report on Form 8-K.10.02
Option Agreement by and between Solo International, Inc. and 9228-6202 Quebec Inc., dated November 15, 2012
Filed with the SEC on November 23, 2012 as part of our Current Report on Form 8-K10.03
Amended Option Agreement by and between 9252-4768 Quebec Inc. and 9228-6202 Quebec Inc. dated December 20, 2012
Filed with the SEC on January 3, 2013 as part of our Amended Current Report on Form 8-K/A.10.04
Securities Purchase Agreement between Solo International, Inc. and Craigstone Ltd., dated January 10, 2013
Filed with the SEC on January 12, 2013 as part of our Current Report on Form 8-K.10.05
Employment agreement between the Company and Michael Jacob Cooper Smith dated September 30, 2013
Filed with the SEC on December 30, 2013 as part of our annual report on Form 10-K10.06
Securities Purchase Agreement with Asher Enterprises Inc. dated September 18, 2013
Filed with the SEC on December 30, 2013 as part of our annual report on Form 10-K10.07
Securities Purchase Agreement with Asher Enterprises Inc. dated December 18, 2013
Filed with the SEC on December 30, 2013 as part of our annual report on Form 10-K10.08
October 14, 2014 Convertible Promissory Note between the Company and Investor Growth LLC
Filed with the SEC on February 23, 2015 as part of our quarterly report on Form 10-Q10.09
December 15, 2014 Convertible Promissory Note between the Company and Level Up Investments LLC
Filed with the SEC on February 23, 2015 as part of our quarterly report on Form 10-Q10.10
December 29, 2014 Convertible Promissory Note between the Company and Level Up Investments LLC
Filed with the SEC on February 23, 2015 as part of our quarterly report on Form 10-Q10.11
Employment agreement between the Company and Michael Jacob Cooper Smith dated January 1, 2015
Filed with the SEC on May 15, 2015 as part of our quarterly report on Form 10-Q10.12
February 24, 2015 Convertible Promissory Note between the Company and Level Up Investments LLC
Filed with the SEC on May 15, 2015 as part of our quarterly report on Form 10-Q10.13
May 14, 2015 Convertible Promissory Note between the Company and Millenial Investments LLC
Filed with the SEC on May 15, 2015 as part of our quarterly report on Form 10-Q10.14
April 20, 2015 Purchase Agreement with OMR Drilling and Acquisition LLC
Filed with the SEC on May 5, 2015 as part of our Current Report on Form 8-K.10.15
April 9, 2015 Convertible Promissory Note between the Company and Level Up Investments LLC
Filed herewith10.16
June 9, 2015 Convertible Promissory Note between the Company and Millenial Investments LLC
Filed herewith10.17
June 30, 2015 Convertible Promissory Note between the Company and Millenial Investments LLC
Filed herewith31.1
Certification of Principal Executive Officer Pursuant to Rule 13a-14
Filed herewith.31.2
Certification of Principal Financial Officer Pursuant to Rule 13a-14
Filed herewith.32.1
CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
Filed herewith.101.INS*
XBRL Instance Document
To be filed by amendment101.SCH*
XBRL Taxonomy Extension Schema Document
To be filed by amendment101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
To be filed by amendment101.LAB*
XBRL Taxonomy Extension Labels Linkbase Document
To be filed by amendment101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
To be filed by amendment101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
To be filed by amendment








9


SIGNATURES





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





SOLO INTERNATIONAL, INC.Date: August 14, 2015
By:
/s/Michael Cooper SmithName:
Michael Cooper SmithTitle:
President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)













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